K+N to axe jobs, demands more influence in Hapag-Lloyd

Kuehne + Nagel’s logistics business has only ever known one direction until now: upwards. However, the Covid-19 crisis has also hit this company hard. The management at its Swiss
headquarters announced a down-sizing process that will lead to the loss of thousands of jobs.

Company owner, Klaus-Michael Kuehne, has meanwhile temporarily failed to further expand his influence in the Hamburg shipping firm, Hapag-Lloyd.

At the same time, the largest terminal operators at German harbors appear to be heading towards a cooperation or a merger.

Klaus-Michael Kuehne is known as tough negotiator  - image courtesy of dpa
Klaus-Michael Kuehne is known as tough negotiator – image courtesy of dpa

As the majority owner of the logistics giant Kuehne + Nagel, Klaus-Michael Kuehne recently announced to the media that 20-25% of all jobs could be lost as a result of the corona pandemic. The
company boss’ actual words were: “We will come out of the crisis much smaller than we were before.” The firm states that it currently employs 83,000 people worldwide.

Job losses especially in the USA
Due to the decrease in global transport volumes, jobs in transshipment terminals will be particularly affected by cuts. This is especially true in the USA, because it has no short-time working
regulations compared those available in some EU countries. In Germany, for example, these regulations enable employees to retain their jobs but temporarily accept wage cuts. In the Germany
example, the wage allowance is between 60-67% of the previous net income and is paid by the responsible state employment agency for a maximum period of 12 months. This provides financial relief
for companies in crisis situations and secures a basic income and job for the employees.

Uncertainty is poison for the economy
How many jobs at Kuehne + Nagel will ultimately be cut depends heavily on the further development of the global economy. The Group does not anticipate a short-term recovery and cites uncertainty
about the consequences of the pandemic for trade and industry as the biggest problem, making business planning processes extremely difficult.

No second Supervisory Board seat – at least for now
Meanwhile, company patriarch Klaus-Michael Kuehne has failed, at least for the time being, in his plan to secure a second Supervisory Board seat alongside the current representative of the Kuehne
holding company, Karl Gernandt, on the Hapag-Lloyd shipping line’s Supervisory Board. Kuehne Maritime GmbH and Kuehne Holding have a stake of just over 30% in the shipping line, followed by the
Chilean shipping line CSMV (30%). In recent months, both companies have engaged in a race to acquire the majority of shares, which briefly drove the value of the Hapag-Lloyd paper up to 189
euros. It currently stands at 89 euros per share.


Kuehne strives to secure a second seat on Hapag-Lloyd’s board of directors but this might need a long breath  -  image: CFG/hs
Kuehne strives to secure a second seat on Hapag-Lloyd’s board of directors but this might need a long breath – image: CFG/hs

Longer-term Hapag-Lloyd commitment
In an interview with the local newspaper Hamburger Abendblatt, Kuehne blamed the Chileans, who had blocked the plan, for the failure of his advance. Six years ago, CSMV was still the largest
shareholder of Hapag-Lloyd, but Kuehne’s recent bidding competition outstripped them. “As the largest shareholder in the meantime, we are entitled to a second seat on the Supervisory
Kuehne stressed in the interview.
Kuehne, who was born in Hamburg, pointed out that he sees the participation in Hapag-Lloyd as a long-term investment and praised the company’s Executive Board for its “good business
visible in the profit of 373 million euros in 2019 and the distribution of a dividend of 1.10 euros per share. At Hapag-Lloyd’s Annual General Meeting next year, he will again try
to fill a second Supervisory Board position with a representative from his company. A position is likely to become vacant then, as the TUI travel group will probably give up its seat. TUI, once
the majority shareholder of Hapag-Lloyd, has no longer held a stake in the shipping line since 2017.

Terminal operator HHLA and Eurogate talk about cooperation
Still in Hamburg, talks are currently underway between the major terminal companies Hamburger Hafen und Logistik AG (HHLA) and its competitor Eurogate from Bremen.
The negotiations are still at an early stage, emphasized HHLA in a statement. However, insiders say that a merger is also on the table, although this would have to be approved by the EU
Competition Commission. A merger would create by far the largest terminal operator at the German North Sea terminals of Hamburg, Bremen, Bremerhaven, and Wilhelmshaven.
The trigger for the possible cooperation are the developments in international shipping, where intensive competitive pressure has created three large alliances: 2M Alliance, Ocean Alliance, and
THE Alliance. These can create enormous economic pressure in price negotiations with local terminal operators, which could make it almost impossible for them to generate returns, also against the
background of the state-subsidized competition in Rotterdam. 

Heiner Siegmund

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Source: Cargoforwarder

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