By Keith Norbury
When global transportation and logistics leader Kuehne + Nagel expanded beyond Europe nearly six decades ago, the first places it set up offices were in Canada. Founded in Bremen, Germany in 1890, Kuehne + Nagel established its first overseas subsidiary in Canada in 1953. That occurred when the company acquired J.W. Mills & Son, a customs house broker in Toronto and Montreal, according to a history of Kuehne + Nagel in a recent edition of the International Directory of Company Histories posted on referenceforbusiness.com.
“We want to create an organization paralleling that in Germany and Western Europe,” Kuehne + Nagel’s then chairman, Alfred Kuhne, was quoted as saying at the time. “We have chosen Canada because we consider her a country of great potential, and because she is a nation of dynamic progress.”
In 1957, the company opened a Vancouver office to serve the Asian market. Today, Kuehne + Nagel has 28 locations across the country. Together, though, they represent a small part of Kuehne + Nagel global operations.
Now based in Schindellegi, Switzerland, Kuehne + Nagel Internationl AG has more than 1,000 offices in more than 100 countries. And it’s still growing. Last year, its employee count reached 63,110, almost 10 per cent more than the previous year, according to the company’s 2011 annual report.
As part of its “Go for Growth” strategy, Kuehne + Nagel made several acquisitions in 2011. They included the perishable logistics business of three South American companies which, on a combined basis, have 160 employees and handle 75,000 tonnes of annual air exports. Among Kuehne + Nagel’s other 2011 acquisitions were 75 per cent of New Zealand-based Cooltainer Holdings Limited for 23.6 million Swiss francs; Netherlands-based J. van de Put Fresh Cargo Handling B.V. for 27.3 million Swiss francs; and U.K.-based Rennies Investment Limited (RH Freight) for 88 million Swiss francs. And, just days before this article went to press, Kuehne + Nagel entered into an agreement to take over the business of Perishables International Transportation Inc. of Vancouver, B.C., an independent freight forwarder specializing in the handling and transportation of fresh and frozen perishables.
Alfred Kuehne’s father, August Kuehne, co-founded the company with Friedrich Nagel on July 1, 1890. A third-generation member of the Kuehne family, Klaus-Michael Kuehne remains the majority shareholder of Kuehne + Nagel, owning 53.3 per cent through a holding company, according to the company’s recent annual report.
Klaus-Michael Kuehne is now the company’s honorary Chairman, having assigned the Chairman’s role to Karl Gernandt, which assignment the company’s Board of Directors endorsed at the 2011 annual general meeting.
Kuehne + Nagel’s management also has a distinct Canadian connection. The group’s current chief executive officer, Reinhard Lange, served as President and CEO of Kuehne + Nagel Canada from 1995 to 1999.
Today, the company proclaims on its website that it’s the world’s number one seafreight forwarder, and ranks among the top three in airfreight and in contract and integrated logistics. In 2011, Kuehne + Nagel handled more than three million containers, the first time it surpassed that milestone. Its seafreight volume grew by 11 per cent in 2011, while its 13 per cent growth in airfreight “exceeded expectations,” said the annual report. Gross profit, however, dropped by about one per cent from 2010, but was still 5.898 billion Swiss francs. That’s all the more impressive given the company’s modest beginnings and that it had to rebuild twice from the rubble after two world wars.
The fledgling company’s early clients were shippers of cotton and glassware. By the end of the 19th century, though, sugar became a major German export. By the time Friedrich Nagel died in 1907, leaving the company in the hands of his partner, Kuehne + Nagel had opened a second branch in Hamburg. The company had also diversified into general shipping as well as expert handling of certain commodities such as lumber and grain.
The outbreak of the First World War in 1914 brought business to a halt. After the war, the company’s rebuilding efforts were hampered by the 1923 devaluation of the German currency. In the 1930s, Kuehne + Nagel, then run by the co-founder’s sons, Alfred and Werner Kuehne, opened a warehouse in Leipzig and a branch in Stettin.
Then the Second World War again stifled overseas trade, and ultimately left Germany’s seaports in ruins. A 1944 air raid destroyed Kuehne + Nagel’s Bremen headquarters, according to that International Directory of Company Histories article.
After the war, Kuehne + Nagel used its damaged facilities to help transport food aid from the U.S. With the assistance of the Marshall Plan, German infrastructure was rebuilt and Kuehne + Nagel was able to construct a modern facility in Hamburg. Kuehne + Nagel soon opened other branches, 19 in all, in Germany in the 1950s and early 1960s.
In 1981, shortly after Alfred Kuehne’s death, the British company Lonrho bought 50 per cent of Kuehne + Nagel. In 1992, Kuehne + Nagel bought back those shares and then went public in 1994.
In recent years, the company has kept on growing, in places like South America, China, and India. For instance, Kuehne + Nagel opened eight new locations in India in 2011 – “all of them in regions of fast economic growth,” said the 2011 annual report.
Not all has been rosy, though. As the annual report noted, under a plea bargain with the U.S. Department of Justice, Kuehne + Nagel agreed to pay a US$9.9 million fine “to resolve allegations that international freight forwarders coordinated their activities with respect to establishing certain surcharges.” More recently, the European Commission slapped Kuehne + Nagel with 53.7 million euros in fines for anti-competitive behaviour allegedly involving 14 freight forwarding companies. Kuehne + Nagel Chairman Karl Gernandt has said the company is considering an appeal of those fines.
Cost increases and lower margins led to “unsatisfactory results for the first quarter of 2012,” said a company news release announcing those results. That was “despite further volume growth,” such as an increase in gross profit for the quarter to 1.502 billion Swiss francs compared with 1.458 billion Swiss francs in the first quarter of 2011. Said CEO Reinhard Lange: “As a consequence of the experiences in the first quarter of 2012, we have intensified our cost management. We are confident that the measures implemented, as well as solid growth will contribute to an improvement of results in the second half of the year.”