Freightwaves: Kuehne+Nagel to layoff 2,000 workers amid weak demand, AI push

A turbulent geopolitical environment headlined by proliferation of global tariff regimes and weak shipping demand took a toll on Kuehne +Nagel in the fourth quarter, as core operating income fell 20% year over year to $432.4 million. 

The Switzerland-based logistics behemoth’s net revenue grew a modest 3% to $2.9 billion. Full-2025 net revenue was $11.4 billion, up only 2% from the prior year, according to financial results released on Tuesday. For the year, recurring earnings before interest and taxes declined 17%, primarily due to yield pressure on sea freight during the second and third quarter. Earnings per share were down 25%.

Kuehne+Nagel (SIX: KNIN)implemented a cost-reduction program in October that is expected to eliminate $258 million in costs by the end of 2026. Management said it will eliminate more than 2,000 full-time positions, saving $193 million. The headcount reduction is mostly related to tech-enabled efficiencies and less about soft demand, executives said.

The company had about 85,000 workers at the end of 2025, about 5,000 more than in the prior year.

The third-party logistics provider issued guidance of about $1.7 billion in operating income, but management acknowledged the outbreak of war in the Persian Gulf could alter results. CEO Stefan Paul said the air cargo industry could benefit from the disruption as businesses shift from ocean freight to bypass ocean bottlenecks. Freight forwarders tend to do well when supply chains are roiled as shippers look for experts that can find alternative transport capacity by leveraging extensive carrier relationships.

Flight suspensions from carriers avoiding the Middle East have reduced global air cargo capacity by 18%, according to Rotate, an air logistics consulting firm based in the Netherlands. About 80% of air freight capacity controlled by Middle East carriers, including passenger and all-cargo aircraft, is grounded. Paul said backlogs could begin developing in Southeast Asia and China for the European and U.S. markets if the conflict isn’t resolved by then. 

K+N is working to help customers secure charter flights, but it is too early to say how the war will impact supply and demand in the near future, he added. 

“If the situation continues I would expect short-term rates to rise rapidly on the Indian subcontinent and Southeast Asia to Europe and U.S.  East coast markets,” Niall van de Wouw, chief airfreight officer at Xeneta, a freight data provider, told FreightWaves in an email. 

K+N expects strong customer demand in 2026 from the aerospace, healthcare, pharma, high tech, semiconductor, and data center sectors, including Tesla.

Core profit from ocean logistics fell 46%, behind a 2% decline in volume y/y, versus a strong prior year comparison, and weak shipping rates — even as net revenue increased 5% to $682.8 million. Volume was weakest on the trans-pacific trade lane as U.S. tariffs discouraged imports from Asia. The largest ocean freight forwarder handled 4.3 million standard container shipping units last year, as volume barely budged (+0.3%) from the prior year. Yields are expected to be pressured again this year as ocean carriers add new-build capacity

The sea business unit achieved its strategic objective of expanding business with small and medium-sized customers, who for the first time accounted for half of total volumes on a full-year basis and enabled the company to stabilise yields in the second half, the company said.  

The air freight unit saw net revenue fall 7% in the quarter to $592.4 million, with core operating profit down 11% at $170.4 million as freight rates fell 3.8%. Air tonnage managed in 2025 grew 7% to 2.4 million tons, ahead of market growth. K+N said it gained market share in 2025, primarily through business in the AI, healthcare and aerospace sectors, solidifying its position as the top air freight forwarder in the world. The air cargo market as a whole grew 4% in 2025, a significant decline from the elevated demand in 2024. Analysts expected a correction last year to more normal supply-demand dynamics, but the market’s resilience in the face of whipsaw changes in tariff barriers surprised to the upside.

Hong Kong-based subsidiary Apex Logistics in November signed an agreement to acquire the majority of shares of Andes Integración Logística, expanding its presence in South America. The company handles more than 90,000 TEUs of ocean shipping containers and 40,000 tons of air freight annually. 

Trucking, a smaller part of K+N’s total business, saw net revenue increase 7% to $422 million and core operating profit nearly double to $24.5 million.

K+N on Thursday said it has acquired the trucking division of freight forwarder LSL-Lohmöller Spedition und Logistik GmbH, enhancing its domestic road network in Germany. Part of K+N’s strategy is to grow its road freight business. Last year, the company acquired TDN in Spain. 

The LSL-Lohmöller less-than-truckload and full truckload business is small, posting $27.6 million in revenue in 2025. K+N added 50 trucks and 142 employees with the deal. 

K+N’s contract logistics unit grew net revenue by 2% in the quarter, with core operating profit up 20% to $100.7 million. The company opened new distribution centers last year in Japan, Turkey, Vietnam and the United Arab Emirates, with five additional hubs launched in important economic zones in India. With more than 150 new logistics projects implemented for customers, contract logistics continued to increase its contribution to the group’s results. Cloud services and healthcare are also focus areas for contract logistics.

Last month Koki Group, a Japan-based power and air tool manufacturer, signed a contract for K+N to manage warehousing and distribution from two facilities in Poland and Belgium. The distribution centers are responsible for shipping products to customers in Central and Western Europe.

In October 2025, Eduardo Razuck took over as Executive Vice President Contract Logistics, succeeding Gianfranco Sgro.

Focus on tech stack

K+N, like other large logistics providers, is investing heavily in artificial intelligence and cloud-based systems that leverage troves of proprietary data to drive productivity and new service capabilities. The AI effort is expected to deliver material productivity gains in the next 18 months, said Alirez Nemati, chief AI and innovation officer.

The company recently migrated its in-house transportation management system and other key legacy systems to the cloud, where every transaction is now supported. AI allows the company to cleanse and standardize master customer data in weeks rather than months, materially accelerating data readiness. Clean master data combined with digitizing internal expertise into structured, reusable intelligence and centralizing, standardizing and automating repetitive workflows are prerequisites for maximizing AI’s return on investment, he said. 

“In air logistics, our AI-powered pricing tool delivers quotes twice as fast as before, improving responsiveness and quote capacity. In sea logistics, AI is embedded into myKN, reducing booking time from minutes to seconds and lowering human errors at the same time. In customs, AI-driven automation is re-reducing handling time per declaration, improving service levels, and delivering meaningful cost savings.

“In contract logistics, machine learning for dynamic workforce planning is showing double-digit productivity gains in pilot sets. These positive results only scratch the surface, and it’s a big surface. We see more upside on the horizon as these solutions are fully deployed across our global operations and as a host of other AI development projects are implemented,” said Nemati.

CEO Stefan Paul stressed that the company is focused on change management, education and coaching employees so they know how to best manage all the digital agents. Management is working with operational teams to identify where AI can be utilized to streamline repetitive work and free up employees to focus on complex customer issues. Dedicated “tiger teams” are also collaborating with business and functional units to identify challenges at the ground level, Nemati added. 

Forwarders that don’t have to rely on third-party tech stacks, including transportation management systems, have an advantage, because they have full control of the end-to-end process and can make big workflow changes across the enterprise rather than limiting improvements to specific customers, the AI chief said. “You can only do that if you own your own TMS, [otherwise] you have to negotiate with third parties on the improvements of their stack,” he added.

By owning its own TMS, K+N is “capable of controlling and centralizing our own data. One of the biggest challenges in this space is to really harness and centralize the data that you have, cleanse that data, and use that data to feed your AI models,” said Nemati.

In a client note, Jefferies equity analyst Michael Aspinall wrote, “Technology should amplify KNIN’s advantage in terms of speed, consistency and customer experience in ways that smaller forwarders can’t replicate. There is a question about how much internal tech is advantageous, with Wisetech recently commenting that 50% of operational and line management labor will be able to be removed within two years.”