📊 Mixed Q4 earnings reported by supply chain and logistics companies

Irbis Index January 2024

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News

AIT Worldwide Logistics Acquires Global Transport Solutions Group AIT Worldwide Logistics has completed a significant acquisition by taking over Global Transport Solutions Group (GTS), a European-based logistics company specializing in marine spare parts.

• This move marks AIT's largest acquisition to date and is seen as a strategic expansion of its global footprint and service offerings.

• GTS, headquartered in the Netherlands, is known for its expertise in "door-to-deck" logistics for ship owners and managers.

• The company has a strong presence with over 600 employees across 16 locations in Asia, Europe, the Middle East, and North America, serving more than 2,000 ports worldwide.

• The acquisition brings new geographic presence for AIT in Greece, Japan, and the Nordic region, while also enhancing its capacity and expertise in the Netherlands and Singapore.

• While the terms of the acquisition have not been disclosed, the deal is part of AIT's aggressive expansion strategy, which has included several other acquisitions in 2023. (link)

Trucking Sector Suffers as Retailers Destock Pandemic Stockpiles The trucking sector is experiencing a significant downturn as companies move to destock their pandemic stockpiles, leading to less demand for freight transportation.

• The U.S. truck freight market ended 2023 with declines in both shipment volume and spending, according to the U.S. Bank Freight Payment Index.

• Compared to the same period in 2022, fourth quarter shipment volume was down 15.7%, and spending by shippers contracted 13.5%.

• The freight market is expected to continue shrinking and restraining into Q4 and early 2024 as it rebalances following the economic surge driven by the pandemic and oversupply.

• Retailers are likely to ramp up their inventories closer to when they're needed, continuing the trend of stocking up closer to peak demand periods rather than holding excess stock.

• Despite the current downturn, some positive signals are emerging. Retail inventories are starting to normalize, and the number of trucking firms exiting the market has started to slow as rates and capacity stabilize. (link)

JD Logistics Invests in Hydrogen-Powered Heavy-Duty Trucks JD Logistics, the logistics arm of JD.com, has announced a significant investment in hydrogen-powered heavy-duty trucks, marking a pioneering move in China's logistics industry.

• This initiative is set to reduce carbon dioxide emissions by approximately 1,000 tons per year.

• The new fleet comprises 9.6-meter heavy-duty logistics trucks, each with an 18-ton carrying capacity.

• These hydrogen vehicles are designed for high efficiency, capable of traveling 400 kilometers on a single 10-minute refueling session.

• They can operate in extreme temperatures ranging from -30°C to 45°C, offering advantages over traditional gasoline and electric vehicles, such as superior environmental adaptability and a longer service life.

• JD Logistics is also expanding its use of electric logistics vehicles, including battery swap vehicles, electric tractors, and methanol-powered small trucks, and has extensively used LNG clean energy logistics vehicles in Northwest China.

• The company has provided green transportation solutions for industry leaders like BMW and Amway (China) and is committed to a 'supply chain shared carbon footprint' approach as the first logistics company in China to establish science-based targets. (link)

Evergreen boosts holdings in box terminals with $532m investment Evergreen, a major player in the container shipping industry, has announced investments totaling TW$16.7bn ($532m), aimed at boosting its holdings in box terminals.

• The investments include the acquisition of additional shares in terminal assets in Taipei and Colombo ports.

• The company has also acquired a 5% stake in South Asia Gateway Terminals, which operates a facility in Sri Lanka’s Colombo port, for $19.8m.

• Additionally, Evergreen is taking over its Italian affiliate, Italia Marittima (formerly Lloyd Triestino), for €405m ($438m).

• Evergreen's general manager, Wu Kuang-hui, stated that these acquisitions would reduce the company's operating costs and enhance its competitiveness.

• He also noted that the ongoing Red Sea crisis and the Panama Canal's issues have distorted supply-demand dynamics and vessel arrivals, which will likely continue for several months.

• This situation will affect terminal operations' speed and extend the number of days of container usage, necessitating pre-emptive measures to avoid equipment shortages. (link)

Earnings

Hub Group

• Q4 Revenue: $985 million, a 23% decrease year-over-year.

• Logistics Segment Revenue: $438 million, a 16% decrease from the previous year.

• Reason for Decrease: The company attributed the decline to difficult market conditions, high inventory levels, and excess market capacity. (link)

UPS

• Q4 Consolidated Revenues: $24.9 billion, a 7.8% decrease from Q4 2022.

• Average Daily Volume: Decreased by 7.4%.

• Supply Chain Solutions Segment Revenue: $3,396 million.

• Strategic Alternatives: The company is exploring strategic alternatives for its truckload brokerage business, Coyote Logistics, which contributed significantly to the decline in the year's earnings. (link)

GXO Logistics

• Q4 Revenue: $2.5 billion, a 9.1% increase year-over-year.

• Net Income: $46 million, down from $56 million in Q4 2021.

• Earnings Per Share (EPS): Diluted EPS of $0.39.

• Highlights: The company saw a significant increase in e-commerce revenue by 31% and reverse logistics revenue by 19%. Despite a softer macroeconomic environment expected, GXO Logistics is confident in its business resilience and predictability entering 2023. (link)

NFI Group

• Q4 Manufacturing Revenue: Decreased by $15.0 million, or 2.6%, compared to Q4 2021.

• Reason for Decrease: Lower deliveries within heavy-duty transit and motor coach, partially offset by higher average sale prices and increased parts sales.

• Challenges: Global supply chain disruptions significantly impacted deliveries, largely due to the COVID-19 pandemic recovery effects. (link)

Amazon

• Q4 Revenue: $170 billion, a 14% increase year-over-year

• Earnings Per Share (EPS): $1.00, surpassing the expected 80 cents

• Net Income: $10.6 billion, significantly higher than the $0.28 billion in Q4 2022

• Amazon Web Services (AWS): Revenue of $24.2 billion, a 13% increase from the previous year

• Advertising Revenue: $14.7 billion, indicating strong growth in the segment

• Guidance: For Q1 2024, sales are projected to be between $138 billion and $143.5 billion, representing growth of 8% to 13%

• Highlights: Amazon's Q4 2023 earnings report shows a robust performance with significant increases in revenue, net income, and EPS, driven by strong holiday sales, growth in AWS, and a substantial rise in advertising revenue. (link)

Deutsche Post DHL

• Q4 Performance: The DHL Supply Chain contract logistics arm reported a 19.4% increase in revenue to $4.6 billion.

• E-commerce Solutions Division: Posted a revenue of $1.8 billion, up about 2% year-on-year.

• 2023 Guidance: Provided three scenarios with operating profits ranging from $6.33 billion to $7.39 billion, indicating a moderation from 2022 levels. (link)

Ryder

• Q4 Operating Revenue: Grew 44% in the Supply Chain Solutions business to $883 million year-over-year, outperforming other segments.

• Annual Growth: The report highlights a 14% increase in Q4 operating revenue from 2021 to 2022, reaching $2.4 billion.

• Strategic Acquisitions: Growth attributed to M&A activities, including the acquisition of logistics provider Whiplash and e-commerce fulfillment firm Dotcom Distribution. (link)

Old Dominion Freight Line

• Q4 Revenue: Slight increase to $1.5 billion, primarily due to a 3% increase in less-than-truckload revenue per hundredweight, which more than offset the 2% decrease in LTL tons per day

• Net Income: $322.8 million, or $2.94 a diluted share, for the three months ending Dec. 31, 2023

• Full-Year Net Income: $1.24 billion, or $11.26 a share, on revenue of $5.87 billion.

• Highlights: ODFL's Q4 2023 results show a slight increase in revenue, attributed to an increase in less-than-truckload revenue per hundredweight. The company's net income remained nearly flat compared to the same period in the previous year. (link)

Other headlines 

China Overtakes Japan as Top Auto Exporter in 2023. Chinese Exports Rose 58% in 2023.

Ryder buys Cardinal Logistics for an undisclosed price.

Red Sea danger spurring global oil buyers to go local. The global oil market is undergoing a shift towards more localized sourcing.

UPS to cut 12,000 jobs amid economic slowdown and plummeting delivery demand, in an effort to save more than $1B.

China-Europe rail bookings surge for LTL service with a 30% increase in volumes in January compared to the previous year.