Panama Latin America Gateway

Panama: “Hub of the Americas”• Total Container Moves: 5.0 million TEU’s

– Atlantic Ports• Evergreen • Hutchinson• Manzanillo International Terminal

– Pacific Ports• Hutchinson

• Tocumen Int’l Airport– COPA / Continental Airlines– DHL Hub– FedEx Hub– UPS Hub

• Colon Free Trade Zone Expansion• Multi Modal facilities

– Rail System– Inter Oceanic Highway– Port Expansion– Free Zone Expansion

Copyright by AIRPORT CONSULTING VIENNA GmbH.

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III.

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VI.

VII.

High Tech Corporate Zone and Aggregated Value

Constructions for Multiple Users and Incubators for New Users

High Tech Logistics with Emphasis in Aerial Transportation

Traditional and Logistics Distribution

HeavyMultimodalLogistics

Expansion of Traditional Operations in the Colon Free Zone

Industrial Zones

Proposal ofInstalations

IIIo.

Vo.

VIo.

High Tech MultimodalLogistics

Future Expansion for Truck Terminal

Heavy MultimodalLogistics

Future development with PCRC

Colon Free Trade Zone

Colon Free Trade Zone

0% Import Tax

0% Export Tax

0% Income Tax

Time Limit on Storage: None

Port-Warehouse: Integrated

Customs Brokerage:1 hour maximum

Country of Origin: Unchanged

Legal Status: Foreign and Local Companies

Colon Free Trade Zone

18.6%

3.9%8.8%2.5%

11.6%

1.5%0.8%2.0%

1.9%1.5%

26.8%1.2%

18.9%

Country of origin

OTHERS

HONG KONG

JAPAN

UNITED STATES

SOUTH KOREA

TAIWAN

ITALY

SINGAPORE

FRANCE

SWITZERLAND

THAILAND

CHINA

UNITED KINGDOM

2008 imports to the Colon Free Zone by CIF value

Imports: US$8,500MM

Colon Free Trade Zone

2008 exports from the Colon Free Zone by FOB value

Exports: US$9,000MM

15.9%

4.5%7.3%

20.2%

3.6%

3.0%2.0%

2.7%2.3%

2.0%4.6%

5.4%1.6%2.9%5.3%

16.5%

Country of destinationCOLOMBIA

ECUADOR

PANAMA

VENEZUELAUNITED STATES

HONDURAS

CHILE

EL SALVADOR

MEXICO

BRASIL

COSTA RICA

GUATEMALA

NICARAGUA

CUBA

DOMINICAN REPUBLIC

OTHERS

7

Imports & exports to/from the Colon Free Zone by value

0

2000

4000

6000

8000

10000

12000

ImportExport

Import 4661.3 5390 5211.9 4039.1 4464.6 4607 4218.5 4004 5075.3 6215.7 6753.1 7625 9335.7

Export 5523.6 6274 5985.2 4938.2 5299.6 5382.9 4843.9 4583.1 5473.6 6661.8 7604.2 8534.9 9874.2

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Warehousing & Distribution

97,000 m2 Total Warehouse Space

24,000 m2 Under Construction (2009)

20,000 m2 Climate Controlled (25ºC)

600 m2 Cold Room (5ºC)

Consumer Electronics (40%)

Pharmaceutical (30%)

Cross Dock (25%)

Cold Chain (5%)

Value Added

MIT Logistics Park

MIT Logistics Park

Built to US Standards

86,000 m2 warehouse space

Fire Suppression/Prevention System

High Density Racking/Cross Dock

Climate Controlled Storage (25ºC)

Cold Storage (5ºC)

Product Conditioning/Rework Areas

Private Container Yard

24 Hour Survillance

(Electronic/Guards)

Electric Fork Trucks

Technology

Technology

WMS Features: Bar Code, Locations, WiFi

Inventory Controls: Cycle Counts, Wall to Wall

Performance: Picks per HR, Loading, Unloading

EDI Capabilities: Communicate with outside systems (SAP, JDE, BPX, BAAN, Legacy Systems)

Internet Integration: Inventories, Orders, Custom Reports

On-Line Documents

Order Entry: Website for order entry (end customer/regional office)

Website Integration Service

Customized Website Design & OperationOn site engineers and support personnel24/7 order processingOrder pre-processingProcess WorkFlow controlsAutomated messaging and e-mail alertsLink warehouse information to sales team in with one websiteIntegrate with SAP, JDE, Oracle, SUN, Legacy, etc.Order track & Trace

Value Proposition

Existing Distribution Network in Latin America

Total Shipments Inbound4002000Main Origins (# of shipments)400 – 500300 – 400200 - 300

Main shipping origins are US, NL , MX and CR. The current distribution flow is composed of many lanes and lacking cost improvement opportunities achieved through consolidation.

Origin DataChargeable weight (kg)

Number of Shipments

MX 384,422.50 461

NL 359,590.00 344

CR 220,222.50 422

US 35,002.00 221

FR 7,162.00 31

GB 3,547.50 11

AR 2,640.00 4

SG 1,384.00 1

PK 817.00 2

IE 632.50 7

CA 211.50 1

BR 141.50 2

CN 56.00 1

PE 5.00 1

Total chargeable weight

1,015,834.00 1,509.00

Possible Distribution Network in Latin America

Total Shipments Inbound4002000Main Origins (# of shipments)400 – 500300 – 400200 - 300

The LATAM market could be divided into three main receiving regions, Mexico, Brazil and Panama. Brazil and Mexico will attend their own markets and Panama will provide product to the other main countries in the region.

Origin DataChargeable weight (kg)

Number of Shipments

MX 384,422.50 461

NL 359,590.00 344

CR 220,222.50 422

US 35,002.00 221

FR 7,162.00 31

GB 3,547.50 11

AR 2,640.00 4

SG 1,384.00 1

PK 817.00 2

IE 632.50 7

CA 211.50 1

BR 141.50 2

CN 56.00 1

PE 5.00 1

Total chargeable weight

1,015,834.00 1,509.00

Regional Inventories vs. Local Inventories

To Be Model using a Regional Hub

• Distribution Center in Colon Free Trade Zone in Panama

• Customer Purchase Order to Delivery time: 2-7 days

Solutions:• Standard packing for the region• Regional Inventory planning• Freight reduction using sea - air• Immediate reaction to market changes• Flexibility of inventory allocation per country• Product Conditioning according to customer’s

needs• Less inventory requirements per country• Reduction of import and nationalization cost• Lower risk of financial impact from currency

fluctuation• Capacity of local deliveries to point of sale

bypassing local distributors• Total control and visibility of the supply chain

As is Model

• Supply Chain: Direct from Plants in Europe, USA, Mexico & Brazil to Customers

• Lead Time from every mnf. point: 4 – 6 weeks

Problems:• Inaccurate forecasting• Different packaging requirements for products per

countries or customers• Small production runs delay delivery times• Higher freight for smaller shipments• Reaction time to market: very slow with low

visibility of supply chain (poor service level)• Creates stock-outs &/or excess inventory

situations• Non-compliance with bid requirements• Stiff penalties by government institutions• Need for high levels of inventory in each country• Customer credits for expired goods• High Write off for inventory obsolescence

Existing DHL Clients

Consumer

Pharmaceutical

Fast Moving Consumer Goods (FMCG)

Electronics

Questions and Anwers

DHL Global Forwarding