The Kuehne+Nagel Group (the Group) delivered an extraordinary strong result in 2022 in a business environment characterised by the uncertainties of the Ukraine war, macroeconomic slowdown, interest rate increases, the rebound of inflation and highly strained supply chains. The Group confirmed its global number one position in both Sea Logistics with 4.4 million TEUs managed in container traffic and Air Logistics with 2.2 million tons of volume. Results in Road Logistics and Contract Logistics increased significantly over the course of the year and contributed consistently to the success of the Group.
Kuehne+Nagel’s service offering is specialised in managing complex end-to-end supply chain solutions within a global network, controlled by Logistics Control Towers and executed by all Kuehne+Nagel business units. These integrated logistics solutions not only increase transparency and efficiency in the supply chain but also optimise the information flow between the service partners and customers. This allows Kuehne+Nagel to support and add value to its customers’ value chain, a key factor in a highly competitive and fast growing market. Against the backdrop of the uncertain economic development during the year 2022, these capabilities have enabled Kuehne+Nagel to offer problem solving competence for customers.
In 2022, the world economy experienced a global economic deterioration with an estimated growth of 2.9 per cent (2021: 5.9 per cent growth). The recovery of the global economy was negatively impacted by the Ukraine war, inflation and the energy crisis. For 2023, global growth of 1.7 per cent is forecasted. (Based on: World Bank, Global Economic Prospects, January 2023)
In 2022, the international logistics industry experienced world trade volume growth below the level of 2021 with an estimated increase of 5.4 per cent in 2022 versus 10.4 per cent in 2021. (Based on: IMF, World Economic Outlook Update, January 2023)
Again, logistics operations were shattered by disruptive events in global supply chains – some due to the war in Ukraine and some due to operational bottlenecks in carrier, port and trucking operations. The Group has decided to stop operations in Russia, Belarus, Azerbaijan and Kazakhstan as a reaction to the war in Ukraine.
On the sea and airfreight carrier side, the market in 2022 was characterised by a significant increase in freight capacities caused by a slowdown in economic activities especially in the last quarter of 2022. This and an unexpected surge in inflation drove a severe cost increase effect with respect to the Group’s operational efforts to execute shipments, connected with continuous pressure on gross margins.
Kuehne+Nagel‘s volume grew in line with the declining market. In combination with the large increase of freight rates at the beginning of the year, net turnover was 20.1 per cent greater than in 2021. Gross profit increased by 12.3 per cent and the Group was able to increase EBIT by 27.7 per cent in 2022.
The Group continued executing in line with its strategy Roadmap 2022 presented at the Capital Markets Day 2017 with a focus on creating additional value through customer excellence, expansion into new services and leveraging the Group’s strengths to extend from supply chain to value chain services. The ambition was to create sustainable growth in gross profit with new value chain services and selective acquisitions to leverage synergies and expertise. Against the backdrop of the extraordinary economic situation in 2022, the targets of the strategy have been achieved and even over-achieved based on the solid foundation laid throughout the last years but also benefiting from the extraordinary market conditions in 2022.
The overall aim was to reach an EBIT to gross profit margin (conversion rate) for the entire Group in excess of 16 per cent by 2022 which has been over-achieved with 34 per cent conversion rate. In the last year, as in the two years before, the Group had to repeatedly shift the focus to the operational challenges to ensure and deliver customer excellence. However, the Group has delivered on the program and has reached its ambitions in digitisation as a game changer for productivity and market offering, investments in new opportunities connected to value expansion, acquisitions as an accelerator and continuous service excellence for customers.
The Group will communicate a new strategy for the time frame until 2026 and a vision for 2030 at the Capital Markets Day on March 1, 2023 in London.
As a signatory of the UN Global Compact, Kuehne+Nagel continues to strive to be a frontrunner in sustainable logistics. The Group has set ambitious, science-based greenhouse gas emission reduction goals for its own operations and also supports customers with their transition to a low and zero carbon business model. As one of the world’s leading logistics providers, the Group acknowledges its responsibility to address climate change, manage climate-related risks and opportunities and develop solutions that decarbonise global supply chains.
In a changing world of work, the Group aims to create a workplace where every employee feels a sense of belonging and believes in the innovative power of diversity.
The Group’s sustainability report addresses in detail Kuehne+Nagel’s commitment to the principles of sustainable business practices and performance for the respective calendar year.