Forwarding heavyweight K+N reveals its key to growth

K+N forwarding heavyweight
Yngve Ruud

Half way through the year, it seems the only way is up for forwarding heavyweight Kuehne+Nagel.

The Switzerland headquartered logistics provider was awarded best forwarder of the year 2021 back in May at ACW’s World Air Cargo Awards, demonstrating popularity and service satisfaction amongst customers.

The figures also reflect this success. In the first quarter of the year, Kuehne+Nagel’s net turnover was an impressive CHF 6 billion (£4.7 billion). In the air logistics sector, this net turnover was CHF 1.7 billion (£1.4 billion), an increase of 51.2% on 2020 Q1 figures.

Translated in to tonnes of airfreight, this is no mean feat. Cargo carried totalled 433,000 tonnes in the first quarter of 2021, +16% year-on-year.

Just last month, Kuehne+Nagel completed the acquisition of Asian logistics provider Apex International Corporation (Apex), part of the company’s organic growth strategy. Dr. Joerg Wolle, chairman of Kuehne + Nagel International AG, commented: “With this transaction we are expanding the Group’s service offering, networks and potential for growth, in Asia and globally.”

Strong growth strategy

What sparked this success? “Back in 2017 we fully reset strategy and actions for Air Logistics at Kuehne+Nagel, aiming to reach our ambition as the largest air logistics forwarder globally by the end of 2022,” Yngve Ruud, executive vice president, air logistics explained to ACW.

“External driving-forces like market conditions, customer behaviours driven by the end-consumer, technology developments and newly-arisen disruptors put a question mark for the future.

“We envisioned that these market dynamics would directly impact how logistics companies execute their business; hence, continuing to perform in a ‘business as usual’ environment would mean missing the opportunities. We were ready to take on this challenge and transform the way we do business.”

Customers, technology and people

Kuehne+Nagel began the transformation with the establishment of three key pillars: customers, technology and people.

“We already had a solid foundation: strong position in the industry, our tools and expertise, and, most importantly, our culture and people. So, by leveraging the activities, actions and cultural aspects of our organisation that had served us well, we, at the same time, focused on undertaking the necessary transformational strides required to address changes in the industry.

“Navigating challenges and turning them into opportunities would help distinguish ourselves from our competitors and deliver on our mission in a long-term and sustainable manner,” Ruud noted.

Key milestones since 2017 demonstrate how the company has executed this strategy. For example, the new transport management system (TMS), AirLOG, has been rolled out in more than 100 countries in less than 16 months

Ruud explained how the focus of recent strategic acquisitions were either aimed at completing the company’s service portfolio (like, clinical trials via QuickSTAT), strengthening their leading position (like, premium AOG service via Sterling) or closing a white spot (like, perishables business in the US via CFI).

“With Apex, we have taken a giant step to fulfil our ambition to expand our strong footprint in Asia and North America – now we are positioned as the market leader on the Transpacific trade lane.

“We have gained prime access to air cargo capacity and capacity management and a proven and robust co-loading concept that will be further developed. Additionally, we have strengthened our high-tech, e-Commerce, and e-mobility service portfolio.

“Apex has a very experienced management team with a proven record of success and I am confident that their success will continue within our family,” said Ruud.

Digital advancements are key to growth

Harnessing the latest digital advancements has been key to growth.

“Our platform, myKN is a complete digital offering across all modes of transport, with an advanced collaboration module, reporting and quote, book, track functionalities for a fully digital, easy and 100% automated interaction with our customers. Today, myKN handles more than 1 million quotes and customer requests per annum.

“With our TMS AirLOG being fully rolled out, we have a one-file global system, which gives full transparency, external and internal, of the whole shipment life cycle. AirLOG is the backbone and prerequisite for our eTouch development.”

The company’s eTouch projects are focused on automating specific shipment touchpoints (such as quotation, booking, status update or invoicing).

Where to now?

Ruud noted that for years, there has been a clear trend of consolidation within the industry, which he believes will continue. “The reasons behind this trend are complexity, capital intensive operation, and the constant need for technological investments. With COVID-19, it has become clear that size matters to offer the best product to the customer. Therefore, we see the global leading air logistics

providers increasing their accumulated market share, and I believe this will be a catalyst for further consolidation,“ he said.

Critical role

“In the last 18 months, logistics has proven to be critical for the global economy and, in particular, air logistics. The global response to the Covid-19 pandemic is a prime example of the vital part we play in today’s world – from ensuring the supply of essential goods globally, to the distribution of the Covid-19 vaccines.

“The industry reacted with urgency, agility, and assertiveness to support global supply chains in an unprecedented way. After all, we don’t just ship perishables – we ensure people all over the world enjoy fresh and quality products. We don’t just ship high-tech – we drive innovation and digitalisation of the world. And we don’t just ship vaccines – we help saving lives.“