Kerry Logistics Network cited profit growth in the first six months of the year and noted growing focus on service customisation citing continued disruptions and capacity chokeholds across the logistics industry.
The Hong Kong-based logistics company said its revenue increased by 68% year-on-year to HK$36,709 million from HK$21,885 million in the first half of 2020. Core profit also grew by 81% year-on-year to HK$1,530 million fromHK$845 million.
Its Integrated Logistics (IL) business recorded a segment profit of HK$1,292 million (from HK$1,139 million) and International Freight Forwarding (IFF) business recorded HK$1,437 million (from HK$379 million), which represent an increase of 13% and 279%, respectively.
"The COVID-19 pandemic has entered into a new phase with the worldwide spread of the Delta variant, which has been severely affecting global and domestic supply chains and disrupting business operations at different levels around the world. These disruptions and capacity chokeholds, together with different government approaches and restrictions in tackling the pandemic, have compelled the logistics industry to move towards a growing focus on service customisation," said William MA, group managing director of Kerry Logistics Network.
"Leveraging our core competency in providing highly customised solutions, KLN Group capitalised on the opportunities in this new environment and achieved record growth in both revenue and core net profit in 2021 1H," he added.
Integrated Logistics grew
Kerry Logistics The IL business reported a 13% segment profit growth, mainly riding on a booming manufacturing sector in Mainland China.
In Hong Kong, the warehousing business grew 18% backed by a higher occupancy. The logistics operations business increased by 9% as the pandemic remained largely under control since 2021 Q2.
In Mainland China, Kerry said its IL business continued its rebound in the first half, expanding by 82% year-on-year in segment profit. This was supported by the accelerated resumption of production, revived domestic consumption and thriving online shopping. In Taiwan, the segment profit for the IL division maintained stable with a 5% growth.
In Asia, as a whole, the IL division suffered a drop of 12% in segment profit as the pandemic continued to rumble across the region with prolonged lockdowns, restrictions and quarantine measures, Kerry said.
Meanwhile, the logististics firm added that the IFF business recorded a 279% segment profit growth in the first six months, mainly riding on the change in consumer behaviour and strong exports from Mainland China to the world.
"The IFF business is experiencing a rapidly changing market and the Group is adjusting its strategy on a monthly basis depending on the development of COVID-19 pandemic, as well as unpredictable events," it added.
Kerry Logistics noted that the air freight sector continued to operate with scarce international belly cargo capacity provided by passenger aircraft, prompting the market to rely on freighters of limited space, which resulted in serious fluctuation in air freight capacity and rates.
In the ocean freight sector, it added that congestion in destination ports has caused severe delays to vessel turnaround time and exacerbated the container equipment shortage in Asia.
Currently, there are still huge backlogs in Mainland China where plenty of cargo vessels destined for the Americas and Europe were cancelled or delayed, it said.
S.F. Holding investment
Kerry said the S.F. Holding’s investment in the Group will bring together the core competencies of S.F. Holding and the Group across multiple verticals to create a leading Asia-based global logistics platform to meet ever-changing demands.
"With no end to the pandemic in sight, KLN Group will continue to support our customers counter various supply chain challenges through customised and comprehensive solutions across major gateways," Ma said. "We are also ready to capture the growing opportunities in the booming and evolving e-commerce business."