Agility appears to be bucking the market trend, posting good first quarter results and ending the quarter with an enviable cash-in-the-bank position of US$1.2 billion.
Speaking to reporters in Hong Kong, Christopher Logan, Agility's chief strategy and marketing officer, said compared to others in the industry, and despite a dismal cargo market, the company was in a strong financial position.
"In the first quarter, we were able to generate $299 million in cash from our business, a combination of operating profits, being more prudent with capex, no significant acquisitions and managing our working capital," he said.
"We do have a net debt position of $400 million that we are working to pare down as close to zero."
Other logistics providers have not been so fortunate with their first quarter results. Panalpina earlier this month reported a stunning drop in profits as a result of "massive recession-related global volume decline". Kuehne + Nagel fared better with net revenue down by a currency adjusted 11.4 percent, while decreasing trade volumes in the first quarter saw DHL's forwarding business revenue dropping by 18.2 percent.
Logan said he had never seen such a weak freight market and expected the downturn to take its toll on companies involved in the logistics business.
"There are a number of strong companies in this industry and the strong companies are going to get stronger. But there are a number of companies that are beginning to falter, and I think they will have tremendous challenges.
"It will be interesting to see how the industry shapes out over the next couple of years. We are very clearly positioning ourselves to be one of the winners," he said.
Logistics service providers traditionally feed off very slender profit margins. But as their customers try to weather falling consumer demand and dismal sales, they are facing growing pressure to improve their value proposition.
"For our customers, changes in demand have caused tremendous disruption to their own supply chains, and we have to come up with solutions to deal with high levels of variability," Logan said.
"We have seen a very large increase in the number of Request For Proposals from both our customers and many new customers. We believe customers are re-examining their providers and are seeking to change to providers who are financially stable and have a track record of being able to manage in challenging and rapidly changing market conditions."
Logan said the company was confident it could weather this, or any further, downturn.
"We will opportunistically look for large potentially game changing acquisitions," he said. "This is a good market to find those opportunities.
"We are clearly positioning ourselves to come out of this economic downturn as a much stronger and more prominent player in the industry than when we went in."
At Agility's global integrated logistics (GIL) business, gross revenue was down 9.5 percent on a constant currency basis with net revenue up four percent.
Across the group's three divisions - GIL, defence and government services and infrastructure - net profit was up 16.4 percent compared to the same quarter last year, with earnings per share up 21.7 percent over the same period.
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