MK and Panalpina
Panalpina were MK's biggest (by far) client. They (Panlapina) have been under investigation for bribery for the past 2 years and as a result their traffic to Africa had dropped off dramatically. I do not understand how MK could have claimed that they expected business to improve when this was going on and why it took a visit from the CAA to convince them to voluntarily give up their AOC.
Why did the CAA not see this coming (after all they must read IFW and these forums!)?
This article was published by IFW 2 months ago..
Panalpina shareholders demand answers
Damian Brett | Fri, 12 Mar 2010
Anger over forwarder's falling market share over past two years
Panalpina has vowed to hold on to its market share over the coming 12 months after losing ground to competitors last year.
The forwarder’s annual results telephone conference with shareholders and analysts yesterday became heated, with one shareholder demanding someone “step up and take responsibility for the poor performance”, referring to market share lost over the last two years.
In response, CEO Monika Ribar said she also felt frustrated over losing ground to competitors and blamed exposure to trade lanes hit hard by the recession and an investigation by the US Department of Justice (DoJ) over alleged corruption in Nigeria under the Foreign Corrupt Practices Act (FCPA).
She said: “It is not easy being under investigation for two years, and it is not making the situation any easier. But it is our target to grow in line with the market.”
Chief operating officer Karl Weyeneth added: “In terms of volume, on our really key lanes, such as Far East westbound, transatlantic and transpacific, we did not lose share in 2009.
“The share loss came from lanes where we had a lot of business affected by the FCPA, such as African oil and gas business, where we lost dramatic share.
“You can say the whole FCPA and Nigeria situation reflects badly on the management, but the fact is that as long as we are still involved in the investigation we will continue to lose market share, because our customers have internal regulations which prevent them from doing business with companies which are under investigation by the DoJ.
“As soon as this investigation is over, we will win some of this business back. Customers have told us ‘as soon as you have settled the FCPA, we will do business with you again’.”
Panalpina said it also suffered due to its high proportion of business with large companies that reduced their volumes last year.
However, these larger clients were starting to increase their volumes again, especially in the hi-tech and telecoms industries.
Panalpina also revealed that last year it faced an “unprecedented squeeze” on its gross profit per unit, which declined by 30% year-on-year in Q4 for both air and ocean, because of a lag between rates rising and passing the increases on to customers.
The situation improved in January and February for its air sector, but its ocean sector’s profit per unit declined even further because ocean rates continued to increase.
In case rates from carriers continue to increase this year, Panalpina is trying to get customers to sign contracts allowing the forwarder to implement peak season surcharges, exit clauses and volume caps.