Friday, August 10, 2012

Ocean Freight Cannot Overcome Economic Conditions for Supply Chain Group Ceva Logistics

A Renewed Road Haulage, Customs Clearance and Warehousing Deal Helps However
Shipping News Feature

WORLDWIDE–UK - Non-asset based supply chain management company, CEVA Logistics, recently posted their first half and second quarter results whilst announcing the renewal of a valuable freight contract. The group announced an increase of 5.5% in revenue, to €1,808 million in the second quarter which was led by growth in ocean freight. Also in the Q2 EBITDA declined 13.6% to €70 million against €81 million the previous year with improvements in Asia offset by weakness in Southern Europe and the Americas and solid progress in individual geographies was also offset by economic conditions generally. CEO John Pattullo said:

“This was a difficult quarter, characterised by flat markets and customer caution, partially offset by our efficiency programmes, global footprint and robust business model. Transpacific volume and weakness in Southern Europe remain a concern. As a result, we have introduced an even more rigorous approach to cost management to support delivery of our strategic plan.”

Freight management revenues increased 9% maintaining EBITDA largely due to strong growth in the ocean freight business, particularly out of Asia. However, this gain was offset by declines in contract logistics, despite a strong performance in the Asia pacific region, as CEVA Logistics were affected by the general economic downturn, most evidently in Southern Europe, as well as being influenced by certain one-off items, mainly in the prior year quarter, which accounted for approximately one third of the decline.

As with so many other freight centred groups CEVA are hoping the implementation of a programme which will address both direct and indirect costs will negate the decline in profitability and says it has identified substantial cost reduction opportunities in its freight management network and certain underperforming contract logistics agreements. In other CEVA Logistics related news, it was recently announced that canned fish brand John West renewed its partnership with CEVA in a three year contract worth €16.9 million. Under the agreement, CEVA will continue to provide domestic supply chain solutions in the UK, which include collecting cleared cargo from the Port of Felixstowe and arranging haulage to Mendlesham. CEVA will also provide customs clearance services and warehousing services for John West. John Tomlinson, Supply Chain Director, John West Foods Ltd commented:

“During John West and CEVA’s five year partnership, the supply chain management company has effectively expanded its range of services, enabling John West to focus on its passion, developing outstanding fish products for consumers. The renewal of the contract ensures that John West will continue to benefit from CEVA’s logistics expertise now and in the future.”

CEVA’s Regional Director Consumer and Retail, Matthew Carroll said that he is delighted to continue this well established relationship. The range and scope of services CEVA provide to John West has been developed over time and the Mendlesham shared user facility along with CEVA’s extensive road distribution network continue to deliver operational excellence for its customer.