IATA STATS TELL A SORRY TALE

Until Bush/Obama started talking $trillions in bail out money a $billion sounded a hefty sum of money. It was only three or fours years ago that Exxon Mobil, the world’s largest company, earned a colossal $40 billion in one year and the world was aghast. When IATA announced this week that the airlines would collectively lose a shade under $5 billion in 2009, it hardly raised an eyebrow.

In our sector of the industry there isn’t one trade lane that is not recording huge declines in volumes. This week one of the larger forwarders, Kuehne and Nagel, completed its first attack at reducing overhead by cutting off hundreds from its workforce from around the world. DHL, Schenkers and Panalpina are not far behind in taking action either. These European forwarders always enjoyed Germany’s export-base as the anchor of their businesses. With Germany the most affected nation in Europe in terms of decline in business activity, these companies have had to act quickly in adjusting to the new world of trade. Japanese forwarders have been slower to react, but their country’s story is even worse than Germany. Japanese exports have taken a 30% (and growing) hit since December and unlike the USA where the internal economy creates most of the country’s wealth, Japan is reliant upon exports to keep its wheels turning. Japanese forwarders have never become global in their thinking and although most of the big three (Nippon, Kintetsu and Yusen) have offices around the world their activity is centered on looking after Japanese client companies. When it happens, don’t be too surprised to see Japanese forwarders shrinking in size to levels when Japan was in its infancy as an export powerhouse. There definitely is going to be a lot of carnage out there in 2009.

We are still betting on the small/mid-sized forwarders to weather the storm the best and when things eventually pick up, they will be better positioned to take advantage of the opportunities. We have a vested interest, so please excuse our bias!

Tags: AirFreight, Bush, DHL, Exxon Mobil, Forwarders, Germany, Huehne and Nagel, IATA, Japan, Obama, Panalpina, Schenkers