Looks like UTi Worldwide is feeling the affects of the slowing market. The company reported their Q1 FY2013 earnings today with total revenue declining over 4% to $1.15bn.
Not surprising, the company's freight forwarding division took the brunt of the decline - in particular the airfreight side. Revenue declined 13% while airfreight tonnage declined 14%. UTi noted the month of April was particularly rough. While tonnage declined in double digits, shipments actually declined "only" 6% as customers moved fewer kilos per shipment.
Ocean freight fared a bit better as TEUs were up 3%. UTi noted a transition away from air to ocean particularly from its automotive customers. It appears that JIT is no longer necessary as many of these customers are willing to wait.
Contract logistics and distribution was a bright spot for the company. Revenue increased almost 5% and organic growth was noted in new business wins in Africa and Asia. The US distribution business remained strong as well.
UTi Worldwide did not provide an outlook but did note a sign of concern for the global economy. A continued shift towards ocean freight is expected however, as ocean freight rates continue to rise, this may change.
The company plans to continue with its transformation program despite a questionable market and slowing economy. It went live in the Netherlands with its freight forwarding IT system and plans to expand it further into Northern Europe next.
UTi Worldwide's earnings report is perhaps a prelude to upcoming earnings reports from other freight forwarders/3PLs.The airfreight market in particular is not good and it appears the ocean freight market may experience a slowdown as well due to the rate increases ocean freight operators have introduced over the past few months. It looks like contract logistics and distribution services may be an option for those freight forwarders/3PLs to focus on for the time being.