COPENHAGEN (Reuters) - Freight forwarder DSV raised its outlook for 2022 on Wednesday and posted forecast-beating first-quarter operating profit as new lockdowns in China and the war in Ukraine will add pressure to already challenged freight markets.
The shipping industry has seen record profits as a surge in consumer demand, pandemic-related bottlenecks in U.S. and Chinese ports and more recently an airspace closure following Russia's invasion of Ukraine prompted a spike in freight rates.
"I don't think there has ever been higher congestion than we see right now. It is adding pressure and the volumes are falling," Chief Financial Officer Jens Lund told Reuters.
Lund referred to China's comprehensive COVID-19 curbs which has clogged highway and ports and shut factories.
In addition, the closure of Russian airspace has reduced available air freight capacity between Asia and Europe while many Ukrainian truck drivers have returned home, putting further pressure on an already tight labour market.
DSV, the world's third-largest freight forwarder, suspended all shipments to Russia in March except for medical supplies after Russia started what it calls a "special operation" to disarm Ukraine and protect it from fascists.
Lund said the firm was now in the process of exiting Russia completely and would hand over the business to the local management.
Shares in DSV rose around 3% in early trading after it reported first-quarter operating profit before special items of 6.5 billion Danish crowns ($927.71 million), well above the 5.3 billion expected by 13 analysts in a company poll.
The company, which has grown its business through acquisitions, now expects earnings before interest and tax (EBIT) before special items in the range of 21-23 billion crowns this year up from a previous forecast of 18-20 billion crowns.
($1 = 7.0065 Danish crowns)