Episode Transcript
[00:00:00] Speaker A: Hello and welcome to the Lodestar podcast where we are going to be recapping all the major points of last week's supply chain news and flagging what might be important next week.
Coming up, this episode we are going to be taking a look at Some major companies Q4 earnings reports. We're going to be having a look at something that caused a bit of a stir in the freight tech market. And we are going to be looking at rates in air, land and sea. All of this plus much, much more.
And joining me for this episode I am with Lodestar master managing editor Gavin Van Marl. Hello Gav.
[00:00:34] Speaker B: Hello Charlotte.
[00:00:35] Speaker A: And Lodestar publisher Alex Linnane. Hello Alex.
[00:00:39] Speaker C: Hi Charlotte.
[00:00:40] Speaker A: We are going to be jumping straight into earnings reports to start the episode now. I feel like I'm an expert in finance after doing the podcast with DP World Trade Finances Sinan Ozcan last week. So if you haven't heard that, then do go and listen to that podcast. It's all about trade finance and it's actually very, very interesting.
But we also had some Q4 earnings reports last week for some major companies such as Maers and dsv. So let's kick off the episode by looking at how Maersk performed. Gav, do you have their results?
[00:01:11] Speaker B: I mean I do. I think everyone has their results. It's pretty, pretty widely distributed. So the headlines centered around the fourth quarter performance of the Maersk line, the ocean shipping activities and the fact that it lost $153 million in those three months which was led by a 23% reduction in freight rates which offsetted an above, above market growth rate of volume growth rate of 8% which was very strong for the final quarter of the year.
And that in response to these sort of declining earnings environment, it's earmarked about a thousand redundancies, mostly at headquarters in Copenhagen we understand in order to save about 180 million a year. I think the exact figure is 15% of its of 6,000 employees if you look on a full year basis because obviously these results are both fourth quarter and full year 25.
The result was sort of broadly in line with 2024. Revenues were down slightly though 54 billion rather than 55.5 the year before. EBITDA down about 25% that was 9.5 billion US and EBIT nearly halved to 3.55 billion US. I mean that's, those are group wide figures. Obviously Ocean is the rump of that business and full year volumes in Ocean were up 4.9%. On 2024, which is marginally ahead of the CTS level. Back to the quarter thing, terminals had a very good quarter, revenues up 20%, profits up 31% and volumes very much boosted by Gemini. But I think for me really one of the more significant parts of the announcement was that it's completely reorganizing logistics and Services division. So away with the previous three subdivisions which were managed by Maersk, fulfilled by Maersk and transported by Maersk, which no one, even some of the Maersk people I talked to really understood what the difference was between and which bits fitted into which. It's just really. Is that. That transported by mers? Oh no, that's that bit. So it's in North America that's fulfilled by. It was just endlessly complicated and actually they received quite a lot of criticism among in the financial analyst circles because it looked very oblique to them. So instead of that these are being replaced by three more divisions but with slightly more simple names. We've got Landside which is inland trucking, Container depots, Drayage and North American less than truckload operations got Forwarding which is air freight, less than container load, you know, consolidation project, cargo logistics and insurance. And then finally there's Solutions which is basically contract logistics. And I'm going to give you a really nice segue to your next question, Charlotte, because I wrote that down and then, and then I suddenly remembered how after the takeover of Schenker, DSV, DSP's contracts logistics division used to be called Solutions, but they dropped that once they took over schenker because as CEOs CEO Jens Lund told analysts, the name of the division should save what it does.
So there we go.
[00:04:54] Speaker A: Thank you very much for that Gav. Thank you for the segue as well. You're doing my job for me. Speaking of dsv, Alex, could you please explain how they did in their financial results having completed now 30% of their takeover of Chenker?
[00:05:08] Speaker C: Yeah, well DSV is very much in the thick of the Schenker integration as you said. I think it's around 30% that it's done now and it's already starting to have a sort of material impact on the numbers that we've seen.
So EBIT before Special Items was up nearly 15% year on year, largely driven by Shankar's inclusion in the numbers.
It hasn't been good for everyone. DSV has confirmed that 5,400 white collar jobs have gone since it began integrating Schenker. It feels like more, but that's what they've said and the results were a bit of a mixed picture actually.
Volumes were up in air and sea, but yields very much under pressure and gross profit in air and sea was down in both modes.
That's partly because of weaker rates, partly because apparently Schenker's margins were lower than DSR fees margins.
DSV said that Schenker relied on freight markups while DSV relies on value added services to make its money. So it wants to bring in more of that and less of the freight markup stuff in road. Schenker had a big effect, understandably.
And DSV also said that the road freight market has probably already hit the bottom in Europe and should grow 1 to 2% this year. So exciting times in road for Europe.
[00:06:29] Speaker A: So big job cuts at both DSV and Maersk, I feel like always says it's a people's business, but is that going to be now caveated too? It's a people's business unless your job can be done by a computer, in which case. Sorry.
In the earnings report from dsv, they gave a bit of insight about what they plan to do on the technology side, standardizing their systems with Schenker. So what did they reveal there?
[00:06:53] Speaker C: Well, yeah, this is, this is quite an interesting bit of the earnings call and it's caused a bit of sort of market stir really.
So one sentence in the earnings call is the sentence at fault, really.
They said we will have to make a choice which platform to go to, as in either cargo wise or Tango.
And, you know, it's very likely that over time we will gravitate towards our own solution.
Now, no one quite knows what that means. I asked DSV to clarify and they helpfully came back to me, which they almost never do, actually saying no comment. So I'm really none the wiser.
So it could be interpreted as Tango being their own solution, it could be interpreted as building something extra.
We don't really, really know. But it has stirred the pot because something is going to change and that is likely to impact cargo wise. And I also understand that many forwarders were waiting to hear what DSV was going to do about its tms.
And so this is likely to cause a bit of a. Bit of a flurry of interest and gossip at Manifest, which I'm gutted. I'm not going to, I have to admit. So, Charlotte, you're going to have to go and get all the goss for me about what everyone's deciding on their TMSs.
[00:08:07] Speaker A: Definitely any gossip I hear will be going straight on the Lodestar website. So look out.
[00:08:11] Speaker B: Big shoes to fill.
[00:08:14] Speaker A: Yeah, TMS expert.
Now, from earnings to rates, we've got the full plethora of it. We've got air, land and sea this week. So shall we start with land? Gav, what were the trucking freight rates looking like?
[00:08:32] Speaker B: I mean this is just so seamless, isn't it? You know, we've got Alex finished. Well, if she had finished on, on DSV's roads division, then we could have just gone in and said the road rates. No, they run. Right.
[00:08:44] Speaker A: It's almost like I curated it this way.
[00:08:46] Speaker B: Yeah, exactly like someone's written a script.
[00:08:50] Speaker A: Imagine.
[00:08:51] Speaker B: They don't by the way. If they do, it's news to me. Okay, so, right, so this is so European Road Freight Rates. The index we use for that is the up.
It's the quarterly European Road Freight rate benchmark produced by Applied Transport intelligence and the IRU, out this week for the last quarter of 2025. And it showed that for the first time since 2017, so way before the pandemic, in fact, right at the beginning when they first launched this index, that the contract rates are actually higher than spot rates on a Europe wide basis.
And this was attributed to stronger retail sales in the latter part of the year, which meant more shippers wanted to secure contracts. And as well there was some, there's some extra higher operating costs, driver's wages gone up slightly, insurance has gone up slightly which then are fed into the contract. So that was the explanation for that change. But I would say that there was throughout the report there was quite a note. There was a sort of, it's a bit like what Alex is saying about the DSP thing. You know, it's, it's the, the when, when things have been so bad, a, a cautious note of optimism is actually sort of shines through the mist like a rare ray of sunshine.
So the year ahead, driver shortages notwithstanding, they do see a rebound in the European economy, especially with Germany. I think most people are expecting the German economy to sort of kick start again this year and obviously that will have a big impact on the road freight business in Europe.
[00:10:39] Speaker A: And how are things looking over in Ocean freight? Last episode you mentioned that a rate war was brewing.
[00:10:44] Speaker B: Well, I mean the most recent wci. Sorry I'm having to look down at this. I've only just received the figures, so.
But the most recent WCI is another week of losses.
They're down. They were down 9% into Northern Europe, they were down 7% into the Med8, down 8% into the US West coast and down 5% into the US East Coast.
It's a very weak period at the moment. The.
You would have expected some for. Well, normally, sorry, in previous years there would have been some form of slight rate rally in the, in the last fortnight or so before Chinese New Year, but that hasn't happened. Demands dropped off a cliff. And, and, and certainly talking to a Trans Pacific forwarder earlier this week or last week, he was talking about rates into the west coast from Asia at around the 1450-1500 dollars per 40 foot rate, which is basically break even.
He's. They, they noted it was a significant. What's the actual term?
Oh, it doesn't matter, it's just not very good.
[00:11:57] Speaker A: Well we, I mean we've just recorded a podcast with Container Trade Statistics and they were looking at the pricing index for the full year 2025 and that's down like 18 or something. But demand's gone up by just over 5% so I don't really understand what the correlation is there, but clearly there's something going on.
Yeah, we'll see what the carriers do going into 2026. Alex.
[00:12:20] Speaker B: Sorry, those just, just. Sorry, sorry Charlotte, those CTS numbers, important to remember that they, that that 18 also includes all the add ons. So it includes all the bunker adjustment factors, currency adjustment factors, terminal handling charges, all of that. You wrap all of those in and it's still. Pricing is still 18% down. It's, it's. Yeah, yeah.
[00:12:42] Speaker A: I'd be curious to know what people are doing with contracting this year. So if anyone has any insight, please do email me. Charlotteheloadstart.com Alex, I'm coming over to you next because last episode you kind of mentioned that air freight rates were softening. But then I saw a story on the Lodestar last week that said the airfreight rates are firm. So which one is it?
[00:13:01] Speaker C: Well, quite frankly they've been going up and down as rates tend to be.
[00:13:05] Speaker A: Fair enough.
[00:13:08] Speaker C: I think. Finally, we've now seen that there is a bit of a hardening before Chinese New Year.
Rates do seem to be firming up a bit.
So Freight Offs Air Index shows rates climbing in the past two weeks, although they did drop towards the end of last week, perhaps because Chinese New Year is nearly upon us.
Even with the rise, rates are still lower than they were last year at the same time.
So it's not a great big peak we're about to have, but there is a slight firming up. Perhaps one of the issues is capacity.
There seems to Be a lot of it about. So capacity was up 4% in the last week of Jan, week on week and up 12% at the end of Jan over the average of the previous four weeks. So the rise isn't maybe so surprising, but that's probably what's keeping rates softer than they were before.
And we also have some interesting stuff going on in Europe now.
So although the EU has said that 1st of July is going to end the de minimis exemption and add fees for small parcels, some countries have already done it. So Italy, Romania, I think Luxembourg on the 1st of January bought in these new small parcel charges and as a result Italy in particular has seen a lot fewer freighters.
I think it was 30 fewer this year so far than the year before and apparently they're being diverted to Liege, Amsterdam and so on to avoid the parcel charges. So there's little interesting snippets of what's going to happen in Europe and it'll be interesting to see what happens from July 1st when that small parcel charge comes in across Europe. Europe everywhere apart from the uk.
[00:15:00] Speaker A: Yeah, definitely. I mean it was only a matter of time after the US abolished theirs. So yeah, like you said, it will be very interesting to see what happens.
Now we have officially got the rates and results section out of the way. That is the numbers done. Let's take a look at some of the main news stories from last week. Gav we briefly spoke in last episode about some news that the Panama's Supreme Court of Justice ruled that the 2021 extension to Panama Ports Company operating concession was unconstit constitutional. And now Panama Ports Company PPC just for ease, has fought back. So what's the latest?
[00:15:37] Speaker B: So, yeah, right. Well just, just to go very slightly. Yeah, the, the Panama, yeah, but you're right. The Supreme Court of Panama ruled the concession contract unconstitutional. The Panama Maritime Authority because obviously that raises great questions about if it's unconstitutional, what are these guys still doing here running these ports? So the Panama Maritime Authority said that they'd be looking for someone to take over the operations on a temporary basis and they've, that they've invited the President of Panama has invited APM terminals, obviously speaking about a bit earlier with the Maersk Group to come in and assume operations on a temporary basis. And APM Terminals have said that they will do that once there is an official court ruling from the Supreme Court that it is allowed to do that.
Panama Port PPC are absolutely furious. I mean it comes as absolutely no surprise. So they are, they are seeking arbitration or they've started arbitration proceedings.
I mean, I've read a lot of company position papers and you know, especially once they put out to the press over in this industry over 30 years. And normally they're, they're very, very, I would say bland. But let's say they're diplomatic. Right. And, and this, this is, you know, a couple of quotes, but, you know, the PPC has become arbitration proceedings and they claim that the Republic of Panama has breached the applicable law and contracts they're excluding, they're seeking damages.
So basically, in a nutshell, things move very quickly. For about three days, they've been ejected from the contract, it's been offered to APM terminals and they are disputing this. What happens next? I don't know. I don't know. And also I really don't know where this leaves the, the, the, the, the big Hutch MSC BlackRock deal. I think that's really up for grabs now.
[00:17:43] Speaker A: Yeah, this is something that we will definitely be looking into over the next few months. So I'm sure we'll have some more information as the story unfolds. Gav last episode we also spoke about how the Suez return would be perhaps a bit further away than thought after the Houthis released a pretty threatening video. And this just kind of underscored the fragility and unpredictability of transiting the Red Sea region.
And when we spoke just seven days ago on this very podcast, you said, and I quote, houthi attacks one of the few remaining ways that Iran can hit back. And I just can't see this threat of attacks being lifted while the wider situation remains so tense and so unpredictable for carriers. So for the foreseeable future, it just seems to me that it's Cape of Good Hope all the way.
But then also last week the Gemini duo completely went against this and they announced that their India West.
Sorry, but last week the Gemini duo completely went against this and announced that their India Med loop would resume Suez Canal transit this month. So what prompted this, do you think? And do you think other carriers are going to follow suit?
[00:18:46] Speaker B: Yes, I got that wrong.
Not for the first time.
Basically, the, the Gemini partners are going to put through their India Med loop is going back through Suez, both Head hall and Backhaul. So it's full rotation back to the the Suez routing.
I mean, a route between India and the Meds that goes around the Cape of Good Hope. You can understand why it's probably first on the block to take the shorter route. Right. Because the route diversion is, is so Big in comparison to what it should be.
And so within the next couple of weeks we'll start seeing those vessels transiting Suez Canal and the Bab El Mandab Straits on a weekly basis. The really important thing to note about this is there's one line in the press release which said we're doing this after securing naval escorts. So it is specifically due to the fact that those ships will be well escorted by.
I don't know whether it's an American or French or British, but certainly they'll be escorted by proper navy. And so that gives them the guarantees.
Chief Executive Vincent Clark was asked specifically about this during the earnings call and had what I thought was a very interesting response because it sort of gave the idea of exactly what the constraints are.
[00:20:09] Speaker A: Well, should we take a listen at what he had to say?
[00:20:13] Speaker D: The conclusion that we have is today it is safe for us to move into a phase one which is having some services, specifically the ones for whom going around the Cape of Good Hope is the longest deviation where it is safe to move under escort and go through the Bayan Mandeb. There is limited escort capacity. There are a lot of ship owners today that already move through BAAL Mandeb without escort.
I feel that it's a bit premature for at least for how we assess the security situation and therefore there is certain limit to what we can do. At some point we need to get into a situation where the temperature comes further down, where we feel it is also safe for us to move into, to reopen services even if we don't have escort.
And that would be probably what triggered the difference between what we have announced so far and a more full return would be the ability that we have to see that we can move without the military escort that the service that do it today have.
[00:21:19] Speaker A: So now we have rounded up all the main points of last week's news. Let's take a look at what's been on Premium last week. Alex, do you have any insight for us?
[00:21:28] Speaker C: I do. It's earnings season, which basically means there's been a deep dive into the Danes, DSV and Maersk. There's also a good piece on FedEx and quite a timely piece on whether forwarders can be software engineers or whether they should stick to forwarding.
So that's useful ahead of manifest.
And just to say that Desk One, which is our very popular snippets of very up to date news, will be on holiday this week, they'll be back next week, but otherwise premium will be going as normal.
[00:22:04] Speaker A: Thanks, Alex. And unfortunately, there will also be no news in brief next week because I am in Vegas for Manifest, so I'm not going to have have time to sit down and record a podcast. But if you do see me at the event, then please don't hesitate to come and say hello. I'd love to meet some of you. And yeah, do follow my reporting from the event next week as well. Gav, Alex, do you have anything on your radar for the week ahead?
[00:22:26] Speaker B: Well, I'm very much going to be looking forward to listening to the CTS.
[00:22:30] Speaker A: Podcast and that should be out today at the same day. So two podcasts in one day. What a treat. What about you? What about you, Alex?
[00:22:38] Speaker C: I just want to give a little shout out to Hive, which is our local logistics networking group.
Gav and I will be talking about the impact of Chinese New Year on rates to the uk.
And obviously I have got more on transport.
Well, I've got more on tms.
It just is never ending. But hopefully there'll be a lot more from Charlotte on that next week as well.
[00:23:05] Speaker A: You've really opened the Pandora's box of transport management system.
Thank you both so much for joining me this week and for all your insight.
[00:23:14] Speaker C: Thanks, Alex.
[00:23:15] Speaker B: Thank you very much, Charlotte.
[00:23:16] Speaker A: And thank you all for listening and watching. If you're on YouTube, please don't forget to like, subscribe, comment, share all of that good stuff. We really appreciate it. Thank you so much. And we will see you not next week, but the week after. Goodbye.
