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October 28 2019

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44 The Journal of Commerce | October 28 2019 Top 50 Global Logistics Providers Special Report ANNUAL REVENUE FOR the top 50 global logistics providers grew at a high single-digit percentage rate in 2018, thanks in large part to a com- bination of factors that were unique and not likely to be duplicated in the near future, according to the latest annual study prepared for The Journal of Commerce by Pittsburgh-based SJ Consulting Group. Total revenue for those compa- nies surged 9.2 percent year over year to $815 billion in 2018, driven primarily a "strong growth rate envi- ronment" for the global economy and growing anticipation of a looming trade war between the United States and China, encouraged by repeated threats of tariffs made by both gov- ernments, said Mark D'Amico, senior analyst at SJ Consulting Group. Eager to cushion the blow of a possible conflict on their revenue streams, many cargo owners increased their shipment volumes in anticipation of tariff hikes that would suppress both exports to and imports from China. "It makes sense if you ship as much as feasible before the tariffs rise," D'Amico said. As a result, 47 of the 50 companies on the latest top-50 list reported rising revenues in 2018 compared with 2017. Three exceptions to that trend were the Japanese ocean carriers Mitsui O.S.K. Line, "K" Line, and NYK Group, which broke off their containerized shipping divisions from their overall operations, marketing them jointly as the new Ocean Network Express (ONE). The companies have contin- ued to report their revenues sepa- rately, but those revenues declined in part because they represented only portions of the group's total operations. On the other end of the growth spectrum, the two ocean carrier giants that registered the largest revenue growth — Maersk and COSCO Group — did so in part because of the results of their merger and acquisition activity. Maersk saw revenue grow 24.7 percent, while COSCO's top line sales were up 35.9 percent. Excluding the impact of its acquisition Hamburg Süd, how- ever, Maersk's annual revenue would have grown 7.2 percent in 2018, said D'Amico, while COSCO's would have increased 9.8 percent if not for the impact of its takeover of Overseas Orient International, parent com- pany of container carrier OOCL. Among third-party logistics providers (3PLs), the most significant merger was DSV A/S's $4.6 billion acquisition of Swiss-based Panalpina. DSV saw its revenue jump 10 percent in 2018, despite the fact that the merger did not take place until 2019. What goes up… Evan Armstrong, president of Armstrong & Associates, a third- party logistics research firm, agreed that 2018 was an extraordinary year for transportation companies. "We had growth that we had not seen since 2010, especially on the trans- portation management side. A lot of that was the build-up of inventories before the imposition of the tariffs." The revenue growth rate of the top 50 transportation providers was destined to slow in 2019, however, in part because of the imposition of those tariffs in 2018, D'Amico noted. Revenue at UPS grew 7.9 percent for the full year in 2018, but only 1.8 percent in the first half of 2019. Likewise, Kuehne + Nagel's revenue growth dropped from 11.9 percent in 2018 to 5.3 percent in the first half of 2019; DB Schenker's slowed from 7.2 percent to 2.1 percent; and BNSF's dropped from 11.7 percent to only 1.3 percent, in part because of slowing intermodal volumes. C.H. Robinson's revenue, which jumped just under 15 percent in 2018, declined nearly 6 percent during the first half of 2019. The company's second-quarter total revenues in 2019 decreased 8.6 percent, "driven primarily by lower pricing across most transportation services," corporate controller Scott Hagen said in a July 31 earnings call with analysts. D'Amico noted that among the companies that contributed Before the trade wars Largest global logistics providers prospered in tumultuous 2018 By Alan M. Field "We had growth we had not seen since 2010, a lot of which came from the build-up of inventories before the imposition of tariffs."

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