”We are not worried,” says Kuehne + Nagel’s CEO despite new Covid lockdowns and declines in freight volumes and global GDP. Private consumption will determine growth.
Freight volumes decrease in the logistics sector, fresh Covid lockdowns in China prompt new bottlenecks in global supply chains, and the war in Ukraine reduces economic growth, but Kuehne + Nagel’s senior management isn’t worried about this year’s development.
For, even though the outlook might be gloomy, economists still expect the global economy to grow, and Covid-related problems at ports in Shanghai could be resolved just as quickly as they appeared, says Kuehne + Nagel Chief Executive Detlef Trefzger.
”We mustn’t underestimate China’s power and the revitalization of trade in China. It will depend on production and manufacturing capacity, and commodities play an important role, but we’re going to see that we can return to normal in a few weeks, and I’m not exaggerating,” said Trefzger Tuesday during a teleconference for equity analysts.
”We are not worried,” said the CEO, referring to the fact that China on several occasions recovered quickly after a lockdown during the pandemic.
Kuehne + Nagel’s revenue grew 68 percent in the first quarter compared to the same period last year, and within sea freight, the group doubled its revenue and tripled its operating result to CHF 621m (USD 644m) despite declining container volumes.
The result for air freight soared as well, with revenue at CHF 3.1bn and the operating result (EBIT) at CHF 425m, even though closing the air space above Ukraine and Russia has reduced air freight capacity because planes aren’t allowed to fly any longer.
Households to determine growth
According to Trefzger, the long anticipated transition in private consumption started kicking in during the third quarter last year, when demand for services began to rise in step with the waning pandemic. Demand for goods remains strong, however, and private consumption will determine the year’s economic growth.
”We are currently seeing no major changes [to demand, -ed.]. The only question is whether the spending power of households will remain so strong globally and particularly in the US and Europe […] that it could drive a certain growth in GDP?” he asked, continuing:
”And we’re not talking about GDP growth of 3.5 percent, ladies and gentlemen. We’re not talking about a depression, we’re not talking about negative GDP growth.”
Unless the current situation changes significantly, Kuehne + Nagel expects an annual result for 2022 ”on par with the preceding [year, -ed.],” said Trefzger.
