AN expected surge in volume when Covid lockdowns are lifted in China's key manufacturing areas and factories quickly resume production will not cause major disruptions in the US and North Europe, said Jens Bjorn Andersen, the CEO of forwarder DSV, reports IHS Media.
"Our people in [China] are expecting a surge in volume because there is a lot of demand that has built up," Mr Andersen said in an interview ahead of the forwarder's first quarter results. "You can't say it will be 100 per cent smooth, but I do not expect a large disruption from the volumes coming into Europe and the US two or three months from now."
DSV followed Kuehne + Nagel in reporting a highly profitable first-quarter result, with Mr Andersen enthusing over the three-month performance, alternatively labelling it as "super strong," "stellar," and "extraordinarily strong."
The forwarder reported revenue of US$8.6 billion in the first quarter, an increase of 77 per cent year over year, while earnings before interest and taxes (EBIT) doubled to just shy of $1 billion, equivalent to the full-year 2019 EBIT result.
In ocean freight, volume handled by DSV was up 15 per cent at 668,000 TEU, while gross profit per TEU increased 20 per cent to $838. Air freight volume rose 22 per cent to 411,000 tonnes, while gross profit per tonne in the first quarter was up 23.3 per cent to $1,626.
The air freight volume included the contribution of Agility's Global Integrated Logistics (GIL) that was acquired last year for $4.2 billion. Excluding GIL, DSV air cargo volume was up 2 per cent.
A softening of volume and rates has been built into DSV's expectations for the full year, although the company still increased its prior guidance for 2022 EBIT by 15 per cent to between $2.97 billion and $3.25 billion.
DSV has made significant acquisitions in the past few years - UTi in 2015 for $1.35 billion, Panalpina in 2019 for $4.6 billion, and GIL - but Andersen said the continuing profitability would not be allocated purely for large takeovers.
"We are not building a war chest just to make acquisitions," he said, pointing to the forwarder's $850 million share buyback program announced with the first-quarter results, and a total allocation of $1.5 billion in dividends and share buybacks allocated to shareholders in 2022.
"We are in no hurry to acquire, but we are more committed than ever before to take part in the consolidation of this fragmented industry," he added, leaving the acquisitions door wide open.