The corona crisis hit DB Schenker hard, like most of its peers, rendering previous business forecasts obsolete. Yet as things stand, the Group will probably generate a surplus in 2020, albeit a small one, following an EBIT of 538 million euros in 2019. Should this happen, and the indicators suggest it will, air freight will have been one of the contributing pillars of the Group's earnings.
Pasta, noodles, penne, and spaghetti: freight cars packed full of these goods are constantly traveling from production sites in Italy northbound across the Alps to consumer markets in Central Europe. “We had lost this business to truckers, but now we gained it back, transporting the items by rail,” Sigrid Nikutta, CEO DB Cargo, stated in a recent Webinar. The lack of drivers in Covid-19 lockdown times prompted this change of operating mode. “It is now up to us to ensure the permanent transport of these goods by rail,” she said.
Down nearly 10%
Nevertheless, apart from noodles and pasta, unfavorable news currently prevails at DB Schenker. Company speaker, Mario Arnold, confirmed rather sobering sales figures both in air and ocean freight to CargoForwarder Global. By quoting DB Schenker CEO Jochen Thewes he says that ocean freight went down 9% and air freight 11% until April. “In comparison, our contract logistics business is hit even harder,” he adds. Despite the unprecedented slump in transport volumes, global supply chains were maintained without compromise, he affirms.
Safeguarding capacity was paramount to keeping them running, as the pandemic started spreading globally. For this reason, DB Schenker chartered three Boeing 767 passenger aircraft from Icelandair and had them converted to “preighters” by removing the seats. “Due to the standstill of passenger air traffic, Icelandair had no use for the aircraft, so we chartered them because we urgently needed reliable transport capacity on intercontinental routes to transport personal protective equipment,” Mr. Arnold illustrates.
First ever DB Schenker ‘preighter’ flights
Since weeks, the aircraft keep shuttling between Shanghai and Munich, always fully loaded with PPE, medical and hygienic goods. Simultaneously, a second shuttle service linking Shanghai and New York was established by his company because, unlike in most parts of Europe, the coronavirus has by no means subsided in the USA, Mr. Arnold explains.
In connection with the flights, he points out a curiosity: To avoid infection, there is no crew change in Shanghai. Instead, there are always two crews on board: one operating the leg Munich-Shanghai while their colleagues who rested on the eastbound flight, relieve crew number one in Shanghai and fly the aircraft back from there to Europe.
The worst appears to be over
Asked about DB Schenker’s financial forecast for the current year, Arnold points out that much depends on the forthcoming two quarters and how much the pandemic will impact global trade and production in the coming months. However, in the end, the financial result on the annual balance sheet will be a black number, he declares, pointing out that since the beginning of spring, the demand for air freight capacity has risen sharply, with rates reaching sky-high levels during some weeks. Conversely, securing sufficient air transport capacity also became extremely expensive, preventing logistics players such as DB Schenker from benefitting much from the sudden rate hike.
In a separate press statement, DB Schenker’s CEO, Jochen Thewes, speaks of a slight increase in business in the past four weeks.
Maybe the first sign of a turning point and a ray of hope.
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