DHL smashes estimates after acceleration in forwarding boom in December 2020

Deutsche Post AG reported preliminary fourth-quarter 2020 EBIT of €1.96 billion ($2.39 billion), which beat analysts' estimate of €1.38 billion, according to S&P Global Market Intelligence data, and was 10% above the company's guidance for the full year. The company now expects EBIT in 2021 to be more than €5.4 billion after its prior best-case "V-shaped recovery" guidance of €5.3 billion.

The parcel and express delivery operations led the way in terms of volume growth while a shortage of capacity allowed an increase in rates, too. The freight-forwarding business also improved 14% at the revenue line, though higher costs for both ocean freight and for airfreight may be the reason for a cut in the profitability of both forwarding and supply chain. Air freight capacity utilization had already reached a record of 58.2% in November 2020, Panjiva's analysis of IATA data shows.

The logistics industry disruptions caused by the demand/supply imbalance are likely to continue during the first quarter of 2021, as discussed in Panjiva's research of Jan. 5, so while shop-from-home may continue to help package businesses, the freight operations may continue to face challenges.

The need for an upgrade was driven in part by the continued acceleration in global trade activity even late into 2020. Panjiva's data shows that U.S. seaborne imports handled by DP-DHL climbed 51.8% year over year in December 2020, increasing pace from 47.1% in November and 39.8% in October. The growth rate in shipments from China slowed slightly to 50.6% in December 2020 from 58.0% in November, while shipments from Asia excluding China climbed 64.7% in the last month of 2020 after a 44.5% jump in November. The surge in shipments from Asia excluding China included a 663% surge in imports of solar panels for First Solar Inc., among others.

The expansion put DP-DHL well ahead of other major quoted, globally diversified freight forwarders with similar growth seen by Kerry Logistics Network Ltd.'s Apex at 53.8% and Expeditors with growth of 47.6%. At the other end of the scale, both FedEx Corp. and Schenker Inc. experienced slower rates of development. FedEx shipments expanded 8.6% year over year in November 2020, marking a slowdown from 12.3% a month earlier, while shipments handled by DB Schenker declined 2.9%.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.