Corona crisis as a turbo: Gold rush sentiment for logistics stocks: Where entry is still worthwhile | message
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by Ralf Witzler, Euro am Sonntag
W.if he wants to send out Christmas parcels this year, it should start much earlier than in previous years. Because a veritable avalanche of orders is rolling towards the parcel delivery services. On the one hand, this is due to the general trend among consumers to increasingly order goods online as a global shopping center and have them delivered to their homes. In addition, the noticeably changed purchasing behavior of consumers during the pandemic has given the industry an enormous boost. Exit restrictions and distance rules drive stationary retail customers onto the Internet. “AFrom the perspective of e-commerce, one could even say that COVID-19 in 2020 means that we will already be at the level of 2030 “, says M.ichiel Greeven, Manager at the Deutsche Post subsidiary DHL Express.
Around the globe, the logistics industry is trying to prepare for the hot phase towards the end of the year. It begins at the latest with the days after the harvest celebrations, which are traditionally strong sales in the United States, known as Black Friday or its online version, Cyber Monday. On these days, the first Christmas shopping is done. The wave can be expected to subside in January of the coming year at the earliest, when the flood of returns of unwanted purchases and gifts has been dealt with.
Deutsche Post is assuming an increase in shipment volumes in the global DHL Express network of more than 50 percent compared to the same period in the previous year for the peak of the shopping season this year. The Bonn-based company has hired additional staff worldwide in the express division and invested one billion euros to expand capacity.
The higher volume of air freight combined with a significantly reduced number of passenger flights, which as a rule also take in freight, is forcing logistics companies to increasingly use pure cargo planes. This year, Deutsche Post put four new large-space aircraft into operation, and two more will be added in the coming months. With the machines, the group itself can operate more than 3,000 additional intercontinental flights per year, with a positive effect on the margin.
Before the Christmas season, DHL hired more than 3,000 new employees in the USA and invested 17 million euros in expanding capacities. At the US transport and logistics group FedEx, business is developing just as dynamically as at its German competitor. When it comes to express delivery, FedEx is one of the largest air freight companies in the world. The Americans benefited from their market position in the first quarter of the financial year to the end of August from the slump in passenger aviation and the resulting restricted freight capacities.
However, this positive effect should be significantly reduced once a corona vaccine has been developed, distributed and large parts of the world’s population have been vaccinated. However, even then, it is not to be expected that the good utilization of freight capacities at DHL and FedEx will virtually disappear overnight. With the resurgence of passenger traffic, the cyclical recovery of the economy should set in, from which the logistics industry will also benefit. However, FedEx in particular is threatening from another side: Competitor DHL is expanding on the North American market. And major customers like Amazon are increasingly expanding their own shipping.
Vaccine as a driver
For the time being, however, the fight against the pandemic will be a direct fuel for the industry. Because at some point in the next few months, the global transport of billions of vaccine doses should start. The experts at Berenberg Bank see this alone as an opportunity for “above normal” logistics profits, for example for the Deutsche Post DHL Group and FedEx. DHL is assuming a requirement of 15,000 flights for the global distribution of vaccines alone within the next two years. Due to the time pressure in the distribution of the vaccine, the air route is mainly used for the long distances.
Transporting vaccine against COVID-19 is also a technical challenge for the industry. Depending on the vaccine, the high requirements for continuous cooling over several days of down to minus 80 degrees Celsius have to be met. The established transport companies should be able to do this primarily. Special providers of thermal packaging systems and global temperature-stable cold chains, which ensure the required extremely low temperatures over a longer period of time, should also benefit from this.
Specialist before special economic activity
This includes the Wrzburger va-Q-tec. The company produces and sells vacuum insulation panels and thermal packaging systems such as containers and boxes. The majority of customers come from the pharmaceutical and logistics sector. In the first half of 2020 alone, the healthcare industry’s share of sales rose from 63 percent in the same period of the previous year to 77 percent. For the year as a whole, the company from Wrzburg expects sales growth of ten to 15 percent with a slightly improved operating margin.
In perspective, va-Q-tec will also benefit from the increasing business volume of grocery retailers and online pharmacies, especially when the digital e-prescription is introduced in Germany next year.
The group raised its forecast for the year as a whole when it published its preliminary business figures for the third quarter. The express and freight divisions are developing particularly dynamically. The people of Bonn are benefiting worldwide, well prepared through new hires and investments, from the increasing online trade and from the ongoing boom caused by the pandemic. Investors take hold.
The leading American provider of transport and logistics services was also able to take advantage of the Corona crisis. Above all, the adjusted operating margin, which rose to 8.5 percent, reflects the positive development. However, the fact that major e-commerce customers such as Amazon are expanding their own shipping and competitor DHL is expanding in the USA could have a negative impact. The stock is worth holding.
The services and products of the supplier of cooling infrastructure and cooling boxes are in demand for the transport of sensitive and high-quality goods. The Wrzburgers are considered to have benefited from the Corona crisis. The share price has roughly tripled since March. With that a lot of COVID fantasy is already priced in. At the same time, the products should open up new customer groups in the medium and long term. Long-term investment for the brave.
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