DSV Panalpina confirms soft outlook for 2020, coronavirus uncertainty — Panjiva
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DSV Panalpina confirms soft outlook for 2020, coronavirus uncertainty

China 2205 Corp - Forwarders 198 Earnings 398 Global 957 Mode - Airfreight 140 Mode - Containerized 1132 Mode - Seaborne 1438 Theme - Disasters 79 U.S. 3973

Freight forwarder DSV Panalpina reported revenue growth of 43.8% year over year in Q4. That was entirely due to the first time consolidation of Panalpina, with the underlying revenue position being a contraction of 1.1% year over year. The result was 6.0% percentage points slower than analysts had expected according to S&P Global Market Intelligence figures. 

Airfreight handled by DSV fell 3.0% year over year while ocean freight rose by 5.5%. The former isn’t a surprise given global airfreight fell by 2.7% year over year in December and by 2.5% on average in Q4, Panjiva’s analysis of IATA data shows.

The better news is that profitability was better than expected with underlying gross profit per ton for ocean freight having risen 10.9% and oceanfreight by 3.8%.

GLOBAL AIRFREIGHT DECLINED THROUGHOUT 2019, RATE SLOWING

Chart segments change in global airfreight by domicile of airline. Calculations based on IATA data. Source: Panjiva

DSV’s outlook is fairly muted. The firm’s outlook is based on OECD and IMF forecasts for global trade activity which count on a 2% to 3% expansion in 2020 versus 2019. The firm has stated that “our normal ambition is to gain market share in all the markets in which we operate. However, due to the ongoing integration, it is likely that organic volume growth (DSV legacy business) will be close to the underlying market. For Panalpina legacy business, there is a risk of a 5% volume loss“. 

The first quarter could run below this rate, with Jens Bjørn Andersen CEO stating “currently the coronavirus situation is impacting global supply chains and creating uncertainty“. 

As discussed in Panjiva’s research of Feb. 5, the impact on Transpacific shipping has likely already begun, though judging the precise impact on a year-over-year basis in January and February is clouded by the lunar new year.

Panjiva’s data shows 32.1% of DSV-Panalpina’s U.S. seaborne imports came from Chinese ports in 2019. Imports from China in Q4 fell by 27.5% year over year while preliminary figures for January show a 31.8% decline. By contrast imports from all other ports fell by 0.1% in Q4 and by 4.9% in January. 

As a consequence DSV Panalpina’s volumes may have fallen by 15.3% in January including a 4.2% slide in shipments from Asia ex-China, a 0.6% slip in shipments from Europe and a 25.1% drop in shipments from the rest of the world. 

NEW YEAR, SAME PROBLEMS AS CHINA VOLUMES SLIDE

Chart segments change in U.S. seaborne containerized freight imports handled by DSV Panalpina by origin port. Source: Panjiva

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