Kuehne+Nagel and DSV Earnings: Third-Party Logistics Companies Squeezed in 2023

With Kuehne+Nagel KNIN and DSV, two giants of the logistics industry, reporting on the same day we get an excellent insight into the current state of the global shipping market. It’s telling when the two companies report EBIT down year over year between one third and one half and entitle the announcements a “very good result” and “solid financial performance.” Relative to their respective fair value estimates, we believe the shares of both are currently overvalued.

Sea and air freight have been particularly badly hit over the last six months as the unblocking of supply chains combined with a global downturn in consumer demand has led to heavily reduced shipping volumes. Road freight, which experienced less of the highs over the last couple of years, is riding out the crisis slightly better than air and sea, with both firms reporting much smaller revenue declines here.

After a period of being on top, 3PL firms like Kuehne and DSV are now experiencing a rough patch as the power balance shifts partly back to customers. One of the key attractions to 3PL companies is that they are asset-light and nimble, and thus able to adjust quickly to changing economic environments. For its part, Kuehne+Nagel has already reduced some costs in an effort to more closely match its capacity to current levels of demand. DSV is slightly more optimistic on this front, expecting a gradual recovery in global trade volumes from here. Ultimately we like the 3PL segment and believe it is far better protected than traditional carriers like Maersk. However, with valuations already high here, we would look elsewhere for exposure to the sector.