KLN's Headwinds Fully Priced In; Shares Cheap

Kerry Logistics Network’s, or KLN’s, international freight forwarding, or IFF, segment accounted for 52% of consolidated segment profit in the first half of 2024. We think it is seeing stabilizing business conditions, with freight rates having started to rise in the fourth quarter of 2023. Demand for international cargo capacity has increased, as shipping vessels took longer routes to avoid Houthi attacks in the Red Sea since then. Nonetheless, we expect that rising international trade restrictions imposed by the US government may dampen trade, and the gradual easing of capacity constraints could reduce freight rates.