Aggressive UTi Worldwide Advising Tight Margin Freight Services to Expect Growth in 2016


One of the successful freight services named UTi Worldwide belonging to US freight forwarder and contract logistics has revealed its second quarter financial results recently. The second quarter results of UTi are positive with remarkable growth seen in profits. The chief executive of UTi freight services sharing his advice to major shippers and freight services about their determinant focus relied on cost of logistics avoiding value is the main reason behind their success and also advised to adopt rate increases for obtaining rate increases in the upcoming year. UTi freight service mostly concentrated on cost and margin of shipments avoiding profit thinking in every situation. He supported the above statement by showing their large clients as examples which have driven more margins out of the industry from past few years. He added that smaller shipment sizes and fixed costs of freight services are the reasons minimizing the profits. With tough competition facing from rival companies, UTi freight service has become smart in its operations. Moreover, clients are expressing their desire to continue with us keeping concern of price hikes. Moreover, they are very cooperative with us despite asking for improved service levels and cut off times.

Transforming market condition from time to time has changed the objective of clients to look for transportation and freight services that avail at low prices. He said that the new shippers and freight services to concentrate more on marketing as clients are scared about increasing prices. UTi revealed that revenue has declined by 16.5 percent standing at 913.9 million dollars compared to previous year revenue standing at 1.09 billion dollars. There is 14 percent net decrease seen in revenues to 338.5 million dollars from 393.7 million dollars. The decline in revenues is noticed primarily due to lower volumes recorded in sea and air cargo services, also adding the impact of a hike in dollar value against Euro. He said that company’s second quarter volumes recorded flat results this year. Comparing the first quarter results, they expected 5 percent seasonal increase in volumes and minimum 10 percent increase in teu of ocean freight service. But after results came out, the company has seen 10 million dollars decline in net revenue of the quarter. He admitted the fact that the IT transformation program widespread by UTi aided towards the destruction of service level performance dropping the market shares.

Immediately he replied that the trend has changed now after facing continuous loss period as their forwarding volumes are now stable with growth return of freight services. He continued that UTi has won two largest contracts of air and freight services recently in which intra-Asian ocean contract was of 25,000 teu availed from a single client while air business contract was through global bid with million volumes. Both are new clients to the company with new portfolios. He said that they are expecting good growth in 2016 meeting the previous target. It is said by Rick Rodick, chief financial officer of UTI that the forecast report of EBITDA was adjusted from 75 million dollars to 100 million dollars.


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