Docstoc

It AFR Market Update Revaluation

Document Sample
It AFR Market Update Revaluation Powered By Docstoc
					Challenges in Freight Forwarding



Budapest, December 8th, 2010
  AGENDA


 Introduction
  Tibor Födelmesi, Managing Director
 Environmental Challenges Along the Supply Chain
  Attila Pál, Sales & Marketing Head
 Air Freight: Flight of the Phoenix
  Péter Kasznár, Air Freight Head
 Ocean Freight: Back on Calm Waters
  Péter Nagy, Ocean Freight Head

Q&A




 Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
 | Challenges in Freight Forwarding                                                            Page   2
      GROUP STRUCTURE 2010



                                                                                        Revenue: €46.2 bn1)




                                                           GLOBAL
                              MAIL                                                                      SUPPLY CHAIN                     EXPRESS
                                                      FORWARDING, FREIGHT

                     Delivers 70 million              Global market leader in                     Global market leader in     Market leader in the inter-
                      mail items to                     air and ocean freight                        contract logistics with      national express market
                      more than 40                      services with 12.9% and                      8.5% global market share     in all regions outside of
                      million house-                    9.1% respectively                           ~23m square metres of        North Americain
                      holds in Germany                 Specialist in industrial                     warehouse space             Presence in more than
                     DHL Global Mail                   projects and end-to-end                     2,500 logistics centres,     220 countries and
                      largest network                   transport management                         warehouses & terminals       territories
                      for mail                          solutions                                   Leading provider            30,000 service points
                      distribution                     One of Europe's leading                      of Corporate Information    4,500 bases
                      worldwide                         road freight forwarders                      Solutions worldwide         136 aircraft
                                                       3000 locations                              Strong customer base        6 main regional hubs
                                                       Strong customer base                         built on long-lasting
                                                        (>50% of Forbes 500)                         partnerships
Revenue                        13.7                                    10.9                                  12.5                          10.3
-€ bn -
Employees                   140,000                                  39,000                                130,000                        100,000
FTE
      1) Divisional revenues including also Corporate Centre/Others 2009, all market shares 2008

    Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
    | Challenges in Freight Forwarding                                                                                                               Page   3
DHL GLOBAL FORWARDING - INSIGHT




   DHL GLOBAL FORWARDING


   World's largest air freight and ocean                           Services offered:
    freight forwarder
                                                                       – Air freight
   Presence in over 150 countries and
                                                                       – Ocean freight
    territories
                                                                       – Multimodal Transport
   29,000 highly qualified employees
    worldwide                                                          – International Supply Chain
   > 810 terminals, warehouses and offices                            – Industrial Projects
   Air freight annual volume: 3.7m tons                               – Customs Brokerage
    (Export + Import)
                                                                       – Transport Control Towers
   Ocean freight annual volume: 2.6m TEU’s
                                                                       – Niche (high value, fashion, perishables &
                                                                         motorsport)




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                              Page   4
DHL – The Logistics Company for the World



                                                        Global Market Position

       Air freight                Ocean freight               European road              Contract logistics           International
       forwarder                   forwarder                 freight forwarder           service provider           express parcel
                                                                                                                       providers

            1                           1                            2                             1                         1
       12.9%    Global Market
                                        9.1% Global Market
                                                                     2.1%
                                                                       European Market
                                                                                                   8.5%
                                                                                                    Global Market
                                                                                                                          ~27%
                                                                                                                    Global International Express
                        Share                        Share                       Share                      Share                   Market Share



       • Annual revenue 2009: € 33.7 billion
       • Logistics facilities in 3,000 locations
       • 30,000 Express service points in over 200 countries
       • 270,000 people worldwide



Challaneges in Freight Forwarding | Supply Chain | Koper | October 1st, 2010 December 8th, 2010.
|Environmental Challenges along the Amcham Seminar & Cocktail Budapest,
  Challenges in Freight Forwarding                                                                                             DHL | Page
                                                                                                                                     Page      2
                                                                                                                                               5
   DPDHL Strategy


   We measure success along three                                                        …and have a consistent customer
   bottom lines…                                                                         promise

                          Provider of Choice                                              Simplifying Services
                          • Improved measured
                          customer satisfaction DGF                                        We strive to simplify our customer
                                               +2

                                                                                           operations by providing improved
                                 2007   2008        2009
                                                                                           transparency, reduced complexity and
                                                                                           by becoming more proactive

                                                                                          Sustainable Solutions
                                                           Employer of Choice
Investment of Choice                                                                       Massive 6-sigma / lean investments,
                                                           • Increased employee
  One of top three leaders in
  the forwarding industry in                               satisfaction DGFF               improved IT capabilities and capability
                                                                           +2
  financial terms
                                                                      +4
                                                                                           training will make our services more
  Stable and high return on
  capital/cash flow even in
                                                                                           reliable and sustainable
  time of crisis                                                   2007    2008   2009
                                                             > 40% of DGFF employees       We are the only Logistics company
                                                             active e-learning users       with a firm commitment to an
                                                                                           increased CO2 efficiency of 30% by
                                                                                           2020 (10% by 2010)




  Challaneges in Freight Forwarding | Supply Chain | Koper | October 1st, 2010 December 8th, 2010.
  |Environmental Challenges along the Amcham Seminar & Cocktail Budapest,
    Challenges in Freight Forwarding                                                                                     DHL | Page
                                                                                                                               Page   3
                                                                                                                                      6
Environmental Challenges along the Supply Chain

                                                                                                     Attila Pál
                                                                                              Sales & Marketing Head




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                Page   7
     What are the “Green“ Challenges along the Supply Chain?
100% = 42G+CO2e, 2000

                                                     Share of global GHG emission [in%]
     Agriculture
                  14                       Power
                                24
                                                                                                    Estimated off-
           14
Industry                                                                                            setting cost of
                                       8     Buildings                                                  60bn €
                                      5
 Land-use 18                           Other energy-related
                                  3
 change                    14         Waste

                            Transport                                                                                     ILLUSTRATIVE




                         Supply            Pick-up         Facility         Line-haul              Facility    Delivery     Demand


                                                                              Sea
                                                          Electricity                         Electricity
                                            Rail             Gas                                 Gas           Rail
                                                             Oil                                 Oil

                                            Road                               Air                            Road



     Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
     | Challenges in Freight Forwarding                                                                                   DHL | Page
                                                                                                                                Page     4
                                                                                                                                         8
Reducing CO2 in the Supply Chain

 The customer has a variety of CO2 reduction levers at his
 disposal, each will have a distinct impact on the supply chain

     Optimization lever

                                            Location, number, and size of facilities required to bring product from supply to                                          HIGH
      Network Design                        customer (DC, hubs)




                                                                                                                                                                         CO2 impact
                                            Way the goods are transported from the supply point to the customer (air,
         Mode Choice
                                            ocean, truck, rail, etc.)

  Product/Lot/Container                     Packaging, quantity and timing of product shipment optimize transport
      Management                            capacity utilization

        Facility Design                     Setup and layout of specific facilities in the network


                                            Travelled route of the shipments for a given mode (route selection, direct vs.
             Routing
                                            milk-runs, etc.)

    Carrier Selection &                     Actual provider of transport; green practices/ Capabilities, managing
      Management                            agreement with the supplier                                                                                                LOW


Source: DGF/F Green Strategy Team; 1) Potential is highly variable to the company being analyzed, potential based on maximum application of the lever to maximize CO2 efficiency
without appropriate tradeoffs being made with cost and service level

Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                                                               DHL | Page
                                                                                                                                                                       Page           5
                                                                                                                                                                                      9
CO2 Reduction Potential – Network Design
                                                                                                                                 Air freight
                                                                                                                                  Trucking
Using the new Gateway in Koper will save transit time, costs and                                                                 Ocean
                                                                                                                                 freight
approx 30% of CO2 for LCL shipments to Eastern Europe
  CO2 reduction levers                               Standard Network                              Optimized Network

  The customer faces                                Hamburg
  many challenges in
  trying to “Green” his
  supply chain                                                Vienna

        Network
  1
        Design                                                                                          Koper



  2     Mode Choice



        Product /Lot/
  3                                  Voyage               Mode           CO2        Voyage                Mode        CO2
        Container Mgmt
                                     Hong Kong            Vessel       1,428 kg
                                                                                    Hong Kong             Vessel    1,181 kg
  4     Facility
        Design/Layout                Hamburg              Rail          153 kg      Koper                  Truck      42 kg

                                     Vienna               Truck          97 kg      Ljubljana, Zagreb
        Carrier Selection            Ljubljana, Zagreb
  5     and Management
                                     TOTAL               18,510 km 1,678 kg          TOTAL              14,450 km     1,223 kg

                                                                                                                    CO2 reduction of
                                                                                                                         ~28%

Source: DGF/Freight Green Strategy    weight of shipment 5,000 kg

Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                             Page 6
                                                                                                                         DHL | Page 10
CO2 Reduction Potential – Mode choice
                                                                                                                                   Air freight
                                                                                                                                    Trucking
One item of 3.5 kg in weight shipped from Kunshan to Nashville                                                                     Ocean
                                                                                                                                   freight
emits 25 times more CO2 when shipped by air instead of ocean
  CO2 reduction levers                                    Road-Air                                     Road-Ocean-Road
                                                                                      Kunshan
  The customer faces                 Kunshan
                                                                       Nashville            Shanghai                  Nashville
  many challenges in                      Shanghai    Los Angeles
  trying to “Green” his
  supply chain

        Network
  1
        Design


  2     Mode Choice
                                                                      ILLUSTRATIVE


        Product /Lot/
  3
        Container Mgmt
                                     Voyage               Mode             CO2        Voyage               Mode        CO2
                                     Kunshan              Truck            0.03 kg    Kunshan              Truck      0.03 kg
  4     Facility
        Design/Layout                Shanghai             Aircraft         30.87 kg   Shanghai             Vessel     0.37 kg
                                     Nashville, TN                                    Los Angeles, CA      Truck      0.80 kg
        Carrier Selection
  5     and Management                                                                Nashville, TN

                                     TOTAL                12,100 km        30.90 kg   TOTAL               13,900 km    1.2 kg


                                                                                                                      CO2 reduction of
                                                                                                                           ~90%+
Source: DGF/Freight Green Strategy     Weight of shipment 3,5 kg

Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                                 Page 7
                                                                                                                             DHL | Page 11
CO2 Reduction Potential – Product/Lot/Container Mgmt
                                                                                                                                   Air freight
Multi-country consolidation helps saving costs and CO2 through                                                                     Trucking
                                                                                                                                  Ocean
better utilization of capacities                                                                                                  freight




  CO2 reduction levers                               Single Transportation                         Consolidation via GWY

  The customer faces
  many challenges in
  trying to “Green” his
  supply chain

        Network
  1
        Design                                                                                         Bremen



  2     Mode Choice



        Product /Lot/
  3                                  Supplier              Mode                       Multi supplier       Mode
        Container Mgmt                                                       CO2                                         CO2
                                     Various ports         Truck             155 kg   Gateway (Bremen)     Truck        155 kg
  4     Facility
                                     Hong Kong             Vessel        2,550 kg     Single Consignee     Vessel      1,529 kg
        Design/Layout
                                                                                      Hong Kong

        Carrier Selection            TOTAL                 18,245 km    2,705 kg                       18,245 km
  5     and Management
                                                                                      TOTAL                           1,684 kg


                                                                                                                    CO2 reduction of
                                     Volume of shipment 28 cbm                                                           ~38%
                                     Weight of shipment 12.500 kg

Source: DGF/Freight Green Strategy   Fill rate LCL 60% / FCL 85%

Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                             Page 8
                                                                                                                         DHL | Page 12
CO2 Reduction Potential – Facility Design/ Layout

Lighting consumes up to 80% of the electricity required to
operate a warehouse – New technologies could save over 50%

  CO2 reduction levers


  The customer faces
  many challenges in
  trying to “Green” his                          …
  supply chain

        Network
  1
        Design
                                                                                                                      ILLUSTRATIVE


  2     Mode Choice



        Product /Lot/                Conservative Lighting                         LED Lighting
  3
        Container Mgmt


        Facility                     #of units                 1,400               #of units                 1,400
  4
        Design/Layout
                                     Energy p. unit            66 W                Energy p. unit            28 W

                                     Operating hrs p.a.        8,400    CO2 p.a.   Operating hrs p.a.        8,400       CO2 p.a.
        Carrier Selection
  5     and Management
                                     TOTAL                776,000 kWh   400 to     TOTAL                330,000 kWh       170 to


                                                                                                                       CO2 reduction of
                                                                                                                            ~60%
Source: DGF/Freight Green Strategy

Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                              Page 9
                                                                                                                          DHL | Page 13
CO2 Reduction Potential – OFR Carrier selection

Judging from Freight Forwarders (FF) carrier performance OFR will
improve its CO2 efficiency by 10-15 % by 2012 (baseline 2007)
                                                                                                                 Freight Forwarder
                                                                                                                 will apply own
  CO2 reduction levers                     Rationale                 Scorecard/ranking program
                                                                                                                 scorecard/ranking
                                                                                                                 program derived
  The customer faces                                                     Criteria                Carrier         from the Clean
                                Increasing importance of                                         name
  many challenges in                                                                                             Carbon Working
                                emission factors to achieve
  trying to “Green” his                                                                                          Group (CCWG)
  supply chain                  FF objectives in regards to             CO2 Target
                                CO2 efficiency                                                                   Survey reports
        Network
  1
        Design                                                        CO2 Efficiency
                                                                          Increase
                                                                                                                    Green
                                Carriers’ environmental targets          since 2008
                                                                        (according to
                                                                                                                 Carrier Ranking
  2     Mode Choice             and efforts will be part of FF             CCWG
                                                                         calculation
                                overall carrier selection                 method)
                                                                                                                        1
                                                                       g CO2/TEU-km
                                                                      (Fleet wide
        Product /Lot/                                                 Performance of            EF
  3                                                                   Dry Cont                                          2
        Container Mgmt
                                Carriers’ “green” initiatives will    CCWG CO2                             X%
                                be considered as essential for        Score
                                                                      (max
                                                                                                                        3
        Facility
  4                             FF’s environmental
        Design/Layout                                                                      (    Performance
                                responsibility targets                Against IMO Curve)           Y%                   4

        Carrier Selection                                                                      Z % below curve
  5                                                                                                                    …
        and Management          Good coverage of FF’s core
                                                                      Environmental/
                                carrier are member of the               Efficiency
                                                                        Initiatives                                    …
                                Clean Cargo Working Group
                                (CCWG)

Source: DGF/Freight Green Strategy

Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                           DHL | Page 10
                                                                                                                                   Page 14
 DHL Green Services


How can DHL support
you in “greening” your
                                                   Supply    Pick-up    Facility     Line-haul   Facility        Delivery   Demand
supply chain?
                                                                       Electricity
                                                                                      Sea        Electricity
                                                              Rail        Gas                       Gas           Rail
                                                                          Oil                       Oil
                                                             Road                      Air                        Road




    DHL OFFERING
        Carbon-footprint                              Carbon-reduced                                           Carbon-neutral
          calculation                                     services                                              (Off-setting)




     A value added service to                     A product or solution with                          A value added service to
    report emissions for any                       lower emission than an                             carbon neutralize any
     core product or solution                     equivalent core product or                          core product or solution
                                                      a nominal solution


Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                               DHL | Page 12
                                                                                                                                       Page 15
Air Freight: Flight of the Phoenix
Assessment of the current after-crisis market situation.
International trends and challenges

                                                           Péter Kasznár
                                                             AFR Head
Agenda


Part I. – Current Market Situation

Part II. – Trends & Tendecies – The Power of Demand and Supply
Part III. – Uniqueness of Hungarian AFR Market

Part IV. – Summary – What is expected in 2011?




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                            Page 17
   Market Situation 2010

JULY 2010

 Airfreight rates are higher by 22.7 % (month to
  month comparison)
 Yearly rates: In January – July period, rates
  increased by 17%
 According to IATA forecast, carrier airlines will
  realize USD 8.9 Million Net Profit, compared to
  same level of deficit in 2009
 IATA forecasts have been modified upward with
  respect to volume growth, as sign of continuous
  market development
 In spite of market volume growth (above                                               -5,0
                                                                                                        2010

  expected), capacities are not expanded, or only to                           -13,0
  small extent                                                           -17,0
                                                                             -14,0
 Volume has reached pre-crisis level, capacities                              -13,0
                                                                                                      Forecast released on:

  are still below
                                                                                                7,0             Dec 2009
 2010 is characterized by aggressive demand                                                             12,0 Mar 2010

  market, where limited supply acts as bottleneck
                                                                              IATA                                IATA
                                                                          Forecast 2010                       Forecast 2010
                                                                      Published Dec 15, 2009              Published Mar 10, 2010
                                                                              + 7.0%                             + 12.0%
                                                                                                                              Sources: IATA

  Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
  | Challenges in Freight Forwarding                                                                                          Page 18
      IATA – Volume (Demand) Change

                                                                                                                 Aug 2010
            Volume expansion has reached 27% by August,
            compared 2009 YTD, exceeding pre-crisis YTD
                                                                                                                     IATA 2007
                              volume                                                                                 IATA 2008
                                                                                                                     IATA 2009
                                                                                                                     IATA 2010

    35
%
    30

    25

    20

    15

    10

     5

     0

     -5

    -10

    -15

    -20

    -25
      JAN       FEB        MAR         APR        MAY         JUN         JUL        AUG           SEP   OCT   NOV     DEC




                                                                                                                     Source: IATA
     Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
     | Challenges in Freight Forwarding                                                                                   Page 19
Financial Situation of Carrier Airlines




                                                                                              Sources: IATA

Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                   Page 20
Capacity (Supply) Change
  All Configurations
  Passengers
  Freighter

2009 Vs. 2008

                                                                                                                       6,7%         6,7%                        6,1%
                                  2,4%            3,2%
                                                               1,7%                                                                              0,9%                         1,7%
      0,3%

                                                                                          -0,9%          -0,5%                                            -0,3%
                                                                               -1,8%                               -2,4%        -2,9%
                               -4,4%        -3,3%
                    -4,7%
  -6,6%                                                     -7,1%                                                                            -6,7%                         -6,3%
                                                                                                                                                                   -8,0%
                                                    -9,7%                               -9,9%         -9,3%
                -11,2%                 -10,7%                            -10,9%
          -13,0%                                                                                                           -13,0%       -14,0%
                                                                                                                                                     -15,3%                        -14,9%
                      -17,1%                                        -16,5%
                                                                                                -20,4%        -19,7%
                                                                                 -21,3%

      JAN           FEB           MAR             APR         MAY              JUN         JUL           AUG           SEP          OCT          NOV            DEC           YTD

2010 Vs. 2009


                                                                                                  15,68%    17,85%
                                                                                        12,71%
                                                                                    10,37%            13,56%                   • Starting May, capacity is on the rise
                                                                                6,49%          11.07%      10.97%                with freighters showing strong growth
                                                                             7,76%
      5,72%
                       7,19%                                                                                                     on ASPA-EU-ASPA and Trans-pacific
                                   3,33%                             1,91%                                                       routes as compared to last year.
               0,87%                                        1,33%       1,06%
                                                                                                                               • Belly Capacity (Passenger & Combi
  -1,06%
                               -2,46%                                                                                            A/Cs) forecast till Nov 2010 (Y-o-Y)
                                           -3.41%     -4,18%
                                               -2,56%                                                                            comparison has been added to the
                         -7,28%
          -9,72%                        -10,11%
                                                                                                                                 deck and shows positive signs.

      JAN              FEB        MAR              APR          MAY               JUN           JUL           AUG

                   Please note that historical data are subject to adaptation/changes according to actual schedule operated by the airlines

                                                                                                                                                              Source: Seabury, status Aug 9, 2010

Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                                                                                      Page 21
      Demand (volume) vs. Supply (capacity) change                                                                  NON-EXHAUSTIVE


      %
35


30                                                                                                                     Market Volume
                                                                                                                       Market Capacity
25                                                                                                                     Forecast Demand
                                                                                                                       Forecast Capacity
20                                                                                                                     Avg. Forecast IATA


15


10


 5


 0


 -5


-10


-15


-20


-25
  SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC


          2008                         2009                                               2010

                                                                                                                      Source: IATA

  Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
  | Challenges in Freight Forwarding                                                                                           Page 22
Capacity situation – planes extracted from the fleet                                          NON-EXHAUSTIVE




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                    Page 23
            2008 Q4 – 2010Q1 – The Power of Demand and Supply I.


        2008 Q4 – 2009 Q1                                 2009 Q2-Q3                               2009 Q4-2010Q1

•Carrier Airlines realize                        • Carrier Airlinesreach                       Rapid and high
 considerable deficit                            financial bottom                               expansion of supply
•Airfreight rates decrease                       • Rate reduction                              Carrier Airlines extract
 continuously                                    restructures demand                            capacities, not willing
•Airlines start to extract                       market, with low                               to re-launch due to
 capacity                                        Customer loyalty                               unprofitable
                                                 •Market is characterized                       operation
•Customers put pressure on
 Freight Forwarders to
                                                 by aggressive pricing,                        Drastic rate increase
                                                 low rates                                     Supply market
 achieve reduction of
                                                 • Market is dominated by                       changing rapidly to
 shipping rates
                                                 strong supply, leading                         demand market
• Freight Forwarders                             to further rate reduction
 suffer revenue loss due to                                                                    Profit margins of
 reduced rates, leading to                                                                      Freight Forwarders
 unavoidable decreasing of                                                                      drop rapidly, FFs
 fixed costs                                                                                    realize deficit




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                         Page 24
               2008 Q4 – 2010Q1 – The Power of Demand and Supply II.


                                                    2010 Q2 – TODAY

       CARRIER AIRLINES                           FREIGHT FORWARDERS                                  CUSTOMERS


•Actual volume growth above                      • Freight Forwarders                            Production rapidly
 forecasted                                      struggle to reduce deficit                       expands
                                                 • Tension between
•Despite high volume growth,                                                                     Rising „conflict” due
                                                 Customers and FFs due
 Carrier Airlines do NOT re-                                                                      to reduced buying
                                                 to unexpected rate
 launch capacities                                                                                power of Customers
                                                 increases throughout the
•Improving efficiency                                                                             and currently available
                                                 year
                                                                                                  capacities of FFs / CAs
•Sector is characterized by pre-                 • Growing number of
 crisis volume situation                         service issues due to                           Difficult to enforce
                                                 increasing workload                              former buying power
•Capacity expansion is STILL
 NOT happening                                   • Increasing risk of                            Switching provider (FF)
                                                 business loss                                    has growing risk of
•Further rate increase on the                                                                     further rate increase
 way                                                                                              and service issues




  Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
  | Challenges in Freight Forwarding                                                                                        Page 25
Uniqueness of the Hungarian Air Freight Market

             IMPORTANT FACTORS AND EFFECTS OF HUNGARIAN AIRFREIGHT
                                     MARKET


       MULTINATIONAL PRODUCTION COMPANIES DOMINATE
       NUMBER / SIZE / QUALITY OF AIRPORTS ARE NOT SATISFACTORY
       AIRCRAFT SIZES NOT SUITABLE / FREQUNECY OF FLIGHTS NOT
        ADEQUATE
       LACK OF DIRECT FLIGHT SOLUTIONS
       MAJORITY OF COMPANIES DISTRIBUTE TO EU MARKET
       DUE TO SHORTER DISTANCES, MAINLY ROAD FREIGHT INVOLVED
       ADVERSE EXPORT / IMPORT RATIO FOR CARRIERS – NO MOTIVATION
        TO DEVELOP FLEET
       ON EXPORT SIDE, SUPPLY CHAIN IS UNDERDEVELOPED DUE TO LOW
        OUTBOUND SHIPMENT VOLUMES (FAVORABLE FOR FFs IN 2009 / 2010)
       AIRPORT DEVELOPMENT REQUIRED TO ACCOMODATE FURTHER
        FREIGHTER AIRPLANES




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                            Page 26
Summary – What is expected in 2011?

            Carrier Airlines continue minimalizing operation deficit (realized in 2009), by increasing
             rates, keeping capacities low, maximalizing efficiency, expanding capacities cautiously
            Market is extremely hectic, rapidly changing, cycle pattern is different from past experience,
             mainly due to low supplies and alternating commercial orders
            Decreasing growth pattern, due to extremely low volumes in 2009
            Threat of „W” shaped crisis recovery for 2011 Q1 for AFR
            Capacity expansion is not adequate on most lanes
            Further rate increase is forecasted, by 10-20%
            Due to capacity expansion on certain lanes, price battle may renew, which may have
             stabilizing effect on market rates
            IATA is forecasting 6-7% volume growth and corresponding capacity expansion
            Lengthening transit time (T/T) due to lack of space allocation and
              revaluation of price-value ratio (faster, better, more reliable
              economic equilibrium will be reached (Investopedia)




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                            Page 27
Ocean Freight: Back on Calm Waters
Overcoming the economic downturn, the challenges of
international ocean shipping


                                                      Péter Nagy
                                                      OFR Head
 Ocean Freight Routing for HU: Koper or Bremerhaven




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                            Page 29
 Ports used by DHL

                                                                         Koper
                                                                         • Used for Middle East / Africa /
                                                                         Far East
                                                                                   • Most flexible port in
                                                                                   Europe
                                                                                   • Lowest inland
                                                                                   charges to Hungary
                                                                                   • Used by 99% of the
                                                                                   main shipping lines


  Bremerhaven /
  Hamburg
  • Used for North – South
  America
  • Lower T/T
  • Higher volume handling
  capacity


Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                           Page 30
The Port of Koper
                                                                                        Competitors to Koper:
                                                                                        Trieste / Rijeka


                                                                                        Why Koper?
                                                                                        • Daily block train from Koper (5
                                                                                        rail operators) / Only 1 rail
                                                                                        operator from Trieste
                                                                                        • Italian rail service is more
                                                                                        expensive
                                                                                        • Main problem of Rijeka:
                                                                                        Croatia is not EU member
                                                                                        (Customs issues)




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                       Page 31
         Market trends 2008-2010

                                                     OFR Buying Rates HKG / SHA (2008-2010)
                                                         (per 20' / 40' / 40'HC containers)

      3000                                                                                                            3000


      2500                                                                                                            2500


      2000                                                                                                            2000
USD




      1500                                                                                                            1500


      1000                                                                                                            1000


      500                                                                                                             500


        0                                                                                                             0
         08 v




         09 v




         10 v
          08 r




          09 r




          10 r
         08 b




         09 b




      20 Feb
         08 g
       20 Se p




         09 g
       20 Se p




         10 g
       20 Se p
         08 r




         09 r




         10 r
          08 y




          09 y




       20 Ma y
      20 Jan




        20 Jun




         09 n




        20 Jun




         10 n




        20 Jun
         08 l




         09 l




         10 l
       20 Dec




       20 Dec




               c
          08 t




          09 t




          10 t
      20 8 Ju




      20 9 Ju




      20 0 Ju
       20 Oc




       20 Oc




       20 Oc
      20 No




      20 No




      20 No
       20 Ma




       20 Ma




       20 Ma
      20 Ap




      20 Ap




      20 Ap
      20 Fe




      20 Fe




             De
      20 Ja




      20 Ja
       20 Ma




       20 Ma
      20 Au




      20 Au




      20 Au
          08




          08




          09




          09




          10




          10




          10
         08




         10
           0




           0




           1
       20




                                                                           t

                                           HKG 20'     HKG 40'    HKG 40'HC     SHA 20'    SHA 40'    SHA 40'HC




        Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
        | Challenges in Freight Forwarding                                                                        Page 32
Capacity

                                                                   Capacity
                                                                   • Due to crisis, production companies canceled
                                                                   orders accounting to production drop
                                                                   • Existing shipment size decreased, total OFR
                                                                   volume dec.
                                                                   • Due to growing competition btw shipping lines,
                                                                   ocean freight rates began to fall significantly
                                                                   • Round trips are loss makers for ocean liners
                                                                   (import brings more profit)
                                                                   • Shipping liners place new vessel orders 2-3
                                                                   years in advance – unforeseen crisis creates
                                                                   extra unnecessary capacity
                                                                   • Several ocean liners reported huge deficit at
                                                                   end of 2009




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                           Page 33
Solutions
                                                                           Solutions
                                                                           • Instead of Suez Channel, liners choose
                                                                           way around Africa (high cost of passing
                                                                           Suez)
                                                                           • Slow steam (lower fuel consumption)
                                                                           • Capacity extraction – decreasing fleet
                                                                           size (cheaper to park ships than to operate
                                                                           empty)
                                                                           • Artificial lack of capacity – rates started to
                                                                           increase
                                                                           • Ocean liners terminated container leasing
                                                                           – shortage of available empty equipments
                                                                           in Far East – rate growing factor after crisis




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                                 Page 34
Effects
                                                                         Effects
                                                                         • Rates drastically increase by 2010 Q1
                                                                         • All-in cheaper to order good from Europe
                                                                         (eg. sanitary)
                                                                         • 2010 last 2 months rates slightly dropped –
                                                                         ocean liners announced 2011 GRI from
                                                                         January to avoid same situation as in 2009




Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                                            Page 35
                              THANK YOU FOR
                              YOUR ATTENTION

                                                       Q&A



Challaneges in Freight Forwarding | Amcham Seminar & Cocktail Budapest, December 8th, 2010.
| Challenges in Freight Forwarding                                                            Page 36

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:25
posted:12/30/2010
language:English
pages:36
Description: It AFR Market Update Revaluation