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DSV set to root out low-margin business as volumes decline in Q3

Air and sea freight volumes at the world's largest freight forwarder, DSV, saw a decline in the third quarter, but revenues grew more than 15% year on year, due to elevated ocean freight rates. According to third-quarter results released today, DSV posted group revenue of DKr71.9bn ($10.8bn), up 10.5% year on year, and an EBIT before special items of DKr5.4bn, up 19.5% year on year. Its Air & Sea forwarding division reported a 3% decline in air freight tonnage and ocean freight teu, but a 15.9% increase in combined revenue, to DKr45.6bn, while EBIT before special items was up 19.8% year on year, to just under DKr4.3bn. DSV also noted that over the first nine months of the year, its sea freight volumes had grown 13%, but attributed the Q3 decline to a mixture of "weaker commercial performance on the APAC-Europe tradelane and the effect of yield management initiatives. It said: "The quarterly decline was greater than expected, but stabilised during the period. "Performance was impacted by weak demand on Middle East-related tradelanes, where disruptions affected activity, while the APAC-Europe tradelane continued to be affected by integration-related commercial impacts in certain countries, particularly in Germany." Chief executive Jens Lund told analysts on DSV's earnings call this morning the firm had spent the quarter "sanitising" its lower-paying and loss-making shipper accounts. "I would say of the 3% decline, about two percentage points were sanitising and the remaining 1% a business decline, certainly in air freight," he said. Third-quarter air freight volumes also fell 3%, year on year, to 560,890 tonnes, although over the nine-month period they were up 15% year on year. The company explained: "Despite a positive volume trend during the quarter, the decline was larger than expected. "Volumes were impacted by yield-management initiatives, conversion from air freight to sea freight, lower-than expected activity in Europe and reduced e-commerce volumes on the APAC-Europe tradelane. "This was partially offset by growth within the technology business in APAC and North America. Middle East-related tradelanes remained weak, due to the ongoing conflict in the region." Mr Lund added that between 20% and 25% of volumes were now running through the Tango TMS inherited through DSV's acquisition of Schenker, the remainder being handled via the CargoWise system. "It's predominantly the larger clients that we have on that [Tango] platform - the more complex ones. "We've not started any roll-out yet - we've said that we want to improve Tango, and it will also co-exist with CargoWise for quite a while, so that we de-risk the roll-out." Meanwhile the Road Transport division was clearly the group's worst performer: revenue essentially flat, at DKr23.4bn; while EBIT before special items decreased 35.1% year on year, to DKr526m, on the back of falling volumes and "a period with operational issues". DSV said: "However, the operational performance normalised at the end of the quarter and focus is now shifting to improving productivity and commercial performance." It added: "While the Schenker integration continued during the quarter, the synergies are expected to be delayed into 2027." In contrast, its Contract Logistics arm saw revenue grow 7.3%, to DKr14.3bn, while EBIT before special items increased 50.3%, to DKr1.7bn, following "productivity and capacity improvements, including consolidation of low-margin sites". Mr Lund said: "Where you have activities in warehouses that basically operate at a very low margin, and sometimes even at a minus margin, all these things are not delivering the return we require - we are basically terminating this volume now. "That's part of the CL improvement - you take some business out that maybe loses money, or has very low margin, and you replace it with business that operates at a normal margin. And look at what an impact it has," he added.

Hong Kong air cargo volumes bounce back in September

The world's busiest cargo airport, Hong Kong International, reported an increase in volumes in September following two months of declines. According to figures released today, the airport handled 433,000 tonnes of cargo in September, an increase of 6.3% compared with last year. This improvement follows year-on-year declines of 1.2% in August and 1.9% in July, partly as a result of the European Union's decision to add a €3 charge for packages worth less than €150 as it sought to tackle the impact of large volumes of low-value e-commerce goods entering the bloc. The Airport Authority of Hong Kong (AAHK) said that September's increase was led by transhipments and imports, which increased by 26.9% and 9.2% respectively. "Southeast Asia and the Chinese Mainland were the main growth drivers, offsetting the decline in volume in Europe following the removal of the EU's duty-free de minimis exemption in July," AAHK said. Over the first nine months of the year, cargo volumes have improved by 3.1% against 2025 levels to 3.8m tonnes. Changi on the up Hong Kong International was not the only airport in Asia to report strong cargo volumes in September as Singapore's Changi continued its good run of form. The airport saw cargo volumes increase by 9.7% year on year in September to 191,000 tonnes. Over the first three quarters of the year, cargo volumes at the airport are up 8.7% year on year to 1.7m tonnes. The growth was driven by healthy demand across export and import flows, particularly for AI-related semiconductor and electronics shipments. China, the US, Australia, Hong Kong and India were the airport's largest cargo markets during the quarter. Meanwhile, SF Airlines launched a new Shanghai-Singapore service in September, complementing its existing Shenzhen operations and strengthening connectivity for high-value technology shipments.

Pressure remains on China-EU e-commerce volumes as new charge looms

China's e-commerce volumes continued to decline in September, while the European Union is set to add another charge for low-cost packages being imported into the bloc in November to pile on the pressure. Figures from consultant Aevean show that low-value e-commerce tonnes flown from China to the EU were down by 50% year on year in September. This has led to an overall decline in low-value Chinese e-commerce air exports of 4% year on year over the first nine months of the year, while in September the decline reached 19% compared with a year ago. While volume declines to Europe led the way in September, there was also a 5% fall from China to the rest of the Asia Pacific region, 4% to North America and 13% to the Middle East and South Asia. Aevean managing director Marco Bloemen said that the 50% drop-off to Europe reflected the EU's decision to add a €3 duty per product type for each parcel with a value of less than €150 being imported into the bloc in July. Bloemen pointed out that a second €2 handling charge is set to be added on 1 November. Dutch advisory firm Holdwise said the €2 charge will also be by product type. As an example of how the extra charge will push up the cost of e-commerce goods, Holdwise calculated the cost of bringing in a China-made T-shirt and watch directly from China compared with stock held in the Netherlands. Its calculations show that a package containing a watch and T-shirt would cost around €9.50 more to process directly from China. "As a parcel from outside the EU, [it is] €19.50 per order. That is €6 duty, €4 handling fee, €7 for postage and customs clearance, and €2.50 for storage and packing," the company explained. "From stock in the Netherlands, [it is] €10.00 per order. That is €2 in normal duty, €0.50 for seafreight and clearance, €2.50 for storage and packing, and €5 for delivery in the EU." Holdwise added that in September and August, Dutch Customs reported about 70% fewer e-commerce declaration lines compared with the same months a year earlier.