UTi Worldwide’s latest earnings mirrors a struggling freight forwarding market
Article by Cathy Morrow Roberson from Transport Intelligence - Published on April 3rd 2013
UTi Worldwide’s latest earnings report echoed a similar theme – declining airfreight revenue and modal shift from air to ocean. However, its Distribution segment proved to be a positive in an otherwise negative earnings report.
For the quarter ending January 31, 2013, total revenue declined almost 5% to $1.1bn. Airfreight forwarding revenue declined almost 11%; Ocean freight revenue increased 1.5%; Contract logistics declined almost 10% and Distribution increased almost 6%.
Freight forwarding remains the company’s largest segment, comprising 58% of total revenue. Like other freight forwarders, UTi also noted market pricing negatively affected its revenue. For the fourth quarter, net revenue per kilo in airfreight declined 15% while net revenue per TEU in ocean freight declined 13%.
Although many major freight forwarders noted declines in airfreight tonnage for fourth quarter, UTi’s decline of almost 11% was a bit alarming. This may be due to the time period of the company’s earnings which is for November through January as compared to October through December for most other providers.
Airfreight Tonnage Comparison by YoY Percentage Change
Source: Ti Dashboard
Ocean Freight Tonnage Comparison by YoY Percentage Change
Source: Ti Dashboard
Overall, freight forwarders continue to face a tough market – despite pockets of optimism, the overall global economy remains questionable, tradelane shifts, capacity shifts/cuts and modal shifts are all affecting the freight forwarding market. As shippers opt for cost over time to ship goods, will a consolidation within the freight forwarding market occur or will we see new solutions as freight forwarding companies strive to differentiate themselves from the rest of the pack?