Freight forwarding giant: further layoffs may be on the way! Taking acquisitions to the next level

On yesterday's (25) earnings call, DSV CEO Jens Bjorn Andersen announced "solid financial results" and noted that since the first half of 2022, in an effort to cut costs in low-yield and low-volume markets, the company has laid off about 2,000 white-collar employees, representing 6% of the total workforce in the aviation and marine divisions. CEO Andersen said further layoffs could come if these divisions fail to perform well in the market.DSV plans to revive growth by focusing on high-yield verticals, although this could lead to a drop in performance. The company is also looking at utilizing technology to reduce its workforce, with artificial intelligence seen as having some potential.

DSV CEO Andersen highlighted recent market conditions, noting that there are forwarders who are competing in bad faith by lowering prices in order to maintain business volume, however, DSV wants forwarders to stay away from such irrational market behavior. It added that among DSV's 500,000 customers, any large customer would reduce the company's revenues. dsv can accept slightly lower yields than in the past, but will not engage in loss-making business.

He emphasized that the company has a clear policy of not engaging in hostile competition where rates are close to break-even or losses. Although customers may be influenced by attractive offers from other competitors, he believes that customers will eventually return to DSV. in the second half of the year, DSV plans to adopt a different strategy in the hope of increasing the volume of business. Though this growth may lead to a drop in yields.

Andersen mentions that while the perishables category has grown, the yields are still not up to expectations. If the volume does not improve, DSV will revisit the costs and take the necessary measures. In the airfreight market, as airlines with long term committed capacity are more willing to accept cargo at lower costs, this means that DSV is focusing on spot rates and will move into a more normalized market as leases come to an end. In Ocean Freight, DSV was close to the rest of the market, down only a few percentage points, with weak performance on trans-Pacific and trans-Atlantic routes, but good performance on Asia-Europe routes, which may enter a period of business growth in the second half of the year. Also in ocean transportation, the high-tech and capital sectors showed positive growth.