Freight forwarder DSV has raised its outlook for 2022, posting forecast-beating first-quarter operating profit as new lockdowns in China and the war in Ukraine add pressure to already challenged freight markets.
The shipping industry has seen record profits as a surge in consumer demand, pandemic-related bottlenecks in US and Chinese ports and more recently an airspace closure following Russia's invasion of Ukraine prompted a spike in freight rates.
"I don't think there has ever been higher congestion than we see right now. It is adding pressure and the volumes are falling," chief financial officer Jens Lund told Reuters.
Lund referred to China's comprehensive COVID-19 curbs, which have clogged highways and ports and shut factories.
In addition, the closure of Russian airspace has reduced available air freight capacity between Asia and Europe, while many Ukrainian truck drivers have returned home, putting further pressure on an already tight labour market.
Shipments To Russia Suspended
DSV, the world's third-largest freight forwarder, suspended all shipments to Russia in March except for medical supplies.
Lund said the firm was now in the process of exiting Russia completely and would hand over the business to the local management.
Shares in DSV rose around 3% in early trading after it reported first-quarter operating profit before special items of DKK 6.5 billion (€870 million), well above the DKK 5.3 billion (€710 million) expected by 13 analysts in a company poll.
The company, which has grown its business through acquisitions, now expects earnings before interest and tax (EBIT) before special items in the range of DKK 21-23 billion this year up from a previous forecast of DKK 18-20 billion.