Status Report

Economic Environment


In 2018, Kuehne + Nagel expanded its global leading position in Seafreight with 4.7 million TEUs managed in container traffic. The Group confirmed with 1.7 million tons in Airfreight its global number 2 position, reported on significant growth and profitability improvement in Overland and gained substantial business in Contract Logistics.

Kuehne + Nagel has specialised in complex end-to-end supply chain solutions, which are managed in the global network of Logistics Control Towers and performed in cooperation with all Kuehne + Nagel business units. These integrated logistics solutions not only increase transparency and efficiency in the supply chain but also optimise information flows between the participating partners and customers. This allows Kuehne + Nagel to support its customers’ value chain, a decisive factor in a highly competitive and fast growing market.

In 2018, the world economy grew by estimated 3.0 per cent (2017: 3.1 per cent) due to continued good levels of industrial activities and a robust global trade. The United States, Japan, China, and the European Union contributed to the global growth. However, the year was characterized by a slowing down growth dynamic due to first signs of the implementation of trade barriers in the second quarter and profit warnings from companies in the automotive and high tech industry that were published in the fourth quarter. This uncertainty has also impacted the outlook for 2019 that is more cautious for the growth in trade volumes based on the fear for new trade tariffs and the uncertainty of implications from Brexit.

Mature economies have shown signs of a decline in growth rates in the light of these heightened policy uncertainties resulting in a slightly reduced growth rate for 2018 at 2.2 per cent versus 2.3 per cent in 2017.

Emerging markets are estimated to have grown by 4.3 per cent in 2017 and 4.2 per cent in 2018, to a large extent based on stable conditions for large commodity shippers and increased domestic consumption. (Based on: World Bank, Global Economic Prospects, January 2019)

In 2018, the international logistics industry experienced world trade volume growth below the level of 2017. The global world trade volume growth has slowed to 4.0 per cent in 2018 versus 5.3 per cent in 2017.

Advanced economies’ world trade volume grew at 4.3 per cent in 2017 and is estimated at 3.2 per cent in 2018. In emerging markets and developing economies these indicators were at 7.1 per cent in 2017 and at  5.4 per cent in 2018. (Based on: IMF, World Economic Outlook Update, January 2019)

On the carrier side, the market in 2018 was characterised by volatile freight rates as a result of the continued imbalance of capacity and demand of carriers and ongoing consolidation in the shipping industry.

Kuehne + Nagel‘s volume growth was significantly above the market despite the changes in market growth dynamics in 2018, resulting in an overall strong turnover growth of 11.7 per cent. These gains in market share were made possible through the industry specific service offering in all business units. Against margin pressure due to consolidation in the supplier market and a more competitive market environment, the Group was able to increase gross profit by 9.8 per cent and grew its EBIT by 5.3 per cent in 2018.

The Group’s strategy Roadmap 2022 was presented at the Capital Markets Day 2017 with the focus on creating superior value through customer excellence and expansion into new services and leveraging the Group’s strengths to extend from supply chain to value chain services. The ambition is formulated as growing twice as fast as the market in the Group’s core business, creating substantial growth in gross profit with new value chain services and selective acquisitions to leverage synergies and know-how.

The overall aim is to reach an EBIT to gross profit margin (conversion rate) for the entire Group in excess of 16 per cent. The Group will reach this through cost control to ascertain leverage benefits, digitisation as game changer for productivity improvements, investments in new opportunities connected to value expansion and acquisitions as an accelerator for reaching the strategic goals.