Logex LineAugust 2009

From the Ernst & Young desk................................................................ 02In focus: ............................................................................................. 03 containerized rail haulage

India sector news................................................................................. 08 Policy and infrastructure Company buzz Market watch

International sector news..................................................................... 14Logistics and deals............................................................................... 16 International deals India deals

References.......................................................................................... 18

Contents

1From Ernst & Young’s deskWelcome to the August edition of Logex LineOn the domestic front, the Ministry of Shipping and the Indian Railways have made various announcements relating to infrastructure development in ports and rail sectors in India, fueling optimism in the logistics industry. Global logistics players such as DHL, Universal Success Enterprise and domestic players such as All Cargo Global Logistics, Container Corporation of India, Pratibha Shipping and Poompuhar Shipping have all announced their expansion plans.

On the global front, players such as Fedex, Sino-Global Shipping, ProLogis and Schenker Rail have announced their expansion plans, based on their optimistic long-term view of the global economy.

We have highlighted the long-term growth opportunity in the containerized rail haulage segment under the “In focus” section of this issue.

This month, the Logex and the Sensex have both gone up by 8%.

We hope you find this edition interesting and informative. We welcome your feedback on it. Please write to us for any further information or to add people to our mailing list.

In focus Containerized rail haulage

2

Introduction

In spite of being cost-effective, the share of the railways in the overall cargo and containerized cargo traffic in the country has remained low due to longer lead and turnaround time, infrastructure bottlenecks, the congested rail network and the railways’ preference for passenger trains. However, this scenario is expected to change due to various drivers such as:

Long-term opportunity due to revival in trade•

Potential from increasing container traffic•

Likelihood of domestic container traffic improving•

Railways to regain market share from roads •

Strategic shift in the focus of Indian Railways•

Dedicated freight corridor to unleash the rail potential•

NMDP aiming to double port capacity by FY12•

Long-term opportunity due to revival in tradeHistorically, India’s foreign trade has grown at 2.5x GDP • and the correlation of its cargo traffic with its GDP is just above unity.However, globally and in India, rising containerization has • outpaced the growth of normal cargo traffic. Further, India’s level of containerization is less than 25%, which is well below the global average of 60–70%.

According to various estimates, India’s EXIM container traffic • is set to reach >22m TEU by FY16, led by rising foreign trade and containerization.

32 36 40 46 50 58 73147

640460370340320

310300290

23%

16%15%14%15%14%

12% 13%

0100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007 2012E0%

5%

10%

15%

20%

25%

Major port traffic (Million tons)Containerized cargo (Million tons)

Containerized cargo (%)

Growth in containerized cargo

Mill

ion

tons

% of

tota

l car

go

Source: Secondary sources

EXIM traffic break-up reveals potential for increasing containerisation (USD million)

Exports ex-oil

FY04 FY08 CAGR FY08/04

(%)

Potential containerisation

(%)

Agri & allied products

7,328 16,210 22 90

Ores & minerals

2,369 9,124 40 20

Leather goods

2,163 3,504 13 100

Gems & jewellery

10,573 19,688 17 NA

Sports goods

99 134 8 100

Chemicals 9,960 22,358 22 25

Capital goods

12,406 37,371 32 100

Textiles 13,495 22,138 13 100

Unclassified 1,881 4,079 21 25

Total 60,275 134,607 188 66

Imports ex-oil

Gems & jewellery

8,690 32,480 39 NA

Machinery 7,129 7,980 3 75

Project goods

9,304 45,197 48 75

Other bulk imports

396 1,294 34 25

Others 32,062 84,927 28 60

Total 57,580 171,879 152 175

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Potential from increasing container trafficAlthough key container cargo such as capital/project goods, • machinery and other cargo have grown at a fast pace, overall container traffic growth has been rather low In india. Due to the various advantages of containerizing cargo, e.g., • cost economics, easy handling, less damages, fast turnaround time and multi-modal transport options, containerization is slated to grow in the future. This will be due to more cargo being containerized, and its • penetration is likely to see a significant increase as ports and inter-modal infrastructure improve.Based on the potential containerization of individual items, • overall containerization is forecasted to be 50–60% of India’s EXIM trade in the next four to five years, which is almost twice the current rate of containerization at 25%.

Growth in container rail haulage

2.47 2.88 3.363.9 4.23

4.74 5.44

14.2

0.75 0.9 1 1.2 1.371.55 1.71

5.6

40%

31%

33%

32%

31%

30%30%

31%

0

2

4

6

8

10

12

14

16

2001 2002 2003 2004 2005 2006 2007 2014E0%

5%

10%

15%

20%

25%

30%

35%

40%45%

Total container trafficRail container traffic

Railways share (%)

Mill

ion

TEU

s

% of

con

tain

er c

argo

Source: Secondary sources

Total EXIM rail trafficTotal domestic rail traffic

Domestic container rail traffic is still small as compared to EXIM

0500

1000150020002500300035004000

FY03

FY04

FY05

FY06

FY07

FY08

FY09E

FY10E

FY11E

FY12E

Source: Secondary sources

000

TEU

s

Likelihood of domestic container traffic improving

Empirically, rapidly developing countries such as India exhibit • transport elasticity exceeding unity. Historically, the elasticity of rail freight to the country’s GDP has ranged from 0.6 to 0.75 (except during the 10th Plan).This is primarily because containerization of cargo is as low as • <5% in the domestic sector. However, the increasing market share of the organized sector in retail is likely to increase containerization of domestic cargo. Further, on a targeted GDP of 7% for the 11th Five Year Plan, we believe that domestic container traffic will reach 2x GDP.

Railways to regain market share from roadsFor long-haul transportation, rail is a less expensive option • than road transport. However, even with the cost differential being as high as 2-3x, road transport has garnered the bulk of the traffic in the country. We believe that the share of rail has lagged behind road transport due to the following:

Rail-linked logistics sector to drive growth

2001-02

8%1%

4%

19%

65%

3%

Road Rail SeaAir Services Storage

2006-07

7%1%

4%

17%

69%

2%

2011-12

10%2%

3%

23%

60%

2%

Source: CSO

Lack of last-mile connectivity with rail transporters• Flexibility provided by road transport operators• Inefficiencies associated with the current monopoly of rail • haulage providers, delays, etc.

The share of the railways is projected to increase in the transportation pie from 17% in FY07 to 23% at the end of the 11th Five Year Plan by FY12.

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Strategic shift in the focus of Indian RailwaysIndian Railways’ strategy of improving its efficiency and • performance has helped it show an impressive turnaround over the last few years. It is set to regain some of its lost market share on the back of the following initiatives:

Improved capacity and productivity: • There has been an increase in axle load from 20.3 tonnes • in FY07 to 22.9 tonnes over FY08 and a reduction in turnaround time from seven days in FY03 to around five days in FY08 in its generated incremental freight-loading capacity.

Freight rate reforms: • The tariff structure has been changed from a fixed to a • market-driven tariff policy, which is linked to seasonality and price elasticity of demand. These initiatives have helped to increase the volume of key commodities.

Value-added services beyond transportation: • To improve its market share, Indian Railways has • attempted to transform itself from a pure transport provider to a service- oriented logistic solution provider. It has tried to do this by providing warehousing and cold • storage facilities, and increasing freight terminals and containerization. It is also looking at setting up logistics hubs through • public-private partnerships (PPP) near or along side important railheads.

Share of rail to improve with entry of private players• With the entry of private players in the rail haulage • business in 2007, the share of railways is likely to improve since they are expected to provide last-mile connectivity, better service and quicker turnaround at terminals.

Dedicated freight corridor to unleash the rail potential

Setting up of dedicated freight corridors (DFCs) would unravel • the potential of rail and significantly accelerate its growth after 2014, when DFCs are expected to become operational. DFCs will have various advantages over the current system and • are expected to achieve the following:

Reduce delays (Exclusive tracks will ensure that • goods traffic is not affected by the movement of passenger trains.)Enhance the carrying capacity of trains (The increase in • the axle load will raise the carrying capacity per train.) Lower turnaround time (This can be accomplished • by using superior rolling stock and advanced signaling systems).

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Investment and development of major ports under the 11th Five Year Plan

Major ports

Capacity (million tons) NMDP

FY05A FY07A FY09E FY12E No of projects

(INR billion)

Kolkata (incl Haldia)

43 55 54 95 40 65

Paradip 39 66 60 106 28 24

Visakhapatnam 50 56 75 108 38 26

Ennore 12 13 35 64 14 65

Chennai 42 49 74 72 14 22

Tuticorin 16 21 36 64 24 46

Cochin 15 19 33 55 14 79

New Manglore 30 38 48 60 20 71

Mormugao 28 29 41 67 12 8

Mumbai 43 44 58 92 14 28

JNPT 33 52 59 96 32 73

Kandla 45 67 77 122 26 51

Total 396 509 650 1001 276 558

Source: Planning Commission (Working group-11th plan), NMDP, Centrum research

Conclusion

The share of the railways is expected to increase substantially in the long term due to various drivers such as increasing exim and domestic volumes, containerization, investment in port and rail infrastructure and the entry of private players. This will benefit players who have made heavy investments in rail infrastructure.

References• Logistics Sector, April 2009, © Centrum Broking Private Limited

• India Transportation: Sea and Land Cargo, February 2009, © Nomura Financial Advisory and Securities (India) Private Limited

• Ernst & Young research and analysis

NMDP aiming to double port capacity by FY12The National Maritime Development Programme (NMDP) • launched an investment plan of INR1,003 billion in 2005, which covered 387 projects that are to be implemented by FY12. The program, which includes ports, inland waterway transport • (IWT) and shipping projects, aims to increase capacity, raise private participation, and improve the quality of service and efficiency in the port sector. Under the port sector, 276 projects have been identified • in the 12 major ports in the country, with an anticipated investment of INR558 billion. The various projects, when completed, are expected to increase the total capacity of these ports from 508 million tonnes in FY07 to 1,002 million tonnes by FY12.

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India sector news 3

A. Policy and infrastructure

Government lays down plans for port expansion 1.

To augment the capacity of major ports in the country, the Ministry of Shipping (MOS) has identified 21 expansion projects on a PPP basis at a total investment of INR160 billion. These projects are scheduled to be awarded in a phased manner by March 2010 and will involve mechanization of berths, construction of new berths, and development of bunkering and cruise terminals. The bidding process for 16 projects is currently under way and requests for qualification have been issued. The MOS is also in the process of identifying another 10 projects that are to be developed during FY11.

Proposed investments

Port Facility Cost (INR billion)

JNPT New container terminal

67

Standalone container terminal

6

Paradip Deep drought iron ore berth*

6

Deep drought coal berth

5

Tuticorin Container terminal 3

Mormugao Coal terminal 2

New Mangalore Mechanized iron ore terminal

NA

Ennore Container terminal 14

*This project has already been awarded to a consortium comprising Gammon

Infrastructure, Minerals and Metals Trading Corporation and the Nobel Group.

During the 11th Five Year Plan period, investment in the PPP mode is estimated to be INR380.8 billion out of the total planned investment in ports amounting to

INR574.5 billion. The projects are expected to involve upgrading or construction of berths, deepening of channels and procurement or replacement of equipment.

The government is also planning to set up a regulatory body, which will consist of a Chairman and four members, who will oversee the functioning of major ports. It has drafted the Major Ports Regulatory Authority Act, 2009. The authority will fix the rates from time to time and will lay down the performance norms and standards of quality, continuity and reliability of service.

Meager addition of gross tonnage (GT) by Indian shipping 2. companies in 2008

The country’s total shipping GT increased from 9.03 million in 2007 to 9.3 million in 2008. Its GT fell from 9.32 million on 1 February 2009 to 9.28 million by the first week of J une 2009, although the number of ships increased from 916 to 938.

Authorization of ports by the Government of India (GOI) 3. to award contracts independently

The GOI has empowered port authorities to award contracts to selected bidders under the PPP mode without the prior approval of the MOS.

The MOS has written to all port trusts, authorizing them to sign concession agreements for PPP projects at their board level. However, the MOS must be informed about all the work awarded.

Gangavaram port inaugurated4.

Gangavaram port, built at a cost of INR20 billon near Visakhapatnam on the Bay of Bengal coast, was inaugurated in July 2009. The port is built by the D.V.S. Raju-led consortium on land provided by the Andhra Pradesh state government.

It is the only port in the country with the infrastructure to handle super cape-size vessels of up to 200,000 dead weight tonnage (dwt) carrying coal and iron ore. In the first phase, five berths have been constructed with an annual capacity of 35 million tonnes. In the second phase, the port will add nine more berths that will handle dry and break bulk and container cargo with dedicated cargo-centric zones.

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Proposed investments

Categories Investment (INR billion)

Gauge conversion 19.1

Machinery and plants 17.9

Restoration of dismantled lines

20.5

Building new lines 29.2

Amenities of staff and passengers

15.3

Port users will benefit from the following:

Reduced per tonne ocean freight due to larger parcel • sizes at deep draft berths.

Reduced waiting time and faster turnaround of vessels.•

Cost-efficient logistics solution to high-speed cargo • evacuation systems.

Competitive tariffs.•

The port has already achieved record discharge rates of 70,000 tonnes of coal every day. It has set a target of reaching 200 million tonnes with 29 berths between 2015 and 2020.

Concession agreement signed for Paradip port5.

The MOS signed a concession agreement to construct a deep draught iron ore terminal at Paradip port. The pact was signed between the Paradip Port Trust and Blue Water Iron Ore Terminal, the concessionaire for the project. Blue Water is a special-purpose vehicle floated by the consortium of the Nobel Group of Hong Kong, MMTC Ltd. and Gammon Infrastructure Projects Ltd.

The consortium will build a deep-draught iron-ore terminal at a total cost of INR5 billion (USD11 million). The terminal will have a draught of around 16 meters, which will enable it to handle vessels of up to 180,000 dwt. Currently, the port can accomoodate vessels of up to 75,000 dwt. Construction is expected to begin in the next three months and will be completed by mid 2011.

It is the first port project to be implemented under PPP in the sector according to the new model concession agreement approved by the cabinet and the tariff fixed by the Tariff Authority for Major Ports (TAMP).

Railway budget proposes infrastructure development6.

Indian Railways (IR) plans to invest INR2,300 billion during the 11th Five Year Plan period to improve its productivity. In the FY10 budget, IR announced its plans to invest INR407.5 billion in activities related to throughput enhancement of high-density network routes, improvement and expansion of traffic facilities and networks, construction of flyovers and by passes and improvement of goods sheds.

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Other key initiatives announced in FY10 budget:

Form ation of expert panel for rail optic fiber network•

Use of rail land bank for industrial purposes•

Setting up of a coach-manufacturing factory with a • capacity of 500 coaches per year

Acquisition of 18,000 wagons during FY10 as compared • to 11,000 wagons in FY09

A 700 km lane, doubling in FY10 as compared to • doubling of 363 km lane in FY09

The Delhi Mumbai Industrial Corridor to be developed in • the PPP mode

Setting up of a 1,000 MW power plant with NTPC•

Gauge conversion of 1,300 km during FY10•

Development of an Eastern Industrial Corridor • and utilization of railway land bank for it

IR focusing on PPP7.

IR is planning to implement various PPP projects, including the construction of 50 world-class stations, medical and nursing colleges, logistics parks and cold storage facilities. The biggest project is the Delhi-Mumbai Industrial Corridor, which will include industrial hubs, rail port connectivity, logistics parks and mega power plants — all through PPPs.

The Railway Ministry aims to encourage private ownership of special- purpose rolling stock and private operation of freight terminals. The Ministry unveiled a new policy to allow construction and operation of private freight terminals and multi-modal logistics parks. It will also allow containers to access private sidings to attract piecemeal traffic presently not being carried by the railways.

Tax incentive to attract funds for warehouses and 8. cold storages

In the FY10 budget, the Finance Minister announced a tax incentive scheme to attract investments in the warehousing and cold storage sector. The scheme proposes that all capital expenditure, other than expenditure on land, goodwill and financial instruments to build and operate such facilities, can be treated as tax deductions.

In the FY10 budget, IR announced its plans to invest INR407.5 billion in activities related to throughput enhancement of high-density network routes, improvement and expansion of traffic facilities and networks, construction of flyovers and bypasses and improvement of goods sheds.

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India wastes 25–30% of its fresh produce due to lack of post-harvest management facilities, absence of suitable cold storage facilities and lack of an organized distribution system. The industry estimates this spoilage to be worth INR500 billion at current prices every year.

B. Company buzz

Dolphin Offshore to build shipyard1.

Dolphin Offshore has laid down its plans to construct a greenfield shipyard at Jaffrabad in Gujarat. This shipyard will be built in three phases during the next five to six years. A total land area of over 250 acres is to be built at a cost of USD85 million. The company is also looking for a JV partner for the proposed shipyard.

The shipyard will focus on small and medium-sized anchor handlers, supply vessels and multipurpose support vessels and will also repair offshore vessels and jack-up rigs.

In the first phase, expected to be completed in the next two years, the company plans to set up a fabrication facility for its own offshore engineering contracts, one slipway, machinery shops and an office block.

The second phase involves the construction of two jetties and an outfitting berth, while in the final phase it is planned that a drydock facility will be developed in the yard to repair jack-up rigs. Currently, no domestic yard in India has facilities to undertake repair of jack-up rigs.

Launch of operations to India by Maximus Air Cargo 2.

Abu Dhabi-based Maximus Air Cargo has started operating seven cargo flights a week between the Middle East, the Indian sub-continent and East Africa for Etihad Airways.

Maximus is deploying Airbus A300-600RF aircraft and serves Nairobi, Chennai, Colombo and Bangalore. From September 2009, it will begin two flights a week to Khartoum, Kolkata and Dacca. In addition, the company will acquire another factory-built A300-600 freighter to fulfill its Etihad contract.

DHL focusing on automotive supply chain in India3.

DHL is planning to augment its automotive supply chain by building warehouses in major cities to provide warehousing services for export of automobiles and automotive components.

Within India, DHL has dedicated automotive teams that provide strategic consulting services to a diverse range of customers, from international players seeking to expand their presence in the domestic market to domestic companies aiming to go global. The company services more than 50,000 customers across India. Its key customers include Mahindra and Mahindra, Skoda, Maruti Suzuki India Ltd., Hyundai and Tata Motors Ltd.

Pratibha Shipping planning to expand fleet4.

Pratibha Shipping plans to expand its fleet to honor its long-term business contracts with the Jamnagar-based Reliance refinery. The company is scouting the second-hand market for two crude tankers. It is looking for double-hull panamax and suezmax units that are around 10 years old.

Poompuhar Shipping seeking to expand fleet

State-owned Poompuhar Shipping plans to acquire two bulkers of between 28,000–55,000 dwt on a long-term charter to transport coal for state-owned utilities in Tamil Nadu. The bulkers will ship coal from either Haldia or the Paradip port to Tuticorin.

Universal Success Enterprise Ltd. to invest in ports5.

Singapore-based Universal Success Enterprise is looking to invest nearly USD1.5 billion in ports to serve two 10,000-MW power facilities in West Bengal and Gujarat and one 5,000 MW facility in Maharashtra. The ports will initially manage coal imports, but are eventually expected to handle ore and containers.

The ports’ facilities will have a draught of between 18–20 meters and will be able to accommodate vessels of up to 250,000 dwt. Work is expected to commence by the middle of next year and will be completed in 2015.

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Kalindee Rail Nirman banking on freight corridor project6.

Kalindee Rail Nirman expects to receive orders worth INR5 billion from the Indian government’s freight corridor projects in FY10. It is anticipated that the government will allot orders worth INR20 billion for the freight corridor projects in FY10.

The corridor seeks to link north India with ports on the country’s eastern and western coasts. Kalindee Rail will supply signaling systems and carry out gauge conversions of rail tracks.

All Cargo Global Logistics (AGL) scouting for international 7. acquisition

AGL is exploring global acquisition opportunities in the non-vessel- owning common carrier (NVOCC) space. The company is looking for country-specific NVOCC firms to consolidate its presence in markets including Europe, US and China.

This proposal has come at a time when AGL has put all its major expansions on hold. The company is currently only investing in capacity expansion at its existing container freight station locations in Chennai and Mumbai. It has also deferred its plans of setting up 10 logistics parks, at a cost of INR3.4 billion, for which it had acquired land at various places.

Growth in domestic traffic reported by Container 8. Corporation of India (Concor)

Concor recorded a 14% y-o-y growth in its domestic traffic during 1Q09. However, its international traffic declined by 9%, y-o-y, during the same period due to global recessionary trends. The company has increased its focus on improving its share in the domestic market to offset the decline in contributions from its EXIM segment.

Sical Logistics enters JV for automotives 9. management yard

Sical Logistics signed a JV agreement with Japan-based Mitsui OSK Lines Ltd. (MOL) to set up an automotive management yard at Ennore port near Chennai. The yard will manage automotives in complete built-up unit (CBU) form and will cater to automotive exporters and importers based in India.

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0102030405060708090

100

Jul'08

Aug'08

Sept' 08

Oct '08

Nov'08

Dec'08

Jan'09

Feb'09

Mar'09

Apr'09

May'09

Jun'09

Jul'09

Inde

x nu

mbe

r

Logex Sensex

Market watch; logex v/s sensexC. Market watchThe Logex index provides a quick snapshot of the performance of Indian logistics companies as compared to the market as a whole. This index comprises 12 logistics companies listed on Indian stock exchanges.

We have highlighted the performance of the Logex as compared to the Sensex over the last 12 month period.

In July, the Logex continued its journey upward by closing at 8% higher than in June. The Sensex also shows a positive performance by moving up by 8%.

S.no. Company Fiscal year end Current FY2009E FY2010E FY2011E

Domestic P/E EV EBITDA

P/E EV/EBITDA

P/E EV/EBITDA

P/E EV/EBITDA

1 All Cargo Global Logistics December ‘08 19 15 17 10 15 na 13 na

2 Arshiya International Ltd March ‘09 40 40 10 4 na na na na

3 Blue Dart Express Ltd. December ‘08 16 9 na na na na na na

4 Container Corporation of India March ‘08 17 14 17 12 15 11 na na

5 Gati Ltd. June ‘08 17 12 na na na na na na

6 Gateway Distriparks Ltd March ‘09 11 10 13 na 10 na na na

7 Transport Corporation of India March ‘09 19 8 15 7 12 7 na na

8 Sical Logistics Ltd. March ‘09 31 na na na na na na na

9 Aegis Logistics Ltd. March ‘09 8 5 na na na na na na

10 Balmer Lawrie & Company Ltd March ‘09 7 6 na na na na na na

Average 185 119 72 33 52 18 13 na

Intenational

1 Kuehne & Nagel December ‘08 19 10 20 11 19 10 17 9

2 CH Robinson December ‘08 25 14 25 14 23 13 20 12

3 United Parcel Service December ‘08 19 9 25 11 20 10 16 8

4 Wincanton March ‘09 17 4 9 4 9 4 8 4

5 TDG September ‘08 13 9 14 9 13 9 13 9

Average 93 46 93 49 84 46 74 42

Source: BSE, Bloomberg and Ernst & Young research. The Logex and the Sensex are indexed by taking the value of the last trading day of September 2007, with 100 as the base. The Logex is calculated based on the sum of the market capitalization of 12 selected logistics companies.

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International sector news 4

FedEx Ground opens northern Ohio hub1.

FedEx Ground, the small package ground delivery unit of FedEx, opened a new USD90 million distribution hub at Toledo in northern Ohio as part of its ongoing network expansion initiative across the US.

The hub uses advanced material-handling technology that will boost its processing rates to 22,500 packages per hour on 15 miles of conveyor belts. With its projected future expansion, the facility will have the capacity to process 45,000 packages per hour at full capacity.

The new FedEx Ground hub is part of the company’s countrywide network expansion plan to exponentially increase its daily package volume capacity and enhance the speed and service capabilities of its network further. Since embarking on the multi-year expansion program in 2002, FedEx Ground has opened eight new hubs that use advanced material-handling systems and has expanded and/or relocated more than 500 local facilities.

FedEx Ground opens hub in Chicago2.

FedEx Ground opened a new USD125 million distribution hub in Chicago to boost its daily package volume capacity and increase the speed and service capabilities of its network further.

The new 131,064 square meter facility will provide enhanced processing rates of up to 30,000 packages an hour, additional load and unload doors, and more scan tunnels and sorters.

UPS reports sharp decline in profit3.

UPS Inc., the world’s largest shipping carrier, reported a 49% y-o-y decline in its net profit to USD445 million for 2Q09, as its sales declined by 16.7% y-o-y during the ongoing economic downturn.

The company reported that the decline in its domestic and international businesses is stabilizing, but volumes are still significantly below last year’s levels. The average daily volume of UPS’ US domestic package segment has declined by 4.6%; its air volume has been flat while its ground volume has fallen by 5.4%. Its average daily export volume has decreased by 7.3%.

Sino-Global Shipping America enters partnership with 4. Forbes & Company

Sino-Global Shipping America has signed an exclusive partnership agreement with India-based Forbes & Company. Under the terms of the agreement, Forbes will recommend Sino-Global as its exclusive business partner to all its existing clients in India, and Sino-Global will serve all the company’s vessels appointed by Forbes in China. Similarly, Sino-Global will recommend Forbes as its exclusive business partner to all its existing clients in China, and Forbes will serve all vessels appointed by Sino-Global in India.

Aramex joins Cargo 20005.

In July 2009, global logistics provider Aramex joined Cargo 2000, which is part of the International Air Transport Association and provides quality management systems to the global air freight industry.

Cargo 2000 re-engineers air cargo transportation schemes for shippers and consignees. Its processes are backed by measurable quality standards to improve the efficiency of air cargo. The company’s members include around 60 major airlines, freight forwarders, ground-handling agents, trucking companies and IT providers worldwide.

ProLogis leases 200,000 sq ft in Japan6.

ProLogis, a leading global provider of distribution facilities, signed two new lease agreements during the second quarter of 2009 that totaled 200,000 square feet of recently developed distribution space at ProLogis Parc Zama I in Japan.

The transactions included leases with the SEI Logistics Network and Kawataki. The distribution facility has several energy-efficient systems including a photovoltaic array and a state-of-the-art seismic isolation structure. It is located in a prime location with convenient access to the Greater Tokyo and Greater Nagoya areas.

Schenker Rail to set up cargo hub at Frankfurt Airport7.

Germany-based Schenker Rail, a unit of local state-owned railways operator Deutsche Bahn AG, will invest EUR50 million to set up an air cargo hub in Frankfurt.

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The new site will have a 15,000 square meter hall on the ground floor. The second floor will have a 10,000 storage space for aircraft replacement parts.

Global Ground Support awarded supply contract by US 8. Air Force

Global Ground Support LLC, a wholly owned subsidiary of Air T, has been awarded a new contract to supply deicing trucks to the US Air Force. The contract was awarded for one year with four additional one-year extension options that may be exercised by the latter.

The award includes standard deicer trucks and extended-reach deicer trucks along with shipping and training costs. Air T provides overnight air freight services, manufactures and sells aircraft deicers and other special-purpose industrial equipment and offers ground support equipment and facility maintenance services to airlines through its subsidiaries.

All Nippon Airways (ANA) to merge Overseas Courier 9. Service (OCS) and Allexs

Japan-based airline ANA is merging its two express holdings, OCS and Allex, to create a new regional integrator that will offer door-to-door services using ANA’s airlift capacity.

The new company will benefit from OCS’ experience and Allex’s sales network to leverage their respective strengths and thereby expand their share of the region’s international express market.

OCS and ANA had already launched a joint door-to-door delivery service, known as BEAM, in July 2007. This service provides high-speed, top quality and reliable international deliveries, primarily between Japan and China, through ANA’s freighter network and OCS’s collection and customs clearance system.

Zhejiang HSD Industrial to purchase logistics assets10.

China-based Zhejiang HSD Industrial, which is engaged in the development of real estate and provision of data system integration services, plans to acquire a 100% stake in a Shanghai-based logistics firm through a private placement.

Aramex joins Cargo 2000

In July 2009, global logistics provider Aramex joined Cargo 2000, which is part of the International Air Transport Association and provides quality management systems to the global air freight industry.

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Logistics and deals 5

International dealsUniversal Truckload Services to acquire truckload 1. operations of Pacer Transport

Universal Truckload Services has entered a limited asset purchase agreement to acquire certain assets of Pacer Transport and two of its subsidiaries, S&H Transport and S&H Leasing.

The assets include customers, operators, agent lists, files and owned trailers, used in operations consisting primarily of flatbeds, vans and specialized heavy-haul equipment services throughout the US.

The assets will be integrated into the operations of Universal Am-Can, a wholly owned subsidiary of Universal Truckload Services. The transaction is expected to be completed in August 2009.

Reddwerks acquires SeayCo2.

Reddwerks, a warehouse performance management software and solutions provider, announced the completion of its acquisition of SeayCo, a warehouse control systems and sorting software developer.

Reddwerks’ support center and online portal will be available to both Reddwerks’ and SeayCo’s clients. Reddwerks will retain SeayCo’s customer support and development executives to ensure continuation of the company’s product line and service teams.

C.H. Robinson buys Walker Logistics Overseas3.

C.H. Robinson Worldwide has acquired the international freight forwarder Walker Logistics Overseas (WLO).

WLO is a global, fully integrated import and export, door-to-door provider specializing in air and ocean freight, warehousing, courier and logistics solutions.

This acquisition will help the company to expand its capabilities in the Asia-to-Europe trade and strengthen its distribution and gateway capabilities for the London and Amsterdam markets.

SNCF and Eurotunnel to jointly buy Veolia’s freight arm4.

France-based railway group SNCF and channel tunnel operator Eurotunnel are expected to jointly acquire Veolia Cargo, the freight arm of Veolia Environnement.

Veolia Cargo was put up for sale to divest assets worth EUR1 billion (USD1.4 billion). Four suitors, including SNCF, Eurotunnel, Polish railway operator PKP and Italian competitor Trenitalia, had expressed their interest to buy the freight group.

Initially, SNCF and Trenitalia offered EUR60 million and EUR100 million, respectively. Later, the French railway operator teamed up with Eurotunnel and the two firms submitted an offer for close to EUR100 million.

Geodis Calberson to acquire Cool Jet’s business 5.

France-based transport provider Geodis Calberson has signed a framework agreement to acquire the business of Cool Jet, a company that provides domestic groupage and chartering services.

In conjunction with this acquisition, Geodis’ groupage division is acquiring full control of Prisme, a platform for the distribution of cultural products in bookstores, in which Cool Jet had a 50% stake.

The acquisition will strengthen Geodis’s position in France and accelerate the development of its European groupage activities.

C. H. Robinson acquires Texas customs brokerage’s 6. assets

C.H. Robinson acquired certain assets of International Trade & Commerce (ITC), a Laredo Texas-based customs brokerage company specializing in warehousing and distribution.

ITC provides a broad range of services that facilitate international customs brokerage in all transportation modes. Its services strengthen the company’s ability to provide customers a seamless cross-border service package across the US and Mexico.

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Sinotrans Air Transportation Development (SADC) sells 7. Beijing Sinotrans Express to DHL-Sinotrans International

China-based SADC has sold Beijing Sinotrans Express, its cargo fright business, to DHL-Sinotrans International Air Courier for CNY46 million (USD6.74 million).

SADC provides airfreight forwarding, air express, domestic cargo transportation and logistics services. DHL-Sinotrans International Air Courier is an express delivery joint venture of DHL Worldwide Network and SADC.

India deals3i Group invests in Krishnapatnam port project1.

Krishnapatnam Port Company Limited (KPCL) sold a minority stake, for USD161 million, to 3i India Infrastructure Fund, an investment vehicle established by international private equity firm 3i Group.

Krishnapatnam is an all-weather port with 12 kilometers of quays in Andhra Pradesh that are operated as a landlord port model. The port is expected to handle around 100 million tonnes of bulk cargo when it is completed. KPCL has been awarded a 30 year concession initially, which may be extended by another 20 years, to develop, operate and maintain the natural deepwater port.

Louis Dreyfus Armateurs acquires 49% stake in 2. ABG Infralogistics

France-based dry bulk port and shipping company Louis Dreyfus Armateurs (LDA) acquired a 49% stake, for USD18.7 million, in the Indian bulk port- handling operator ABG Infralogistics (ABG).

The companies seek to participate in the auction process for various bulk cargo-handling projects at Indian ports. On winning new contracts, they plan to infuse fresh capital into the venture.

ABG has hived off its bulk cargo-handling assets at the government-owned New Mangalore, Paradip and Vizag ports into a separate subsidiary, ABG Bulk Handling. Following the sale of the stake, ABG Bulk Handling will be renamed ABG LDA Bulk Handling, in which ABG will have a 51% stake.

Further, Singapore-based container port operator PSA acquired a 49% equity interest in ABG Kolkata Container Terminal for USD28.9 million and a 49% equity interest in ABG Kandla Container Terminal for SGD80.9 million in 2008.

Caravel raises INR250 million from Swiss PE firm3.

Swiss private equity and venture capital firm BTS Investment Advisors Pvt. Ltd. has invested INR250 million for a 17% stake in Caravel Logistics Pvt. Ltd. The latter is a Chennai-based firm that runs warehouses and operates a container shipping service between Indian ports.

The investment will be used to buy a container ship that can carry up to 700 standard containers, and also to set up a container freight station at Chennai, where cargo will be consolidated and put into steel containers before it is loaded on ships, and vice versa.

Caravel owns containers and tractor trailers and has finalized arrangements with private container train operators to move containers from the premises and warehouses of cargo owners to ports for onward shipment. The company also plans to ship vehicles and temperature-controlled cargo such as dairy products and fruits.

Ennore Port Ltd. (EPL) to sell a stake of up to 10% 4.

EPL is planning to sell a 10% stake to financial institutions including Life Insurance Corporation of India and General Insurance Corporation of India. The company intends to use these funds to partly finance a dredging project. It is also modernizing the port to enable it to handle export of Nissan cars.

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References 6

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“Pratibha Shipping looks to buy secondhand pair,” • Tradewinds, 17 July 2009, via Dow Jones Factiva, © 2009 TradeWinds“Poompuhar after bulkers,• ” Tradewinds, 17 July 2009, via Dow Jones Factiva, © 2009 TradeWinds“Indian Govt authorises ports to award contracts • independently,” Asia Pulse, 16 July 2009, via Dow Jones Factiva, © 2009 Asia Pulse Pty Limited“Gangavaram port inaugurated,” Business Line • (The Hindu), 13 July 2009, via Dow Jones Factiva, © 2009 The Hindu Business Line“Indian developer to invest in ports,” • Tradewinds, 10 July 2009, via Dow Jones Factiva, © 2009 TradeWinds“India flags off another phase of port privatisation, • ” The Economic Times, 6 July 2009, via Dow Jones Factiva, © 2009 The Times of India Group.“Mamata boards PPPs to boost development, revenues ; Indian • Railways is betting big on public-private partnerships (PPPs) to...,” Business Standard, 4 July 2009, via Dow Jones Factiva, © 2009 Business Standard Ltd. “UPDATE: Kalindee: Expect INR5 Bn of Railway Orders This • FY,” Dow Jones International News, 3 July 2009, via Dow Jones Factiva, © 2009 Dow Jones & Company, Inc.“Universal Truckload Services to acquire truckload • zoperations of Pacer TRANSPORT,” Datamonitor’s Financial Deals Tracker, 29 July 2009, via Dow Jones Factiva, © 2009 Datamonitor plc.

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“FedEx Ground opens $90m northern Ohio hub,” CEP • Research, 29 July 2009, via Dow Jones Factiva, © 2009 ITA Consulting GmbH - CEP Research“Sino-Global Shipping America, Ltd. Establishes Partnership • With Forbes & Company Ltd,” Reuters Significant Developments, 27 July 2009, via Dow Jones Factiva, © 2009 Reuters.“Reddwerks Acquires SeayCo,” • Wireless News, 24 July 2009, via Dow Jones Factiva, © 2009 Close-Up Media, Inc. “UPS says second-quarter profit plunges 49 per cent to $445 • million,” The Canadian Press, 23 July 2009, via Dow Jones Factiva, © 2009 The Canadian Press. “Aramex Joins Cargo 2000,” • Journal of Commerce Online, 22 July 2009, via Dow Jones Factiva, © 2009 Commonwealth Business Media. “C.H. Robinson Buys Walker Logistics Overseas,” Journal of • Commerce Online, 21 July 2009, via Dow Jones Factiva, © 2009 Commonwealth Business Media. “ProLogis Leases 200,000 Square Feet in Japan; - Two New • Customers Will Occupy Space At ProLogis Parc Zama I, A Newly Developed Distribution Facility Completed in June 2009 -,” PR Newswire (U.S.), 21 July 2009, via Dow Jones Factiva, © 2009 PR Newswire Association LLC. “Frankfurter Allgemeine Zeitung: Schenker plans to set up • cargo hub at Frankfurt Airport,” Frankfurter Allgemeine Zeitung, 21 July 2009, via Dow Jones Factiva, © 2009 AII Data Processing Ltd.“SNCF, Eurotunnel may jointly buy Veolia’s freight arm,” • M&A Navigator, 20 July 2009, via Dow Jones Factiva, © 2009 Electronic News Publishing“Air T (AIRT) Subsidiary Awarded Supply Contract From U.S. • Air Force,” StreetInsider.com, 15 July 2009, via Dow Jones Factiva, © 2009 StreetInsider.com.

“Geodis Calberson to acquire business of Cool Jet, • ” Datamonitor’s Financial Deals Tracker, 10 July 2009, via Dow Jones Factiva, © 2009 Datamonitor plc.C. H. Robinson Acquires Texas Customs Brokerage’s Assets, • ” Journal of Commerce Online, 10 July 2009, via Dow Jones Factiva, © 2009 Commonwealth Business Media.“ANA creates regional integrator with merger of Japanese • express firms OCS and Allex,” CEP Research, 10 July 2009, via Dow Jones Factiva, © 2009 ITA Consulting GmbH - CEP Research“Sinotrans Air Transportation Development sells Beijing • Sinotrans Express to DHL-Sinotrans International, ” Datamonitor’s Financial Deals Tracker, 9 July 2009, via Dow Jones Factiva, © 2009 Datamonitor plc.“FedEx Ground opens new $125 million hub in Chicago to • boost capacity,” CEP Research, 9 July 2009, via Dow Jones Factiva, © 2009 ITA Consulting GmbH - CEP Research.“Zhejiang HSD Industrial to purchase RMB 400-mln logistics • asset,” China Knowledge Press, 3 July 2009, via Dow Jones Factiva, © 2009 China Knowledge Online Pte Ltd.“All cargo hunts for buys abroad,” DNA - Daily News & Analysis, • 11 July 2009, via Dow Jones Factiva, © 2009 Diligent Media Corporation Ltd.“Tax incentive to attract funds for warehouses, cold storages, • ” Mint, 10 July 2009, via Dow Jones Factiva, © 2009 HT Media Ltd.“FOCUS: CONTAINER CORPORATION OF INDIA (domestic • traffic growth of 14% during Apr-Jun 2009),” Indian Business Insight, 5 July 2009, via Dow Jones Factiva, © 2009 Informatics (India) Ltd.“Sical forms JV with Japan’s MOL for automotives • management yard,” United News of India, 4 July 2009, via Dow Jones Factiva, © 2009 UNI.

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