Toll grows fastest in troubled times: report

Date: 24.05.2013

Global analysis put Australian firm in top eschelon as T&L firms struggle to shake off the GFC

May 24, 2013

Australia’s Toll Group has distinguished itself in new Transport Intelligence (Ti)
research as the fastest-growing international transport and logistics company, doubling in size since 2009.

Ti's
Global Transport and Logistics Financial Analysis 2013, which reveals winners and losers in the international
logistics industry since the global financial crisis (GFC), attributes Toll’s
success to its "expansive strategy in the buoyant Asian market".

The research also highlights the strong performances of United States forwarder CH Robinson and Damco, part of the AP Moller-Maersk shipping group, whose growth has persisted at similar rates.

Meanwhile, France-based logistics company Norbert Dentressangle showed the most aggressive growth, more than doubling its revenues, largely through acquisition.

Analysing the financial accounts of 20 of the world’s largest publicly quoted express and logistics firms, the report tracks performance in terms of revenues, profitability and other financial ratio indicators over six years
starting 2007.

It finds on an inflation adjusted basis, average revenues for the companies fell by over 15 percent at the depth of the recession.

On the same basis, average revenues are now only 7 percent higher than they were 2007.

Margins over the six year period have also seen a rollercoaster ride.

From a peak in 2007, they halved to 2.2 percent in December 2009 before regaining much of their ground.

Worryingly though, margins have slipped for the last three consecutive quarters.

The range of profitability is quite startling even for companies in the same sector.

For example, US logistics firm Expeditors achieved operating margins of 8.9 percent, while Panalpina managed just 0.6 percent.

Report author David Bagshaw says recessionary pressures were worsened by the industry’s expansive growth in the early 2000s.

"After a period of intense merger and acquisition activity, the major players were re-grouping and the onset of the recession made their task more difficult and probably depressed profits further," Bagshaw says.

"Many players entered the recession with declining margins and, as the recession took hold, margins continued to fall."

At the end of 2012, revenue levels in real terms were slightly above those at the start of 2007 when the crisis set in, but profits are still below the levels achieved in 2007.

"Nor has the recovery of 2010 been sustained in 2011, with the mixed pattern continuing into 2012," Bagshaw says.

"The first half of the year saw growth recorded by a number of companies but towards the end of the year this has fallen away and for some companies margins have declined."

The report reviews ‘mainstream’ logistics activities on a combined basis as well as across three individual sectors – contract logistics, freight forwarding and freight
and trucking.

The report also evaluates the results of parcel operations in a separate section.