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            november 21, 2019

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Weak air cargo market cuts Panalpina's third quarter profits


Available third quarter financial figures indicate that Swiss forwarding giant Panalpina will show an operating profit (EBITDA) between CHF15 million and CHF20 million (US$16.2 million-$21.4 million), which includes its CHF12 million share of an EU price fixing fine.
Profits were also hit by an eight per cent year-on-year drop in air freight volume coupled with higher costs, a decline that reflected even more acutely in September, according to the Shipping Gazette.
Panalpina's air freight division accounts for almost 50 per cent of the company's net forwarding revenue and two thirds of its air freight volumes come from trade lanes involving Europe.
"After a weak July and an improvement in August, we expected our air freight volumes to grow sequentially in September. However, compared to August they came in much weaker than seasonally normal, especially on Europe-related trade lanes," said Panalpina CEO Monika Ribar.
The company also saw significant volume decreases on most European trade lanes, both in import and export.
Air freight volumes of major customers in the high-tech, telecom and chemical sectors declined substantially in the third quarter, said the company. These three industries alone account for roughly 40 per cent of Panalpina's air freight volumes.
"On the upside, Panalpina shipped significantly more air freight for its customers in healthcare, oil and gas as well as manufacturing in Q3. The trend towards smaller shipments was accentuated. While the number of handled air freight files during the third quarter remained practically unchanged year-on-year, tonnage dropped by eight per cent," said the company.
Said Ms Ribar: "During the course of the third quarter it became evident that the expected volume recovery in air freight in the second half of 2012 would not materialise."
While Panalpina began to adapt to a lower volume environment through outplacement of staff during the third quarter, the company was not able to benefit from resulting cost savings in time for the third quarter, they are expected to take effect in the last quarter.

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