European logistics companies are expected to deliver strong third-quarter earnings as resilient global trade, elevated shipping rates and widespread supply-chain disruptions support their bottom lines.
The off-contract ocean container shipping rate from China to the US East Coast has returned to levels seen after Covid-19 upended global trade and could set new record highs as the US and Israeli war on Iran drives fuel costs higher.
The main beneficiaries of this are ocean carriers, whose earnings are closely tied to movements in freight rates. German container shipping company Hapag-Lloyd already raised its full-year outlook, and Bernstein analysts expect Denmark's Maersk to follow suit in what would be its third hike this year.
But for freight forwarders, which coordinate transport for clients, higher rates do not translate into profits to the same extent as for ocean carriers, Morningstar analyst Ben Slupecki said.
Even so, the complex supply-chain situation remains a positive driver for the sector, as customers increasingly rely on large forwarders such as DSV and Kuehne+Nagel to manage extensive logistics networks. Demand for higher-margin services such as customs clearance, insurance and warehousing also boosts earnings, Slupecki said.
European logistics stocks have rallied this year, with Maersk leading gains on expectations of further guidance upgrades, while Schenker integration concerns and a weaker second-quarter performance have weighed on DSV.
DSV remains the most closely watched stock in the sector, with investors waiting to see whether the Road division could improve on-time performance in its seasonally strongest months, Bernstein said.
J.P. Morgan analysts are on the lookout for positive stock drivers for DHL, including benefits from the supply-chain situation and a path to renewed profitable growth in the medium term. Kuehne+Nagel should also post solid earnings for the third and fourth quarters thanks to supportive near-term trends, they said.
DSV kicks off third-quarter earnings season for the sector on October 21.
While Maersk said in September it had restored selected services through the Suez Canal, analysts generally do not expect a gradual reopening of Red Sea routes to materially affect earnings this year.
Other major container shippers, including Hapag-Lloyd, MSC, CMA CGM and COSCO, have also begun restoring Red Sea services, but the process remains gradual and is being continuously evaluated, said Rico Luman, senior economist at ING Research.
"When the current resumption of the route continues, this will have a material impact in 2027," Luman said.
(Reporting by Anastasiia Kozlova and Amir Orusov in Gdansk, editing by Milla Nissi-Prussak)