Swiss freight forwarder Panalpina achieved steady growth in ocean freight handling on the back of freight management contracts for large industrial customers and also improved its profitability in the first quarter.
The volume of cargo under its management rose by 5% to 387,000 teu, driven by “more business wins in managed solutions”, it said.
Managed solutions refers to a mode of operation where the freight forwarder typically only takes care of booking, documentation and tracking/coordination while the freight contracts are being negotiated directly by the beneficial cargo owners with the shipping lines.
The increase in volume was greater than average market growth in loaded container traffic which is estimated at 3% for the first three months.
Overall gross profit from ocean freight operations was slightly down to CHF199 million (USD124.3 million) chiefly due to the appreciation of the Swiss franc versus the US Dollar.
However, gross profit margins per teu dropped even faster (-8%) than its currency appreciated, which may indicate a lower profitability of its large new freight management contracts.
Even so, Panalpina was apparently successful in improving the productivity of its ocean freight division, as illustrated by a slight increase of its operating profit (EBIT) in the division to CHF4.5 million. Accordingly, the profit margin (EBIT/Gross Profit) improved from 3.2% to 3.8%.
A turnaround into profitability in its contract logistics division helped Panalpina to improve its group net profit by around 10% to CHF19.6Million in the first quarter.