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Supply Chain

Freight Forwarder DSV Expects Supply Chain Challenges To Persist

Challenging conditions in the freight sector and high prices for transporting goods are likely to persist for 'a very very long time', the world's third-largest freight forwarder, DSV, has said.

Major trade bottlenecks have formed around the globe due to a surge in demand for retail goods from people stuck at home under pandemic-related lockdowns, and these have worsened as economies recover.

This has led to record-high freight rates and the situation has worsened in recent months for both air and sea freight, Danish-based DSV said in its third-quarter earnings report.

'Not For A Very, Very Long Time'

"I have stopped using the word 'normalisation'," chief executive Jens Bjorn Andersen told Reuters. "If normalisation means that we will come back to a market like we knew it in 2018 and 2019, I do not think it will happen - at least not for a very very long time."

The situation has been particularly severe in major markets such as the United States, where dozens of vessels remain stuck off the West Coast ports of Los Angeles and Long Beach, unable to discharge.

"The fact that investments in infrastructure have been neglected in the US for many years does not help as the port and railway infrastructure simply is not equivalent to the volume increase that has taken place," Andersen said.

Third-Quarter Performance

He spoke after DSV confirmed strong preliminary third-quarter profit released earlier this month, when it also lifted its 2021 outlook for the fifth time this year on the back of record-high freight rates.

Revenue in the third quarter came in at DKK 49.6 billion, up from DKK 28.1 billion the previous year.

DSV recently took over Agility’s Global Integrated Logistics business, with Andersen saying that the integration of the two businesses is "off to a good start, and in the coming period our two organisations will be merged into one."

He added that transport markets "continue to be characterised by disruption and imbalances, causing extraordinary challenges for both our customers and us. Under the extraordinary market conditions, we are happy to report solid results across all divisions.”

News by Reuters, edited by ESM. For more Supply Chain news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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