Irish Freight & Logistics Monthly – Aug ’11

K+N Profits Soar With 25% Sales Growth
The resilience of Ireland’s exporting economy is revealed in the latest results for one of Ireland’s largest freight, shipping and logistics companies, Kuehne & Nagel. The company, which is based at Dublin Airport, has grown sales by 25pc in one year, the latest figures show, with the Irish operation chipping in a €6m dividend to its Swiss parent, one of the largest logistics firms in the world.

The Irish operation, which provides a range of services to Irish companies and multinationals, produced a pre-tax profit of €4.1m, up from €2.9m in the previous year. Sales rose to €110m, from €86.3m, with the vast majority of the revenues coming via local Irish operations. The results cover 2010. Revenues from Ireland went from €69m to €89m, with the company employing 175 people in the Irish operation.

Kuehne & Nagel Ireland operates at eight locations across the country, offering national and international clients a range of services. The global company employs over 50,000 people and trades heavily in its use of IT in freight forwarding and shipping. Exports have been identified as the key driver of the Irish economy over the next few years as domestic demand contracts even further. Ireland has one of the largest export sectors (as a percentage of GDP) in Europe, with much of this driven by chemicals, IT and pharmaceuticals.

Profits Rise 30% for Ceva
Ceva Logistics has posted a 30 per cent rise in first half EBITDA to 152 million euros, after winning new business worth one billion euros. First half sales were up five per cent to 3.4bn euros. In line with market trends, the group saw some softening of the global freight market, driven mainly by lower airfreight volumes predominantly in the Americas and Asia Pacific regions.

Sales in the Contract Logistics business were up nine per cent year-on-year at constant exchange rates. This growth was experienced in all regions, driven by new contract wins and the continued expansion of services offered to existing customers.

John Pattullo, chief executive said: “Despite the industry-wide softening of freight volumes, we have increased freight management business with our global customers and we have experienced growth in our contract logistics business in all regions. Our new business performance in the period has been excellent with significant wins and contract extensions.”

In the second quarter, the group also limited its net working capital and which is now 19m euros compared to 57m euros at the end of quarter two 2010. The group’s future plans are to continue growth, specifically investing for growth in China.

Irish trucks being seized in UK ports
Irish lorries are being impounded in west coast UK ports by the government, which claims Irish hauliers are operating illegal cabotage. A number of Irish companies send unaccompanied trailers to Liverpool, Fishguard, Pembroke and Holyhead, where they are collected by Irish drivers who have stayed overnight near the ports. The UK government claims the trailers should be collected by British hauliers.

“Irish drivers often take a load across the Irish sea and then stay in Britain to collect more Irish trailers,” explained Eoin Gavin, President of the Irish Road Haulage Association (IRHA). ”It doesn’t make sense for them to keep going back and forth when they know they will have more loads for Britain. The stay in the UK also acts as an official break from working hours.”
The IRHA is lobbying the Irish government to persuade Westminster to classify the four relevant ports as international, so that existing cabotage rules will not apply. At the moment, an Irish haulier is allowed to make three journeys in the UK – but any trip involving a UK port is considered one of those three trips. If the ports were classified as international, they wouldn’t count, so collection from, and drop-off at, a port would not be seen as domestic movements.
“Our members do not want to take UK business away. We are only collecting Irish loads which we would be carrying anyway, added Gavin. ”We believe the UK government is being protectionist.”

£1m aluminium contract for P&O Ferrymasters
Aluminium rolling firm Novelis has awarded contract worth £1 million a year to P&O Ferrymasters to transport goods from its factories in Göttingen, Nachterstedt, and Neuss in Germany. The operator will handle 1,000 loads per year. Its volumes to the UK and Ireland are increasing, and it now also handles distribution to Belgium and France.

The pilot project consolidates loads in Germany into payloads of up to 28 tonnes ahead of shipment, to make use of the greater vehicle weight limits in the UK and Ireland compared Germany. This scheme is expected to produce save £1 million based on volumes of 1300-1800 tonnes per month.

Novelis produces foil and flat rolled aluminium products for industries such as automotive, transport, packaging, construction and printing. The contract represents a four-fold increase in business with the company for P&O Ferrymasters.

Rhenus Acquire Wincantons mainland Europe operation
The sale comprises Wincanton’s German intermodal and contract logistic activities, which operate from 38 locations, and its businesses in France, which provide contract logistics and transport services and operate from 30 locations.

These businesses employ approximately 3,000 people, who will transfer to Rhenus upon completion of the sale, which is subject to anti-trust clearance and the approval of shareholders.

Wincanton CEO Eric Born said: “The sale of our remaining businesses in mainland Europe to Rhenus will enable us to focus on developing our leading position in the UK market, where we have greater scale and see significant potential for profitable growth.

“Over the next few weeks, we will work together to ensure that service levels to our customers are maintained during the transition period.” Investment bank JP Morgan Cazenove said it viewed the sale as a positive step for Wincanton in terms of simplifying the business and reducing the debt levels with the proceeds. “The exit from the loss-making French operations is particularly encouraging, in our view,” it said. “Overall, longer-term, we believe the group has an opportunity to grow its core UK and Ireland operations as well as deliver on the targeted 10% annual profit growth target for the newer businesses, excluding its Foodservice business. “With management’s focus on paying down debt, increased financial flexibility should allow for investment in these areas in the medium term.”

In the 12 months to 31 March 2011, the sold businesses generated revenues of €558 million and operating profit of €4.1 million on gross assets worth €181 million, with the French business loss-making in that period. Wincanton’s Foodservice business in the UK is now the only remaining underperforming business.

The deal follows the sale in June of Wincanton’s German road network and businesses in Poland, Hungary, Czech Republic and Slovakia to Raben Group, and its logistics operations in the Netherlands to JCL.

It said it had decided to sell these businesses to focus on strengthening its leading position in markets where it has significant scale and infrastructure, and to develop areas with higher profit growth potential.

Containerships Restructure Services
Over the next few weeks short sea carrier Containerships will implement some significant changes to their services. Improvements on the services to and from Finland, The Baltic States and Russia will be counterbalanced by termination of the North Europe / Mediterranean Service.

An improved 9-vessel system is being introduced in North Europe. It will be operational as from beginning of September. The schedules will provide for improved frequency and transit time on Containerships’ key trades in the area. One of the major changes relates to the increased frequency of services linking the UK and the Benelux to Finland and Russia with up to 4 weekly connections and more direct links than previously.

Due to overall difficult economic climate which has resulted in reduced trade between the North European and Mediterranean economies, Containerships has taken the decision to stop its North Europe / Mediterranean service. The schedule of the last southbound vessel (into Med ports) will be MV Nordic Stani with ETS from Sheerness (22/08), Teesport (24/08) and Rotterdam (25/08), whilst the last northbound vessel (from Med ports): MV Nordic Stani with ETS from Piraeus (03/09), Istanbul (05/09), Izmir (06/09)

The termination of the North Europe / East Med link will not affect the Intra Med service that Containerships provide. This will continue to link Turkey, Egypt, Libya and Tunisia. In the coming months, further develop its Intra Med coverage will be introduced.