Kuehne & Nagel Company Profile

Sitting and smiling in his Schindellegi headquarters overlooking the picturesque Lake Zurich in Switzerland. CEO of Kuehne & Nagel Klaus Herms has every reason to be pleased. Last. week’s financial results for 2001 showed healthy progress despite declining economic conditions in many markets and the devastating effects of 9/11.
“2001 went more or less as planned for us, with the exception of the interruption in September, which added to the stagnat ion in air freight overall,” he says. “We earned in excess of t he year before which, under the circumstances, was more than we could have expected and better’ than most forecasts.”
Although Herms saw K&N’s air trade and customs broking business fields struggle as a result of the economic slowdown, the company’s traditional strength — sea freight — grew above the market average and other areas of the business performed admii’ahlv.
“We had good growth in contract logistics because of the various acquisitions such as Usco in North America, and the alliance we’ve built up in Asia with SembCorp Logistics,” he says.
Developing integrated logistics solutions has become something of a cliché used by any company trying to cultivate a reputation for dynamism. But Herms is genuine when he credits aggressive sales of such products as the key to putting K&N’s financial performance on an upward curve.
“The market is so fragmented that even in a recession, there are still lots of opportunities to
develop new business, as major customers reduce their service providers because of the interface complications they have,” he says.
“Aggressive sales, more outsourcing of activities by customers and our ability to dominate IT-driven solutions created further growth, even in a time of difficulties.”
There was no escaping the downturn in air freight, however. “The whole North American trade was down for two weeks. It simply stopped and we didn’t even see much cargo go by sea instead — some, but not much. January was slow, but things are returning to normal now, and overall we’re pleased with our air freight performance.”
Herms is predicting a strong fightback by air freight in the second half of this year. “You will have a tremendous increase in demand, because people have to stock their inventories.”
Indeed, if peace comes to the Middle East and markets continue to recover, then capacity shortages could emerge because of reductions in bellyhold capacity. “That could happen, but for the time being we have all the capacity we need,” he says.
Herms is dismissive of suggestions made in the wake of 9/11 that cargo be banned from passenger flights. “This was something sought by integrators and freighter operators. but half of air cargo goes as bellyhold so it would not he feasible,” he says. “The capacity is just not there, and it would immediately entail increased charges for freight and passengers.”
Herms would like to see more stability in the air freight and shipping markets and, surprisingly for a buyer, even advocates rate hikes. “The rates are too low for the airlines — for us they are never too low but if they don’t get the volumes back it will be difficult for them to make ends meet.
“Hut air freight rates are not under as much pressure as sea freight. That has been a clisaster and the market should accept rate increases.”
Herms feels K&N is well placed to take advantage as the
world economy pulls out of this period of stagnation. “(‘ustorners are reducing the number of logistics providers and they are interfacing IT svstems m re and more. We will be part of the product iOfl pr cess, fully integrated with our customers.” he says.
Well not bejusta freight forw arder, or air or sea agent, we’ll be a company which is integrated end-to-end with the Client even down to feeding into the production process by supplying all the components needed worldwide as one package for end users. “This type of integrated package, end to end with no limits by continent. I think that’s where we need to get