AI air freight demand lifts Kuehne+Nagel profit 53% to $527m

Kuehne+Nagel's pre-tax earnings jumped 53% year over year to $527 million in the third quarter, on revenue of $8.97 billion, up 22%, as AI-driven air freight demand and cost controls pushed results past analysts' estimates for both profit and volumes.

The world's largest freight forwarder by gross revenue raised its full-year outlook for earnings before interest and taxes to $1.88 billion at the midpoint range, based on nine-month results.

Management said a cost savings initiative is running ahead of schedule, with annualized savings of $242 million expected by year's end. Better productivity helped convert increased gross profits into operating profit at a rate of 18.2%, up from 13.4% a year ago.

How fast did air freight grow?

Air cargo volumes accelerated 7% quarter over quarter and 10% year over year, significantly exceeding overall market growth of about 6% from last year. Air logistics revenue hit $2.88 billion, up 38% year over year. EBIT for the division grew 84% during the quarter and is up 35% year-to-date.

Market share capture accounted for roughly 60% to 70% of the volume outperformance. Demand for logistics solutions supporting cloud infrastructure and semiconductor customers was a key growth driver, with general cargo also strong. A large share of the air volume growth moved on dedicated freighter aircraft.

The commentary dovetails with data and anecdotal evidence from airlines and logistics providers reporting huge demand for high-tech shipments. Executives said they expect further volume gains during peak season, especially in higher-yielding segments.

The product mix is shifting. High-tech shipments are beginning to dominate, while volumes from European automakers have fallen in recent years. Lightweight e-commerce volume fell significantly during the quarter, CEO Stefan Paul said in an analyst briefing. Global e-commerce traffic has been hit by new European Union customs fees and U.S. tariffs on low-value goods introduced over the past 18 months.

What about ocean freight?

Ocean shipping returned to growth, with EBIT up 55% after falling 11% in the first half since the end of last year. Volumes rose 5% year over year and 6% sequentially.

The gains came primarily from market share wins on Asia outbound to the United States, where the company made inroads with China-based exporters, and in the transatlantic, helped by recovering U.S. import demand.

"We decided roughly a year ago to invest into these new multinational customers coming from China. All of them want to become global and they need support with their uplifts into the markets, whether it is Europe, whether it is Latin America, but as well to a certain degree, of course, outside of the automotive industry, to the U.S.," Paul said.

Full implementation of the new master service agreements will take two or three years, meaning revenue from this segment will keep growing, he added.

K+N expects ocean yields to hold stable at elevated levels through the first quarter of 2027 — an outlook TD Cowen analyst Jason Seidl said in a note was also expressed by DHL Forwarding management in a recent meeting.

Where is K+N investing?

The company continues to build cold chain capacity for pharmaceutical customers. In September it opened a 37,700-square-foot healthcare logistics facility at Frankfurt Airport, expanding its ability to handle temperature-sensitive pharmaceutical and healthcare products.

The facility sits within a large K+N warehouse at Frankfurt airport with direct tarmac access and quick transfer times to and from cargo handling areas, minimizing exposure to temperature changes. It can hold products at cool, refrigerated and frozen conditions.

Earlier this year, K+N established a "cool corridor" between Frankfurt and Atlanta using a dedicated Boeing 747-8 freighter operated on its behalf by Atlas Air. The concept pairs direct flights on the forwarder's own-controlled aircraft with refrigerated warehouse facilities at each end, giving shippers faster, more reliable transport for specialized products than booking through for-hire commercial airlines.

Elsewhere in the portfolio, contract logistics revenue rose 9% and pre-tax earnings 7%, driven primarily by Europe and the Middle East, with 37 new contracts signed during the quarter. Trucking profits climbed 40% on stable demand in North America and Europe.

K+N has set a target of $1.2 billion in revenue from its new long-term Amazon deal to support construction and operation of data centers, with air, ocean, road and contract logistics divisions all contributing, Paul said.

In September, the company inaugurated a new Tech Center in Chennai, India, chosen for its skilled engineering talent, to develop proprietary digital logistics solutions. K+N expects to hire about 250 tech workers by early 2027 to work on the core digital forwarding platform for managing air and ocean shipments.

With high-tech demand still building, ocean yields projected to stay elevated into early 2027 and the Amazon data center deal ramping, K+N heads into peak season with momentum across every division.