Conf call redux: does Kuehne + Nagel know its toys from its teus?
Yo bro, where’s the growth?
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By Alex Lennane
Large-scale job cuts by forwarders are expected to begin to bite, as previously “hidden” poor results can no longer be disguised.
According to sources in the forwarding industry, “the wheels have fallen off”.
One insider at a major forwarder told The Loadstar: “During the last two years every country has been “banking money” from their results each month, and reporting numbers back to head office to only meet budgets; anything above budget has been hidden in the country’s balance sheets.
“Over the last 12 months, when the market has been deteriorating and results have come under pressure, each country has dipped into these reserves and been artificially bumping up their results each month.”
The source added that head office had not been aware of the extent to which it has been happening.
“In the last two months, these reserves have been mostly exhausted and now true results are being seen – it’s clear someone at the top has pushed the big red panic button.”
Another forwarding source agreed it was happening “across the board”, adding: “It’s happening, I suspect, at many of the multinationals. K+N is shedding staff quicker than imaginable. I hear the same at DHL Global Forwarding – and there is a core reason behind it.
“Even the independent LSPs are seeing this and, if you look at profit reductions year on year, some of the figures that have now normalised from financial submissions are lower than pre-pandemic. After the party everyone was having until the middle of 2022, there is a 12-month drag, and it is now all coming out and being reported, with nowhere to hide.
“It will be absolute turmoil over the coming 12 months, with reduced margins, reduced profits and huge overheads that have been taken on, that all needs paying for – or releasing.”
Ceva Logistics, for one, has seen much management upheaval, as revealed by Loadstar Premium. It has appointed new regional heads, who according to one source, “have clearly been given a mandate to cut costs aggressively and urgently”.
The source claimed more than 100 staff will be cut from Ceva’s LATAM operations before the end of the year, and a similar number in Asia Pacific. Europe will be making cuts too.
“There are apparently further cost reductions and possible structure changes, all coming before the end of the year. No doubt further changes will be required when the integration with Bolloré actually begins,” said the source.
Ceva is also said to have implemented a travel ban and hiring freeze – but has approved travel for meeting ocean carriers in advance of new contracts.
“It’s a surprise, when there is such a push to reduce costs, and especially when Ceva is linked so heavily to CMA CGM – meetings with other carriers are almost pointless,” said the source.
The source said that, despite the hiring freeze which has hit operations and customer services, with teams struggling to keep up with the workload, the same freeze does not seem to be true for management: “We see new and additional executives being appointed all the time.”
The ‘hiring freeze’ certainly seems localised. Yesterday, Ceva chief executive Mathieu Friedberg wrote on LinkedIn: “These are challenges times for sure, and the lack of qualified workers in the logistics and supply chain industry looms large in many local and regional economies. I’m really proud of the work we’re doing at Ceva Logistics to attract and retain talent across our global facilities.”
The source agreed that similar moves were happening at other major forwarders, but added: “I don’t think it’s the same as at Ceva.
“Ceva only made profits in the last couple of years due to the extraordinary market conditions. Now that the market has changed, we are under huge financial pressure, hence all the cost-cutting.
“In terms of the other multinationals, the likes of DHL and K+N are still performing quite well, Ceva is definitely performing worse,” claimed the source.
Another forwarder said: “2024 is going to be the worst year for the past two decades in logistics – that I guarantee you.”
Ceva did not respond to requests for comment.
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