KERRY LOGISTICS: INT'L FREIGHT TO FACE ANOTHER YEAR OF VOLUME, CAPACITY VOLATILITY

Kerry Logistics Network Limited (Kerry Logistics) expects price, volume, and capacity volatility in international freight to continue this year as countries continue to face challenges related to the pandemic and recent geopolitical developments.

 

This comes as the Hong Kong-based logistics company reported growth in its core operating profit and core net profit in 2021 amid supply chain constraints in the market.

 

Kerry Logistics reported that it achieved a "record high" revenue of HK$81.8 billion and a core net profit of HK$3.7 billion in 2021.

 

"In 2021, supply and demand mismatch, logistics bottlenecks, congested ports, labour shortage, and pandemic related lockdowns and measures continued to cause endless disruptions in the global supply chain," said William Ma, group managing director of Kerry Logistics Network.

 

For the period, Kerry said its Integrated Logistics (IL) business recorded a segment profit of HK$1,868 million (2020: HK$2,642 million), which represents a decrease of 29%, partly due to the disposal of the Group's Hong Kong Warehouse and the Taiwan businesses during the year.

 

Its International Freight Forwarding (IFF) business recorded a segment profit of HK$4,860 million (2020: HK$993 million), which represents a growth of 389%.

 

"The segment profit of KLN Group’s IL business did not grow in line with the other segment, mainly due to a weak Asian market brought about by a series of prolonged lockdowns and other pandemic measures across Southeast Asia, severely disrupting both manufacturing and consumption-related activities, as well as the required disposal of the Group’s Hong Kong Warehouse and businesses in Taiwan," Kerry said.

 

Kerry said in Asia, the IL division went down "by a large extent" mainly due to prolonged lockdowns across many countries in Asia, which depressed manufacturing activities.

 

"Furthermore, pricing pressure and fierce competition experienced by Kerry Express Thailand in Thailand have also impacted the Group’s results. The Group is expected to reclaim its dominance in key Asian markets, where profitability will gain traction starting in 2022 2H," Kerry added.

 

Risks to supply chains to persist

 

Meanwhile, the Hong Kong-based logistics company said risks to supply chains will remain — reacting to developments in the market.

 

"The complex dynamic system of the global supply chain will remain sensitive to an array of different pandemic responses and measures as well as geopolitics," Kerry said.

 

"International freight will face another year of price, volume, and capacity volatility. Inflationary pressures and material shortages along the supply side will continue to disrupt global trade for a prolonged period."

 

It added that although onshoring and reshoring have been discussed widely, it is highly likely that Asia, the manufacturing base of the world, will continue to hold its ground in the next five years.