DHL Global Forwarding - dpdhl.com · PDF fileDHL Global Forwarding, ... 21st Century approach to a traditional Freight forwarding sales activity with strong customer focus and

Chris Fahy, COO

DHL Global Forwarding

Capital Markets Day – Logistics – December 11, 2006 - Frankfurt

An excellent market position

DHL Global Forwarding, the global industry leader in forwarding with a leading market share of 11,6 % in AFR and 8,6 % in OFR

Strong position in all regions

Globally balanced weight of the 3 main regions


Global Forwarding organization

Products / M&S General

functionsAir FreightTony Widmer

Ocean FreightAndreas

Boedeker

Marketing& Sales

Mark Oxtoby a.i.

Industrial ProjectsLouis Fret

Field sales

Tradelane

MNC /Bid/ sector sales

CPM

MNC Business DevelopmentMichael Young

a.i.

Europe/CEEThomas Nieszner

North AmericaHans Toggweiler

Latin AmericaSamuel Israel

EMAEnver Moretti

IS DemandRalf

Weissbeck

HRAlison

Houldsworth

CFOMartin Sigel

BPOAndrew Thorne

IntegrationStephen Chipping

StrategyDanielFurrer

GlobalForwarding COO

Chris Fahy

Asia Peter Landsiedel

Presenting today

Presenting today

Presenting today

Presenting today


A Consolidated Market Only a Small Group of Strong Competitors Left

Commoditization of More Products Increasing focus on core product lines

Higher Customer Expectations Better Value and Customization Expected

More Cross Border Trade More International Services / Solutions

Rise in Importance of China, India, Brazil Big Growth Opportunities

More Outsourcing Growth in Importance of Value Adding Services

The Logistics Market in 2010: Our View


Main emphasis in 2006 has been integration

Organisation

Operational platform

Branch Mergers

Migrate all customer solutionsCustomer Solutions

Focus Area Scope

Implement a standardised organisation design in all countries

Migrate all countries into the standard operational platform called Logis

Merge all overlapping branches

Renegotiate global agreements

Co-load programs for AFR and OFR

Products

Terminate agents and implement single representativeAgents & JV’s


Integration: achievements per end of November

Standard organisation implemented in all regions and countries

80 % of all countries in scope migrated to Logis

130 branch co-locations completed

95 % of customer solutions migrated

New carrier global agreements completed resulting in COS synergies

95 agents terminated (100 %)


Latest LOGIS Migration schedule – 6 December-06

TR*

IN CN PK ***PH

Feb DecSeptAugJul MarMayAprJan NovOctJunMarch Jan Feb

HU

ID

MY***

DE

CZ

HK

JP

GB SE

TH

VN

NL

FI

AT

IE

MX

TW, KR

US

AU

SG

CA

NZ

EMA

Europe

N America

Asia

Months

2006 2007

S America

Europe

exceptionsOther CEE countries*

* Migration to LOGIS from non-U21 application** Migration initially to non-LOGIS local application*** Migration subject to JV resolution

EG*

GR*AE***

ES

PTCHBE

ZA

FR

BR*

IT**NO*DK**PL*

AR*CL*

PE*

902 3 3 15 21 18 10 15 5

0

1100

8


Future plans and goals

Strategic four year program launched covering following initiatives

Sales force efficiency

Operational excellence

First Choice

Product Design & Innovation

Carrier Management


First Choice is particularly relevant to DHL Global Forwarding

provides a systematic methodology to leverage staff skills for identifying root

causes, monitoring quality and continually improving processes

DGF depends on “daily heroes”:skilled employees making ad hoc decisions and continuous small improvements on the front line

First Choice allows the necessary flexibility on country level by at the same time opening a change platform for global initiatives

No direct end-to-end control

Dependency on many operational partners (e.g. airlines, ocean carriers) limits internal direct control on operations and requires extensive coordination

Global networked business

Cross-country and cross-regional teams have different operating norms

– Product delivery requires coordination across regions

Aspiration to consistency…

Large number of small and medium sized customers

– Flexible processes are required to consistently address needs of fragmented customer base

Focus on consistent/efficient products

– Standard products, with value-add, to combine efficiency of operations with customer orientation

… but unique challenges


Trade Lane Management Trade Lane strategy in Global Forwarding

21st Century approach to a traditional Freight forwarding sales activity with strong customer focus and end to end service capability via Air Freight and Ocean Freight.

Management of trade lanes through bilaterally agreed budgets and business plans with clearly defined target lists, scheduled overseas travel by a team of experts throughout the world, sales campaigns, supported by market analysis and product initiatives.

Achieve business Growth above market

Increase market share

Product development – increased carrier

selection and service frequencies

Bilateral agreements (country/country)

Strong focus on SMC segment

Sales visits to new and existing customers

Import value propositions

Drive growth opportunities

Achieve trade lane budgets

Optimize visibility of customer segments, commodities, load factors


Customer Stability

Notable Wins 2006

Pipeline

Solid Pipeline – 20% Renewal / 80% Potential Business (YTD ’06)Total monthly DGF pipeline is equivalent to 38% of DGF’s total RevenueRFQ Hit rate 35% an increase of 4% over legacy companiesGood mix across customer segments and regions.

High renewal rates on existing business.Key element of 2007 strategy is increasing pipeline to ensure higher-than-market growth rates.

40% Corporate Customers

60% Small,

Medium Customers

Revenue Split

From Service Provider To Strategic Partner

Global Forwarding - Pipeline

Outbound finished goods and inbound equipment for global production.

Global Air freight and cross-dock program for final mile distribution.

Global Ocean freight and Air freight of finished goods.

APAC to Europe final mile delay program.

Global Air freight and Ocean Freight.


Customer Case StudyMarket Leader in roasting high –quality coffee beans sold through own retail stores

Global and intra- Asia less-than-container -load (LCL) ocean and air shipments -Regional distribution centers in Singapore, Hong Kongand Shanghai.

DHL is now viewed by this client globally across all of its regions as an internal integral logistics partner.

Retail distribution in Singapore, Hong Kong and China.

Regional implant customer service center in Singapore covering all Asia.

EMEA DC just awarded in Essen , Germany.

Result:

Key Operational Dynamics: Relationship Development:

Key Success Factor:

Key Account Management Structure.


AMD Global Air Freight and Visibility

AMD customers: Materials planning

& scheduling accuracy

AMD corporate:Order planning

accuracy

AMD sales:Added and

enhanced new business

Reduced short-term capital

deployed

Aggregatedinventory buffer

Eliminated mostcustomer

inquiries forshipments

Advanced Micro DevicesElectronic Components

Out-bound Finished Goods and In-bound Equipment for global production platform in Asia, Europe, and the Americas.

Project goalProvide AMD customers with web-based, end-to-end visibility on

their orders shipped through the DHL network or other third-party providers (including the “final-mile” delivery component).

Enable AMD customers to track shipments with a unique referencenumber through the AMD website.

DHL solutionAS AMD’s global freight partner, DHL delivers a reliable, quality

visibility tool that exceeds AMD’s expectations.

AMD is a leading manufacturer and marketer of electronic components.

DHL secured a two-year contract period.

AMD business to grow significantly 2007 and 2008.

Asia-Pacific region is main focus of global production for AMD.

Value delivered to customer

Case Study

Facts and figures

Europe – Air & Ocean in motionThomas Nieszner, CEO DGF Europe/CEE


Europe/CEE at a glance

Key Facts

32 Countries280 Locations8‘600 Employees

No. 1 in Air Freight:1.2 million tons (est ‘06)No. 2 in Ocean Freight:1.33 million TEU (est ‘06)

Employees

Highly skilledHighly motivatedLow attritionrate

67%

33%

Rest ofthe world

Total 2005 = 25‘400 employees

Europe/CEE


Our Achievements

Net RevenueBiggestcontributorto globalrevenue 42%

58%

Europe/CEE

Rest ofthe world

TOP Ocean Freight Countries (Revenue)

Germany

France

Italy

UK

Belgium

TOP Airfreight Countries (Revenue)

Germany

UK

Netherlands

France

SwedenYTD Oct ‘06million €

YTD Oct ‘06million €

300 400


Our Strengths

What makes DHL GF Europe strong and unique

ProductsProducts ClientsClientsStrategy, Structure & SystemsStrategy, Structure & Systems

Market Leader in Airfreight

Leading Ocean Freight provider

Broad productportfolio within Air and Ocean including valueadded services

Serving profitable niches

Healthy balance incustomer portfoliorevenue

40% global/ multinational companies

60% SME

Cross Sellingactivities with otherbusiness units

Strong presence in growing industries

Exel Integration completed extremelysuccessfully and synergies significantly aboveplan

Tremendous buying power through our sizeand intelligent European consolidation(Starbroker & Multinational Gateway Concept)

Strong focus on optimizing and expandingcountry to country trade landes

Common worldwide IT-platform linked to carriers and clients

Presence at all airports in Europe and all mayor seaports

Significant contribution to bottom line results of DPWN!


Our Portfolio

Niche Excellence…Strong in the strongest Industry Sectors…completes our product portfolio

and contributes to profitable organic growth.

Motor SportsComplete logistics packages related to any kind of racing event, most famously the Formula 1.

BeaujoulaisWithin the timeframe of 9 Nov to 16 Nov two million bottleswere delivered to the furthestplaces inthe worldfor the past20 years.

Audio VideoTelecom

Audio VideoTelecom

Life Science& ChemicalsLife Science& Chemicals

ConsumerProducts

& Services

ConsumerProducts

& Services

ElectronicComponentsElectronic

Components

ElectronicEquipmentElectronicEquipment

Engineering & ManufacturingEngineering & Manufacturing

AutomotiveAutomotive


Future Plans & Opportunities

DGF Europe: mid-term growth plan

Net Rev Growth Return on SalesNet Rev Growth Return on Sales

Prospering regional economy withinEurope in the nextyearsNew Market potential with expansion of European UnionLogistics sectorgrowing above GDP

First ChoiceBe the preferred service provider forour customersTherefore intensifiying customer focus& perfectionizing quality

Airfreight PLUSIntra-European Airfreightproduct with high bottomline contribution

Selection of initiatives to boost growth for DHL Global Forwarding Europe

Econ. Environment Our AssetsDominant presence in growing industries(Pharma, Biotech, …)Financial resourcesto further expand intonew marketsFull sales pipeline forclear visibility of futurebusiness with existingand new customers

Ocean DriveStrategic regional salesinitiative to significantlyincrease the transatlanticOcean Freight volume

06 07 08 09 06 07 08 09

AsiaPeter Landsiedel, CEO DGF Asia-Pacific


Asia Pacific at a Glance

Regional head office: Singapore

AP Global Forwarding Staff: Approx. 8,000

Countries: 23 (5 sub regions)

Locations: 123

Highly secured locations: 22 (TAPA certified)

DHL is the clear market leader in Asia PacificDHL is the clear market leader in Asia Pacific

Ocean freight Airfreight

The Top airfreight forwarder in Asia Pacific (IATA ranking #1)

More than 1,200,000 tons in 2005 (export & import)

96 airfreight facilities in Asia-Pacific

The Top airfreight forwarder in Asia Pacific (IATA ranking #1)

More than 1,200,000 tons in 2005 (export & import)

96 airfreight facilities in Asia-Pacific

Undisputed market leader in LCL product

Over 660,000 TEU in 2005

More than 180 ocean freight operational locations in Asia-Pacific

Undisputed market leader in LCL product

Over 660,000 TEU in 2005

More than 180 ocean freight operational locations in Asia-Pacific


Asia Pacific – Integration

9 Countries are already integrated (AU, JP, KH, KR, NZ, SG, TH, TW, VN)

Lean organization and management teams are in place in all countries which enabled DGF to further improve cost basis

Dedicated heads in integrated “back office” functions ensure a stronger focus on previous challenges

Productivity went up in all countries which were migrated to the new system

A clear governance structure between all business units in place (DHL Exel Supply Chain, DHL Express, DHL Global Mail)

Scale of DGF Asia Pacific business volumes result in strong position with carriers

Status QuoStatus Quo

6 countries (incl. Hong Kong, China and India) will be integrated in 2007

Review sessions to further improve profitability & productivity

Customer Satisfaction Surveys in all migrated operations

Next StepsNext Steps


Driving Asia Pacific: China & India

China India

Coverage 44 locations in 23 cities

Employees 2,100 FTE

Warehouse space 116,700 sqm

Establishment DDAO 1991, Exel 1984 (Exel-Sinotrans JV, since 1996)

Offices more than 37 branch offices

Air Freight 226,000 tons (2005)

Ocean Freight 280,000 TEUs (2005)

Investments Double digit EUR spending to ensure leading market position (2004 - 2006)

Coverage 44 locations in 21 cities

Employees 1,300 FTE

Warehouse space 242,700 sqm

Establishment DDAO 1996, Exel 1997

Offices 21 branch offices

Air Freight 89,000 tons (2005)

Ocean Freight 37,000 TEUs (2005)

Investments Double digit EUR spending to strengthen network & coverage (2004 – 2006)

Strong Market Position

Huge Investments in the past three Years

Bright Outlook for the Future


Saint Gobain Global Ocean Freight LLP

Fulfilment of carrier contracts

100%

Expansion intoemergingmarkets

Integration ofservices across the supply chain

In-house resourcespent on

freight planning and coordination

Overall transport costs

Time spendon freight

procurement and related activity

Saint GobainEngineering and Manufacturing

Value delivered to customer

Case Study

Facts and figures

Saint Gobain delivers virtually every kind of glass, refractory products and material that is used in buildings and cars throughout the world.

Saint Gobain has more than 1,200 consolidated businesses and is present in more than 50 countries.

Total shipments with DHL grew from 9,000 in 2004 to 30,000 in 2006.

DHL’s scope of services are expanding into oceanfreight LCL, air-freight, warehousing, as well as domestic road transport

Global Ocean Freight Lead Logistics Provider (LLP) and sole shipping agent to support production and sales locations.

Project Goal

Optimize logistics operations and extend cooperation geographically with core carriers.

Provide support for strategic expansion plans in emerging markets.

DHL Solution

In its capacity as global LLP, DHL coordinates with carriers on rates, and deploys an analysis tool to optimize cost and quality.


Recognized by Peers & the Media

DGF won Best Air Freight Forwarder award at the 2006 Asian Freight & Supply Chain Awards

DGF won Airfreight Forwarder of the Year at the inaugural Lloyd’s List FTB Asia China Logistics Awards 2006

DHL Danzas Air & Ocean Lemuir in India was presented with the Award for Excellence by NEG Micon

DGF won Airfreight Forwarder of the Year at FTB Asia’sLogistics Awards 2006


Leading in Quality & Sustainability

Quality Certification (ISO 9001:2000) & Environmental Certification (ISO 14001)

A total of 14 countries including the regional office covering 157 sites are certified to Quality & Environmental Management Systems in the Asia Pacific Region

Quality & Environmental Integration

Strong commitment to Corporate Sustainability in Asia Pacific


Our way forward

Delivering on “First Choice”

– Customer relationship

– People development

– Product quality

– Innovation (new fields)

Consolidating Integration

– Continuing customer and employee retention

– Delivering on synergies

– Review of productivity & profitability

Improving Cost Management

North AmericaChris Fahy, COO


Four successive profitable years

Exel Freight Management integration on schedule and in final phase.

DHL Global Forwarding: North America

12575Offices

3.2 M2.8 MShipments

5,2133,480Employees

2006(E)2005Canada and USA

Recognized No. 1 Logistics Provider in North America and globally


United States111Offices70 Dedicated Brokerage Offices4,881 StaffOperating: 1935Certification: ISO 9001:2000,

No. 1 in Airfreight in the United States

No. 1 in less-than-container-load (LCL) ocean freight

One of the top 3 leaders in customs brokerage and import services

4th largest non-integrated domestic heavyweight logistics provider

Key Tradelanes are 1. Europe and 2. Asia

DHL Global Forwarding: United States

There is a certain peace of mind that comes with leadership


DHL Global Forwarding: NAFTA

The link for shipping finished products or parts between the US, Canada and Mexico

Northern and Southern Border Infrastructure and Services:

– Comprehensive end-to-end solutions to importers and exporters trading between the largest trading partners in the world.

– Unmatched network of 27 dedicated brokerage offices strategically located on the Canada/U.S. border and 5 at the U.S./Mexico border.

– Unique, personalized solution based on customers’ specific needs


Customer Recognition:

– Moen: “Creativity Unleashed” Award for supplier innovation and excellence.

– Unique Industries: recognized DHL Global Forwarding with its “Distinguished Service Award.”

Logistics Management Magazine: awarded 2006 “Quest for Quality" award in the category of freight forwarding

DHL Global Forwarding: Achievements

The most challenging deliveries in the world are what we do every day


The Result: The service, supported by real-time pipeline visibility1. Cut transit times by 11 days. 2. Slashed inventory costs 3. Reduced Moen’s reliance on expensive air freight

Case Study: Moen

Winning Innovation for Moen Incorporated

Moen is the number one brand of faucet in North AmericaCustomer Needs: Recently restructured its operations and asked vendors to think strategically and not focus on tactical execution.Action Plan: DGF re-engineered Moen’s trans-Pacific all-water supply chain to a 28 day “trans-load” service.

Tony Widmer, Head of AFR

Airfreight


Airfreight at DHL Global Forwarding

2000 2004 2005

1.8

3.9> 2 x

Airfreight

Market Volume3): € 19.8 bn

Top 7 Companies (2005 Market Share In % By IATA Turnover )

No. 1

DHL Global Forwarding1)

Nippon Express

Kühne + NagelExpeditors

Schenker/BAX Global2)

Kintetsu

Other

64.22.93.13.5

5.2

11.66.8

Source: IATA/CNS and corporate estimates

1) Pro forma, 20052) Pro forma, combination of Schenker & BAX Global in 20053) Data originates from IATA report and does not refer to airfreight sales as published by the companies

Airfreight (Volume In Mio. Ton)

2.7 Panalpina (excl. ASB)Over 6’500 operational air freight experts worldwideOver 600 air freight offices/terminals (excl. agents)Airline net turnover 2.4 Billion EUR (excl. surcharges)

1)

1) Pro forma, 2005

2.2


Airfreight Products Portfolio

Air FirstPriority upliftAirport-to-airport or door-to-doorIndividual handling and monitoringClear transit time statement

Air PremierCombines price and timeAirport-to-airport or door-to-doorScheduled direct services with prime carriersClear transit time statement

Air ValueEconomy service, for less time-sensitive freightLower air freight ratesRouting mainly via gatewaysDefined transit time statement

CharterFull and part charterFlexible capacityFor routes with limited commercial lifts, during peak seasons or for oversized cargo

Sea/AirCombines speed of Air Freight with economy of Ocean FreightAsia to Europe and Latin America

For All Products (Incl. / Opt.)

Dedicated Customer Program Management (CPM) offeringsNo weight or size restrictions (subject to aircraft type)Tracking and tracingCustoms clearance, pick-up and delivery


Increased and upgraded Station / Country Network Network

Enlarged service offering (increased consolidations services and frequencies)

Offering

Less risk due to increased built up through units and increased QualityQuality

Productivity synergiesProductivity

Clear communication, planning and implementation as well as dedication on all levels created minimal integration issues

Set-up

Customer “first policy” throughout the entire integration processCustomer

Best positioning with all major airline partnersCarriers

Integration Benefits


Outlook

Finalization of integration Q1 2007

Stabilization (make robust) all basic processes, best practice

Expand in-house carrier offering:- Strategic network management- Balance with global carrier management- Optimize network opportunities

Increase and further expand interface between StarBroker and DHL Aviation to build up strategic markets and improves economies of scale

Further enhancement of capabilities:- Staff (Training on all levels)- Equipment (IT)- Infrastructure


Positioning

Remain The Leader In Global Airfreight Services By

Exceeding Expectations In Providing Excellent,

Safe And Environmental Responsible Service

Andreas Boedeker, Head of OFR

Oceanfreight


Ocean Freight At DHL Global Forwarding

No. 1 Oceanfreight (Volume In Mio. TEU)

Approximately 3’300 operational experts worldwideMore than 330 operational locationsClose to 2’000’000 m3 of LCL* annuallyMore than 35’000 weekly point pairs for LCL* globally

1) Pro forma, 2005

Oceanfreight

Market volume2): 22.9 m Twenty Foot Equivalent Unit (TEU)

Top 4 Companies (2005 Market Share In % By Twenty Foot Equivalent Unit)

No. 1

8.68.3

4.3

4.0

DHL Global Forwarding1)

Kühne + Nagel

Schenker

Panalpina

74.8Other

Source: Global Insight Trade Databank, annual reports/publications and corporate estimates;

1) Pro forma, 20052) Estimated part of overall market controlled by forwarders

*) LCL: Less than Container Load

2000 2004 2005

0.7

2.0> 2 x

1)

1.1


Ocean Freight Core Products

LCL (Less than Container Load)

Operated through “Danmar Lines“, the NVOCC* of DHL Global ForwardingDefined global routing matrix with over 35,000 point pairsRouting via dedicated gateways through own feeder concept

FCL (Full Container Load)

Centralized purchasing through “Danmar Lines”Long-term agreements and EDI** links with partner/core carriersContainer inland logistics through competence centers

Non Containerized Load

Oversized project cargo management through a dedicated team of industrial projects expertsNo weight or size restrictions

OceanfreightLogistics

* Non Vessel Operating Common Carrier

** Electronic Data Interchange


Extended Product Portfolio

DHL Global Forwarding Ocean Freight Logistics

Basic OFR Services Additional OFR Related ActivitiesTraditional OFR Value Adds

Ocean Freight- FCL- LCL- Break Bulk, Projects

Local Pick-up

Inland Freight

Drayage

Port and Terminal Activities

Customs clearance

Trade documentation

L/C Handling / Banking

Insurance

Buyer’s Consolidation

Transit Warehousing

CFS Management

P/O Management

Tracking & Tracing

Warehousing, Distribution

LLP / 4PL (Control Tower)

Quality Inspection

Advanced Visibility Tools, Information Flow

- DHL Interactive - Transportation plus- Ocean Cargo Management - Logistics Management

Services

Information Flow


The Ocean Freight Process

InformationFlow

TransportationFlow

Visi

bilit

y, T

rans

pare

ncy

From

Doo

r to

Doo

r


The overall transportation chain remains an important issue as effectiveness of global supply is heavily reduced by delays

Oceanfreight Challenges

Carriers operating costs rise because of extended vessel turnaround times, full speed sailing, seeking of different gateways

Operating Costs

Terminals are under pressure due to the explosively increase in container volumes and the terminal infrastructure could become the bottleneck fro growth in the future

Port congestions will almost certainly return very soon without a big investment in new capacities

Transportation Chain

Terminals

Port Congestions


Why Do More Customers Choose DHL?

Deep Global Coverage

Leverage Of Scale: Best Price And Guaranteed Space

Sophisticated Cargo And Information Flow Solutions

Flexibility Range: From Standard To Tailor Made Service Portfolios

Inland Logistics and In-House Carrier Concept (LCL – FCL)

Multiple Carrier and Port Alternatives


Outlook

The DHL Global Forwarding Oceanfreight Wave Forward

Further Refining/Reshaping Our Core Carrier Policy, To Ensure

Maximum Price And Service Leveraging

Further Improving And Strengthening

Of Our Operational Processes, Reduction Of

Interfaces

Expansion Of LCL In-house Carrier

Network By Increasing Direct

Connections

Attract Best Industry Talent For DHL,

Through Our Employee Value Proposition And

Consequently Give The Customer The

Best In Market Logistic Solution

Chris Fahy, COO

Conclusion


Why is Forwarding attractive?

Low asset base

High growth potential

Global coverage

Large customer base

Product offerings are time definite and cost sensitive

Cash generating

Market driven by global trade

Looking forward to the future!

Documents

DHL Global Forwarding - dpdhl.com · PDF fileDHL Global Forwarding, ... 21st Century approach to a traditional Freight forwarding sales activity with strong customer focus and