Logistics Evolution to Address New Challenges in Multimodal Transport in Europe

Logistics evolution to adress new challenges in Multimodal transport in Europe

Jean Claude Delen, Chairman REU Fiata, President of Clecat, CEO DHL Benelux

Multimodal Freight – Connecting Europe to Asia

Odessa Freight Forwarder’s Day

LIST OF CONTENTS

Deutsche Post World Net - DHL

Intermodal Transportation – today and future opportunities

Will Europe continue leading

Rail Solutions - Connecting Europe and Asia


DEUTSCHE POST WORLD NET

A global player with strongly placed divisions…

MAIL

Worldwide

•DHL Global Mail –

biggest network for

mail distribution

worldwide•Delivers mail to

about 40 million

households

in Germany•More than 71

million

shipments a day

GLOBAL FORWARDING,

FREIGHT

Worldwide

•No. 1 in global

air freight•No. 1 in global

ocean freight•One of Europe’s

leading road freight

forwarders•3,000 locations•Strong customer

base (50% of Forbes

500 companies)

FINANCIAL SERVICES

Germany

•Germany’s leading

retail bank•14.5 million

customers•17.2 million savings

accounts

USA•Worldwide

finance services

for logistics industry

EXPRESS

Worldwide

•No. 1 in cross

border express•Strong presence

in 220+ countries

and territories•6500 branches•More than 4.2

million customers

worldwide•120,000

destinations

All information taken from DPWN 2007 Annual Report and DPWN The No.1 in numbers

SUPPLY CHAIN, CORPORATE

INFORMATION SOLUTIONS (CIS)

Worldwide

•No. 1 in global

contract logistics•3,000 locations•Strong customer

base (50% of Forbes

500 companies)•3.5 million square

meters of managed

warehouse space•Leading provider

of CIS worldwide


DHL BRAND AREAS

Service Overview by DHL Brand Area

Road and Rail FreightAir Freight &

Ocean Freight ServicesContract Logistics &

Industry Solutions

Same Day, Time Definite, Day Definite

EXPRESS

• Same Day• DHL Express 9:00• DHL Express 12:00• DHL Express

Worldwide • DHL Import Express

Worldwide• DHL Europack• DHL Europlus

• Supply Chain

Management• Warehousing• Distribution• Value Added Services• Logistics Outsourcing• Lead Logistics Provider

GLOBAL FORWARDING, FREIGHT

Flexible and customised road and intermodal transportation network

• Groupage• Part Loads• Full Loads• Rail Transportation• Customs Services• Trade Fairs

& Events

Supply Chain, CIS

• Air Freight• Ocean Freight• Industrial Projects• Customer Program

Management (CPM)


DHL LOGISTICS OVERVIEW

6.2%Global Market

Share

Global Market Leader

> 160,000 people• Logistics facilities in 3,000 locations

in over 220 countries

Rethinking logistics in the 21st Century…

World‘s largest

logistics service

provider

World‘s largest air

freight forwarder

World‘s largest

ocean freight

forwarder

(in both FCL & LCL)

• Revenues: € 25.739 billion (2007)• Customer base includes 50% of Forbes top 500 companies

Global Market Share

12.1%Global Market

Share

9.2%

One of Europe’s

leading road freight

forwarders

2.0%European Market

Share

* Full-containerload ** Less-than-containerload


DHL FREIGHT MARKET INTELLIGENCE STUDY 2007

European Market 2006¹

90.3%

Top 6 providers

Others

Total market1:

157.2 Billion Euro

Note: 1) Figures exclude bulk and specialtiesSource: MRSC MI Freight reports 2006 & 2007, Eurostat 2006, annual reports, press releases, corporate web sites, estimates.

Corporate Development September 2007.

DHL is among the leaders in a very

fragmented market

Market shares of top 6 road freight forwarders

9.7%


DHL LOGISTICS – COMBINED GLOBAL COVERAGE

DHL Global Forwarding and DHL Exel Supply Chain presence

DHL Global Forwarding, DHL Exel Supply Chain and DHL Freight presence

DHL Global Forwarding and DHL Freight presence

DHL Global Forwarding presence

DHL Logistics is No 1 in Europe, Americas and Asia Pro Forma Revenues 2006 (DHL Global Forwarding, DHL Exel Supply Chain, DHL Freight)

• Operations in all continents • Facilities in over 3,200 locations• Over 160,000 employees worldwide• Pro Forma Revenues 2006: € 22.7 billion


Consignor Pick-up Intermodal

Terminal

Rail

and/or

Short Sea

lane

Intermodal

Terminal

Delivery Consignee

UNACCOMPANIED INTERMODALTRANSPORT


CURRENT INTERMODAL BUSINESS

Total: 81.410 movements

Athens


FUTURE MODAL SHIFT (1/2)

Modality Time Cost Co2 Distance

Air +++ - - - - - >500km

Water - + + >5000km

Road ++ +/- - >500<2500km

Rail +/- + ++ >500<5000km


FUTURE MODAL SHIFT (2/2)

– Increased congestion and environmental pressure (modal shift)

– Increased demand for oil putting more pressure on renewable fuels and prices (continued to search for alternatives, surcharges)

– Alternative Fuels and Energy must become priority

– Focus of governments on international trade (open borders, standardized customs and ICT systems)

– Development of continental railway networks as alternative for road and sea transports (e.g. Asian, African and/or Middle East)


Railways are challenging the container shipping companies in the Far East transports

Traffic balance are a challenge with substantial financial impact

Petroleum has more than doubled its prices (60 to 130 $ a barrel)

On the markets there is a call for a new service concept

New routes – traditional transport flows are being reshaped

There is a fast growing customer demand for new rail route connection services

A bare rail connection to the Far East is not enough

Customers (Forwarders) to be involved in the development

It is now a question of networking the existing railway connections in a new way to secure the growth possibilities for the future

RAIL SOLUTIONS – CONNECTING EUROPE AND ASIA


Vladivostok, Vostochniy, Nakhodka

Hamina port, FinlandROSE arrows show the short-sea leg from the port of departure in the Far East to Russian port of discharge.

BLUE arrow shows the leg on rail.

RED arrows show the on-carriage legs (either by trucks or short sea) from Hamina to the final destinations in Europe.

MULTIMODAL FCL FREIGHT SERVICES ex. FAR EAST TO EUROPE VIA RUSSIA: TRANSPORT ROUTES (example)


Zabaikalsk

Druzhba (Alashankou

)

Hamina port, Finland

BLUE The leg on rail

RED The on-carriage legs (either by truck or short sea) from Hamina to the final destinations in Europe.

OVERLAND FCL RAIL FREIGHT SERVICES ex. CHINA TO EUROPE IN TRANSIT VIA RUSSIA: TRANSPORT ROUTES (example)


Key areas in future logistics

Infrastructure

– infrastructure (the lack of?) will dictate our growth and employment numbers in the next few years.

– Lack of investment in transport infrastructure comparable to 1975 – 2000 will crate inevitable decline in Europe.

Energy & emissions issues

– Alternative fuels and alternative energy must become commercially viable and find appropriate distribution networks

The importance of the intermodal and the railways in particular

– Alternative (to the road) means of transport will grow in market share and will become predominant (in 20-30 years) in long haul

– Road legs (with lower emission and alternative fuels) will secure capillarity and become ever more important

– Rail transport must become more reliable and efficient

Knowledge based

– ICT as an instrument of expert management of the SC and communication with authorities

– Trade facilitation & partnership with authorities (compliance programmes)


What needs to be done to increase the use of rail

* Increase railways reliability and efficiency

* Invest in own cargo transport tracks

* Accept Less than a railcar shipments

* Become Customer Friendly

* Recognize Forwarders as true partners

– In one sentence:

* Be open, Flexible and commercial minded


Will Europe continue leading?

Some elements have changed in the last two years

– EU has become more efficient, but more expensive (dollar value drop, 1,1 to 1,6 to the Euro)

– Petroleum has more than doubled its prices (60 to 130 $ a barrel)

– Energy market is not sufficiently competitive to reflect currency value differences

– EU pays petroleum more than it should at nominal value (about 50%)

– US pay petroleum less than markets would suggest

EU competitiveness is penalised twice, but the price of the Euro and the inability to reap the benefit of its high value in the energy market

For Europe to continue leading logistics important changes must happen in the way transport deals with energy for propulsion: transport industry must progressively abandon petroleum and look elsewhere (possibly within Europe) for its energy supply (1st and 2nd generation bio-fuels, renewable sources and nuclear)

Invest in the “human factor”: logistics are now key employers….


“Big boys” and Small Medium Enterprises

EU logistics market and other mature markets, such as the US

• Logistics, 3PL’s and 4PL’s grew steadily (about 5% a year) in the last 20 years

• More mature markets have a higher share of logistics (about 50%) outsourcing than new, emerging markets (25-30%)

• Potential of growth is still very big for everybody

multinationals look very powerful, but they control 6-7% of the market only

• Looking back in time, after mergers & acquisitions and spin-offs the landscape of national logistics has not changed: less than 10 big players and very many small operators is general pattern

• Big boys are “product oriented” they set a standard

• Smaller companies are more client oriented they scan the market for “new entries” and build lasting customers’ confidence

There is much to do together, if we wish to cooperate….


Where is the logistics market heading to now?

Logistics has evolved: it is today the main “facilitator” of trade, how?

– By providing a direct link between production and markets, with increased efficiency and contained costs

– By enlarging the commercial horizon of manufacturers and putting marts that were unreachable within reach of a large number of SME

– By providing a “single window” for all those who wish to take advantage of this kind of service

Being the heart of Logistics we need to raise our voice


contributing to an open market and growing employment opportunities

Source: Europe’s 500 Listing (http://www.europes500.com/pages2/results.htm#sector)

Relative annual growth of employee figures of 20.5% for transport and logistics companies


2006 advantages are waning….

Relative logistics cost in developing markets were still significantly higher than in the EU and US. But the gap is closing, or?

EU/ US Typical developing market

~8-10% logistics

cost relative to GDP

~20% logistics

cost relative to GDP

Infrastructure bottlenecks Pressure on transport

capacity Environmental challenges Security requirements

Considerable investment in logistics infrastructure (ports, airports, rail and road)

Transfer of foreign best practice


In conclusion

Logistics is now a powerful economic force that can contribute to development Logistics is now a powerful economic force that can contribute to development

There is no integrated development today without logistics as a key to access markets

There is no integrated development today without logistics as a key to access markets

The role of big players is to ethically show the way for the benefit of our sector The role of big players is to ethically show the way for the benefit of our sector

Institutions such as Fiata, Clecat and OSJD should concentrate on the promotion of facilitation at political level and disseminate expert information useful in the national implementation of international programmes, such as WCO SAFE, AEO, e-freight etc. They should also support infrastructure investments.

Policymakers Should know that without alternative energies and huge investments in transport infrastructure competitiveness will vanish and decline will be inevitable.


Regional Body Europe in Fiata

Fiata cooperates with many international institutions, amongst which:

– WCO

– WTO

– UNECE

– WORLD BANK

– UNCTAD

– INTERNATIONAL TRANSPORT FORUM

– To exchange and disseminate information about international conventions, transport and trade agreements and other international public order instruments

Fiata cooperates actively with CLECAT, using its preferential access in Brussels

– In the attempt of shaping EU logistics and Customs landscape


THANK YOU FOR YOUR ATTENTION

Logistics Evolution to Address New Challenges in Multimodal Transport in Europe

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