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Annual Report 2003

Passion for Solutions

North America

Asia

Europe

Latin America

Oceania

Africa

Panalpina Annual Report 2003 03

A Passion for SolutionsBrains can move loads while ideas create crucial added value.Panalpina is the global logistics service provider with both brainsand ideas. 12,000 employees at 480 branches guarantee ex-perience, professionalism and motivation in 75 countries and onall continents.

Our global, Swiss-based Group owes its leading market positionto the “Spirit of Panalpina”, which inspires our staff throughoutthe world. Thanks to our regionalized group structure along withour global process and quality standards – teamed up with reli-able, best-in-class partnerships and local, personal customercare – we guarantee customers outstanding, reasonably pricedservices and added value.

The Panalpina Group is wholly owned by the Swiss-based ErnstGöhner Foundation.

Our logo depicts an active human figure using its energy todynamically encircle the globe – in the air, on the seas and onland.

Profile

Interview with Chairman Gerhard Fischer and CEO Bruno Sidler

Group Management Structureas of May 2004

04 Panalpina Annual Report 2003

Gerhard FischerChairman of the Board of Directors

CFORoland Wider

CIOMonika Ribar

Executive BoardPresident & CEO

Bruno Sidler

Steering CommitteeChairman

Gerhard Fischer

Board of DirectorsChairman

Gerhard Fischer

Corporate Auditor

Vice ChairmanOtto Schmid

Jürg FurgerHeinz KühnleinWilfried Rutz

Roger SchmidHeinrich Walti

Otto Schmid Bruno SidlerJürg Furger Roland Wider

Regional CEOEMEA*

Jörg Eggenberger

Regional CEONORAM*

David I. Beatson

Regional CEOLATAM*

Beat Simon

Regional CEOAPAC*

Lars-Ola Gunnarsson

*EMEA Europe, Middle East, Africa, CIS, Central Asia*NORAM North America*LATAM Latin America*APAC Asia-Pacific


Bruno Sidler President and CEO

How would you assess the past financial year?Gerhard Fischer Despite the ups and downs of theeconomy and persistent tough competition, we in-creased net revenues by 5.7% or over 14% after adjust-ment for currency effects. This growth impacts on theGroup’s result right up to EBIT level, where our perfor-mance improved 5.7% year-on-year. I regard this as anotable achievement, particularly after the stagnantgrowth in the previous year. The weakness of the US dol-lar and other currencies dependent on the dollarobviously impacted on our performance. About half ourbusiness is dependent on the US dollar. The slight fall innet income primarily due to our significantly poorer finan-cial result compared with the previous year.

What are the reasons for the increase?Gerhard Fischer Our sales growth is largely attributableto our booming business in Asia, where we were ableto increase gross profit by double-digit amounts. However, sales to key-account customers in our coreindustries also increased 18% year-on-year.

Did all industry groups perform equally well?Bruno Sidler We signed major new contracts, many ofthem with customers in the SME segment. The volumeof business that we obtain from major, globally active

customers may be constantly growing, particularly in theHigh-Tech, Automotive and Oil & Gas segments, butSMEs still account for nearly 80% of our revenues. Soyou can see that these customers are as important to ourbusiness as ever. Our SME customers naturally benefitfrom the forwarding solutions we devise for key accountsbecause we have to generate a certain volume of freighton individual routes in order to be able to provide thoseservices in the first place. It is essential to maintain abalance between customer segments.As regards our core industry groups, the Health Carecustomer segment still has some catching up to do, andwe have taken appropriate action, such as establishinga Competence Center on the lines of our other core indu-stries. So we are expecting Health Care to show a clearimprovement in the current year.

How did business develop in the various Regions?Bruno Sidler It’s no secret that we didn’t achieve theresults we were hoping for in the former AmericasRegion, but we reacted in good time and took appropri-ate action. Because of Latin America’s importance to ourexport traffic operations, we have a comparatively largeorganization there. As a result, we were harder hit by theeconomic crises – mainly in Venezuela and Brazil – thanour competitors. In light of the problems in Latin America,

Interview with Chairman Gerhard Fischer and CEO Bruno Sidler


we decided to restructure our management resourcesand split the Region into two management units.Splitting the Americas Region was ultimately also todemonstrate a clear commitment to the North Americanmarket, the enormous potential of which we have ex-ploited insufficiently in the past. Since the middle of lastyear we have a US citizen as Regional CEO for the firsttime, and he also has a seat on the Executive Board.Consistent with our commitment, we have investedconsiderable sums in setting up a sales organization. Theobjective is clear: aggressive growth and an increase inour market shares. The results for the first few months of2004 are encouraging.Buoyed up by the Asian boom, we have greatly improvedour market position in the Asia-Pacific Region. Grossprofit rose by over 14% compared with the previous year,and we achieved high double-digit growth on the routesto Europe and North America.In the EMEA Region, which accounts for more than halfof the group’s gross profit, we continued to feel thesluggishness of Europe’s economies. But we have aresponsive and effective organization, and we shall be ina position to benefit from the upturn that we hope is justbeginning. The former AMEC Region used to focus pri-

marily on the Oil & Gas industry, and amalgamating thetwo Regions has created considerable synergies.

What is Panalpina’s growth strategy? Are you con-centrating on particular geographical areas? Areyou contemplating any acquisitions?Gerhard Fischer Our growth strategy remains un-changed. We will continue to invest in the highly promi-sing Chinese market, for example. We are just about toobtain a Class-A-license, which will enable us to com-mence operational activities and further boost growth.But fundamentally we intend to go on concentrating onorganic growth, though we’re not averse to acquisitionsto bolster our position in geographical or key industrymarkets if they make sense. We have substantial netliquidity and our strategy has the full support of our share-holder.

How do you see developments in 2004?Bruno Sidler There was a noticeable increase in freightvolume in the fourth quarter of last year, which makes usvery optimistic. Internally we’ve done our homework:we’ve regionalized management structures, and indivi-dual functions at global level have been clearly defined,

“Our employees focus on solutions,not problems.”


demarcated and largely standardized. With our restruc-tured sales organization, efficient operational structuresand responsive central purchasing organization for seaand airfreight, we are ideally equipped to face the chal-lenges of the future.So far business in 2004 has been satisfactory. Thegrowth trend in Asia is continuing, as is the recovery ofthe North American market. Economic activity in Europeis still hesitant, but here too we expect an improvementin the course of the year. We see the eastward expansionof the EU as an opportunity. It can be assumed thatinvestment in these countries will increase. Panalpinahas been active in eastern Europe for many years. Ourpolicy has always been to grow with our customers: wedid not “stock up” on major infrastructure before it wasneeded. This approach has proved successful.

In the past 20 years Panalpina has developed from atraditional forwarder to a provider of complex servi-ces spanning the globe. What has it been like to bepart of that development?Gerhard Fischer In recent years logistics has becomeenormously important to all companies. Globalizationmeans that products come from suppliers all over the

world, rather than being supplied centrally from a singlecountry. It’s very clear that the organization of logistics isa salient cost and competitive factor today, which is whylogistics companies now bear a substantially greaterresponsibility to their customers and their products thanthey did in the 1960s and 70s. Supply chains and cargoflows have become much more complex, and Panalpinarecognized the opportunities presented by this process,and organized itself to take advantage of them, at anearly stage.The successful implementation of this strategy is largelydue to our staff throughout the organization, of whom wecan be justly proud. Panalpina has an outstanding repu-tation – particularly when dealing with complex require-ments for key accounts, projects or the oil business. Thiscompetence also equips us to handle daily bread-and-butter business with the same motivation and profes-sional attitudes. Our employees focus on solutions, notproblems. They are determined to give customers thebest solutions for their needs, regardless of whether theyare international conglomerates or SMEs.

“We succeeded in increasingrevenues.”


Executive Board

“Clear structures, industrycompetencies andhigh levels of motivationguarantee customersatisfaction.”

Bruno SidlerPresident and CEO

“We are totally committed to strength-ening our leadershipin Latin America.”

Beat SimonRegional CEO LATAM

“We pursue a growth-oriented business strategy.”

David I. BeatsonRegional CEO NORAM

“IT decisions are alwaysmade on the basis ofbusiness requirements.”

Monika RibarCIO


“Our success is due tothe fact that we speak thecustomer’s language.”

Jörg EggenbergerRegional CEO EMEA

“We will systematicallyexpand our strategicposition in the Asianmarket.”

Lars-Ola GunnarssonRegional CEO APAC

“We have set the course for sustainableand profitable growth.”

Roland WiderCFO


Interview with CFO Roland Wider

“Our revenues and operatingresult rose mainly due to theboom in Asia.”

Roland Wider CFO


Are you satisfied with the way business is going?All in all we can be satisfied with the past fiscal year. Allregions improved, delivering very encouraging results –except for the Americas Region, whose result was disap-pointing. But midway through last year we divided theAmericas Region into two new Regions, Noram andLatam, and established a clear growth strategy for theNorth American market, which is of great importance tous. We are confident that we have laid the foundations forprofitable long-term growth in this market too.

Revenue fell in 2002…Yes, but it returned to significant growth in 2003. We in-creased net revenues by 5.7%, or by as much as 14.1%in local-currency terms. It’s worth mentioning that this ispurely organic growth. Owing to pressure on gross mar-gins, however, we increased our gross profit by only 1.2%.This squeeze on margins was mainly caused by a sharprise in seafreight rates – by up to 400% on some routes –that was due to a shortage of capacities. Obviously ratehikes like these cannot be passed on to the customer infull. Stringent cost management enabled us to increaseour operating profit once more, by 5.7%, but a substan-tially lower financial result and a higher tax charge meantthat consolidated net income was 4.1% down on the pre-vious year.

What are the challenges facing the new LATAM andNORAM Regions?With the continuing political and economic instability inLatin America, it’s our aim to create structures that are asflexible and adaptable as possible. That means the impor-tant thing is to minimize fixed costs, which enables us toreact quickly to economic crises and devaluations. InVenezuela, for example, we had to cut our workforce dras-tically in the year under review. In North America we expectvery positive stimuli from current initiatives. In particular, theinvestment we have made in the local sales organizationshould start to yield results during the current year.

How is growth looking for the current year?For one thing, we do of course expect the general econo-mic upturn to provide some positive stimuli. For another,we will expand our already strong position in Asia. And, asalready mentioned, we expect the North American busi-ness to make a significant contribution this year.

Thanks to our focus on four defined core industries, wehave built up a great deal of industry-specific expertise inrecent years which enables us to develop very complex,and in some cases world-spanning, concepts for ourcustomers. This is where we want to continue gainingmarket share in future. It is these major customers – pri-marily the global ones – which are looked after by our glo-bal Key Account Management organization. But weshould not forget that about 80% of our revenue comesfrom customers in the SME segment. And it is precisely inthis segment, among existing Panalpina customers, thatwe still see a huge amount of growth potential.

What about internal measures?Around 60% of our employees work in Operations, wherethey are responsible for arranging transportation and pre-paring documents. In this area we want to continue impro-ving quality by clearly defining responsibilities, processesand objectives. By doing so, we can further improvecustomer satisfaction and reduce the claims risk. We alsosee this as an area in which there is further potential forimproving productivity.

“There is still huge growth potentialwith our customers in the SMEsegment.”


Airfreight

Core Activities Airfreight Seafreight Logistics Solutions Projects


Seafreight

Logistics ProjectsSolutions



On track to meet ambitious goals

Growth market and peak demand In 2003 Pan-alpina airfreighted a total of 620000 tons of goods.Traffic between Asia and Europe grew by 32% com-pared to the previous year. 5000 tons of goods wereflown from Shanghai to Europe in December alone,and growth was also achieved in all other intercon-tinental routes. This success is no accident; it is essen-tially based on our own global airfreight network andour ability to furnish capacity that is tailor-made to ourcustomers’ needs. To this end, Panalpina applies thebest-in-class principle to cooperate with selectedcommercial airlines and partners from whom it char-ters cargo aircraft capacity on an exclusive basis.In addition, Panalpina is able to build on its specialists’extraordinary commitment and expertise in purchasingcapacity and network planning. This has enabled usto make sufficient cargo space available even in timesof great demand.Ad-hoc charter activities were also significantlyincreased compared to the previous year. On averagePanalpina organizes three charter flights a day to meet special customer requirements. This segment issteadily becoming more significant.

Proactive rather than reactive Great progress wasmade in the development of the “AirWarder” IT applica-tion during the year under review. In future, this elec-tronic platform will be used to perform functions suchas capacity management, bookings, documentation,processing and account management. AirWarder is animportant tool for the centralized and standardizedmanagement of Panalpina airfreight flows. A proactivetracking function was developed for this softwarewhich makes it possible to identify deviations immedi-ately and to take countermeasures. Thanks toAirWarder, negative events can be avoided and thecustomer can be informed at any time with great trans-parency. AirWarder is not only an operational process-ing and control tool: it also contributes substantially to reliability and operational excellence and thusimproves customer value.

Network expansion and centralized controlAnother key aspect of a well-functioning global air-freight system is efficient infrastructure on the ground.In 2003 Panalpina opened a state-of-the-art logisticscenter at Cargo City Süd in Frankfurt, which functions

next to Luxembourg and Paris as a central airfreighthub in Europe. With main hubs in Europe, the UnitedStates (Chicago, Huntsville, Los Angeles, Miami) andAsia (Dubai, Macau, Singapore), the Group has aglobal network that is supplemented by numeroussubhubs.In the medium term, Panalpina’s airfreight will behandled exclusively by its in-house carrier ASB-Air.While Panalpina takes care of customers, the sub-sidiary handles transportation and is responsible forcapacity management, optimization of interfaces andthe operation of the global airfreight network. It coor-dinates and bundles freight flows around the world.

Greater transparency means more securityPanalpina attaches the greatest importance to secu-rity, and is one of the first globally active logistics enter-prises to have obtained C-TPAT (Customs-Trade Part-


nership Against Terrorism) certification in the UnitedStates. American authorities regularly monitor com-pliance with the obligations Panalpina has taken on inthis area. Panalpina is also deeply involved in variousnational security programs. The Group’s forward-look-ing security management is focused on guaranteeingclearly defined standards and processes around theglobe. It is coordinated from the head office and it alsocomprises training programs and seminars for ourown staff and third-party companies.



Joining forces

the North America and Asia-Pacific Regions so as tocreate a world-spanning network.The LCL (Less than Container Loads) sector is nowalso centrally organized. The in-house carrier oper-ates all hubs and container freight stations in Europeand is gradually taking over hubs in the USA andAsia as well.

The booming Asian market Despite a difficultmarket environment, Panalpina succeeded onceagain in boosting freight volumes in 2003. The Groupshipped a total of 680000 TEU around the world. Inthe booming Asian market, there was a clear anddisproportionately large rise in revenues. While thismarket rose by 12%, Panalpina achieved growth of20%, and as much as 28% in exports to China.Export traffic from Asia accounts for approximately40% of total seafreight revenues, while exports fromEurope account for approximately 30%. Here too,the 10% growth in traffic to Asia was a result wellabove the market average. With a rise of 17%, theroute between North and Latin America showed avery satisfactory development, as did transpacifictraffic, with a volume of over 100000 TEU.

Rate increases and tight capacities 2003 saw amarked increase in freight rates and strong demandfor capacity. Thanks to its far-sighted and efficientcapacity management system, Panalpina was none-theless able to master the situation. The systemgenerates real added value for customers, becausePanalpina is able to offer capacities and thus areliable supply chain even when supplies are short.

Transparency takes the center stage The newsecurity regulations introduced by the United Statesfor the seafreight industry are likely to be standardoperating procedure across the globe by next year.They require early and detailed information aboutgoods about to be shipped. This poses a challengeto all parties involved in the transport chain, includ-ing customers. Panalpina's experts therefore adviseand support customers in implementing the newregulations.

On-site customer service, centralized process-ing A large number of functions are increasinglystandardized and performed centrally in seafreightservice centers. In concrete terms, this means thatPanalpina books the shipment through the “Sea-Warder” electronic platform, which it employs to for-ward the data directly to the SSC managed by theASB-Sea in-house carrier. That is where the actualshipment is organized and carried out. Thanks tocentralized transport and container management,import and export freight flows can be coordinatedand optimized.While customers are served on-site in variousregions and countries around the world, freight pro-curement, capacity management, bookings and thelike are performed centrally in the SSCs. Customersconsequently benefit in terms of higher productivi-ty, transparent information and availability of con-tainers and loading space.So far SSC’s are in place in Bremen, Hamburg,Milano and Paris. The concept is being extended to



Earning customers’ trust daily


The components, supplies and semi-manufacturesneeded by international manufacturing companiesfor their products come from all parts of the world.And their products are used in turn by the pro-duction companies to provide quality products forend-consumers around the world.Designing, controlling and continually improving thecomplex flows of goods and services from outsidesuppliers to system suppliers, and finally to theproducer, is a challenge that few globally activelogistics service providers can meet.Smoother deliveries all along the line Panalpinaprovides time-definite and cost-effective delivery ofgoods and components to production lines acrosscountries and continents. In close cooperation withbest-in-class partners, it seeks to identify the logis-tic requirements and processes of major customers,optimizes processes, designs tailor-made logisticssolutions, and plans and manages the entire supplychain, including warehousing and inventory man-agement. Panalpina proactively and innovativelydeploys cutting-edge product and data logistics toenable its industrial customers to focus on their corebusiness. Top quality at all levels Operational excellencealong the entire logistics chain is no mere slogan,but an imperative: solution-oriented procedures,responsibility, standardized processes, securitymeasures, cutting-edge IT, clearly defined interfacesand precise modes of operation at every levelensure that Panalpina provides active support tocustomers in their business. Operational excellenceis achieved when a multiplicity of individual sub-tasks are executed efficiently, resulting in a first-class service package and customer satisfaction.This includes problem-free data transfer, correct for-warding and customs documents, optimum use ofIT systems, faultless account management, proac-tive customer information, compliance with secu-rity standards, thorough selection of partners andmuch more. Exchanging specialist knowledge Panalpinaoffers a broad range of logistics services in conjunc-tion with intercontinental airfreight and seafreightservices. It focuses mainly on the needs of cus-tomers in the core automotive, high-tech,healthcareand oil & gas industries. It goes without saying thatintimate knowledge of the industry is indispensablefor first-class customer service. That is whyPanalpina is strongly committed to the training anddevelopment of its specialists. Multifunctionalteams comprised of sales, operations, in-house car-rier and key account manager staff, supported byindustry competence centers, are in charge of everykey industry. At Panalpina’s annual specialist semi-nars, these teams discuss contemporary industryissues with customers, partners and experts fromindustry and science – an opportunity for profes-sionals to keep one another up-to-date.



Notwithstanding all the indicators to the contrary, thedevelopment of project business in the year underreview was encouraging. Despite the Iraq crisis, indus-try invested heavily in the energy field, and 2003 alsosaw a continuation of the trend of recent years forinvestors to put their capital into major industrial proj-ects rather than the equity markets. Panalpina carried out assignments in various regionsin 2003, from West Africa to the Middle East, fromCentral Asia to the Far East. The flow of goods to cer-tain areas, particularly China, promises to be uninter-rupted – and the trend on the China-US route is alsoclearly up. From a global perspective the constructionindustry – which has an enormous need for forward-ing services – stood out alongside the energy sector. The ability to identify problems rapidly, find creativesolutions, make quick decisions and handle jobs flex-ibly are the keys to success in global project business.At ASB-Panprojects – a centrally managed, inde-pendent profit center – some 150 specialists coordi-nate activities and collaborate closely with both theircolleagues in sea and airfreight and with partners. Highlevels of quality and efficiency are essential, all themore so because project terms are getting shorter andshorter. Panalpina often comes to the rescue whenbottlenecks occur.

Global nichesDiversity of products and goods Most interconti-nental project transportation is sea-borne, thoughairfreight also plays a major role. Panalpina oftencarries out spectacular airfreight projects, such as in2003, when railway carriages were loaded into threeAntonov cargo planes, with millimeters to spare, fortransportation from Germany to China. But heavy andoversized goods account for “only” 20–30% of overallfreight. Projects consist of a multiplicity of goods orig-inating in various countries, the delivery of which mustbe planned to the tiniest detail and flawlessly exe-cuted – especially in remote areas with poor infra-structure.

Focus on industrial projects Most project cus-tomers are in Oil & Gas, construction or the power-plant industry. Decades of experience, good contactsand outstanding knowledge of industries and coun-tries combine with Panalpina’s global network to makeus a preferred partner for major projects. We offer thecustomer proximity, specialization and flexibility of aniche provider, together with the strength and securi-ty of a global group.

Key Industries Automotive High-Tech Health Care Oil & Gas


• Development and implementation of flexible, fine-tuned sup-ply chain solutions with integrated airfreight and seafreightservices for the automotive industry

• Integral packages for the establishment and operation of dis-tribution centers and warehouses, for the optimization ofinterfaces, processes and data transfer, and for outsourcingschemes, process engineering etc.

• Just-in-sequence and just-in-time supply: carefully coordi-nated delivery to production lines of components from a vari-ety of companies based in different countries on several con-tinents

• Automotive Competence Center for tailored solutions• “Intrac” Internet-based tracking & tracing system for supply

chain monitoring, with innovative “incident and alert” report-ing module

• Annual industry symposiums

Strong partner to strong industries

• Strategic partnerships with several global leaders in the high-tech sector

• Integrated logistics solutions, from procurement to ware-housing and distribution

• Logistics chains linking the industry’s key East Asian pro-duction sites with the rest of the world

• All-round, globally standardized security concept for logisticsoperations involving highly sensitive goods

• TAPA (Technology Asset Protection Association) certificationfor Panalpina-operated warehouses and logistics centers

• Development and implementation of a central, automaticaccounting system for all consignments of globally operatingIT and communications companies

Automotive High-Tech


• Highest standards for safeguarding completeness andintegrity of pharmaceutical products and punctual (just-in-time) delivery to destination

• Weekly services for highly sensitive consignments betweenEurope, North America and Asia

• Choice of transport mode depending on urgency and con-signment size: aircraft, vessel, rail, road, courier

• Order confirmation, consignment documentation, forwardingprocedures and invoicing via e-hub

• Exclusive shipment of pharmaceutical samples• Guaranteed total hygiene and constant temperatures and

pressures throughout supply chain• Innovative use of temperature-controlled containers (Enviro-

tainer) for airfreight

• Logistics partnership with global oil industry leaders andnumerous oil exploration, supply and engineering companies

• Integral infrastructure/logistics services and innovative solu-tions for the tapping, transportation and processing of crudeoil and natural gas

• Charter shipments for plant and construction materials,spare parts and oversize freight

• Coast link services• Packaging, warehousing and distribution• Agency services and husbandry (customs and port clear-

ance, oil platform supply, staff care, crew changes, visa pro-curement etc.)

• Progressive standards for health, safety and environment(HSE) and their enforcement within the Group and by sub-contractors

Health Care Oil & Gas



Efficiency at all levels

cies. That is why Panalpina has established competencecenters for all core industries, including the automotivesector. The Virtual Competence Center Automotive(VCCA) knows how to effectively bundle know-how andmake it available to all participants. In addition, industrialseminars are held on a regular basis for exchangesbetween Panalpina, customers and partners.

Custom-made product chain instead of expensivewarehousing Panalpina counts among its customers oneof the world’s largest suppliers to the automotive industry.This company, which itself has suppliers in more than 20 countries and has to contend with long distances andcomplex transportation processes, faces considerablelogistic challenges and high costs. For this customer,Panalpina has developed a tailor-made and flexible sup-ply chain that generates real added value in conjunctionwith seafreight and airfreight services and that meets thefast-changing requirements of car manufacturers. Follow-

Today cars are no longer built for stock. Manufacturersaim to build vehicles to order and deliver them promptlyin line with the customer’s individual requirements. Theyalso cooperate with suppliers all over the world, whichmeans that all individual components have to be deliv-ered at the right time and in the right order. Every delay,or a single missing component, can interrupt the entireproduction process or even bring it to a standstill – whichcan be very costly.

Motto: Just-in-sequence To do justice to changingtrends, global supply chains and delivery dates in theautomotive industry, the management-intensive “just-in-sequence” system has replaced the traditional “just-in-time” delivery system. It coordinates the logistics processas a series of integrated part deliveries from numeroussuppliers and directs them to the production line. Thelogistics partner needs to know his customer’s businessin detail and to acquire the relevant industrial competen-


ing an analysis, extensive process adjustments were madewith the aim of rationalizing communications, standardiz-ing common processes and integrating the responsibilitiesof all partners involved. A Panalpina key account managerwho is intimately acquainted with the customer require-ments is practically “online” and in permanent contact withthe person in charge at the company. This enables himto identify problems promptly and immediately proposesolutions.

One-stop logistics management As part of its servicesto customers, Panalpina manages interfaces, monitorspickups, consolidates goods at its logistics centers,handles the actual transportation and ensures promptdelivery to the recipients. An important part of the job is tostandardize reporting and to provide full transparencythroughout the logistics process. The customer can usethe Web-based “Intrac” Track & Trace system to monitorthe supply chain. The “Incident and Alert” module providesreal-time information about any problems so that appro-priate action can be taken immediately. In addition,Panalpina takes charge of order management, drawing upand inspecting documents, performing quality and quan-tity control, repackaging if necessary, and monitoring allagreed delivery dates.



Made to measure, tailored to requirements


The IT and telecommunications sector is developing at abreakneck speed. Headlong change in the digital worldforces the developers, manufacturers and distributors ofIT and communications systems and equipment to thinkand act innovatively and to react quickly, and the same isequally true of their service providers. Panalpina’s clearindustry focus and professional key account managementhas enabled us to form strategic partnerships with manyof the world’s leading high-tech companies, for which wesupply integrated logistics solutions. Global activity, cen-tral coordination and a regional presence characterize thebusiness of our major customers, who expect no less oftheir logistics partner: these factors are essential totranscontinental collaboration.During the year under review, Panalpina secured new busi-ness with a number of well-known companies, amongthem a major technology group that entrusted the ship-ment of its products on various trading routes toPanalpina. A leading telecommunications companyengaged Panalpina to handle logistics between Asia andEurope, and another telecommunications giant has askedPanalpina to handle all its future freight requirements within Brazil and from the US to Latin America and theCaribbean.Industry expertise, innovative strength, cost and qualitycontrol, commitment and an intensive dialog are whatthese companies expect, because that is what their cus-tomers demand of them. All parties involved in the supplychain must meet the same high standards: these are, afterall, high-quality and high-priced products. The standardsare applied in all fields: distribution networks, storage,intercontinental transportation and customs clearance,safety, data transmission, flexibility, invoicing and capacityavailability.

Key-account management: linking the parts of thebusiness Every transaction is coordinated by the respon-sible Key Account Manager. There is no need for thecustomer to contact the local or regional Panalpina organ-ization himself: instead he has a personal contact with athorough understanding of both parties’ requirements,who can thus ensure that they are harmonized.

High safety standards Damage and processes thatfacilitate criminal activities don’t fit to the logistics busi-ness. Even at the stage when major contracts are put outto tender, great importance is attached to clearly definedsafety standards – covering both damage prevention andprotection from criminal actions. In its own warehouses,Panalpina follows the guidelines of the TAPA (TechnologyAsset Protection Association), and it also arranges TAPAcertification for the most important hubs. It uses the DVD-based Security Awareness training program, in whichcourses are held throughout the world, to increase aware-ness of these guidelines.

Boom market with a wealth of opportunity Asia, andparticularly China, is the main production base ofPanalpina’s high-tech customers, who include numerousmajor global players, their contract producers and sup-pliers. Panalpina bridges the gap between the economiesof the Far East and their markets throughout the world.Together with its customers, Panalpina exploits the oppor-tunities offered by this complex, multi-faceted region.



Core regions: Europe, US and Asia Health Care is oneof Panalpina’s four core industries. We have been workingsuccessfully with leading pharmaceutical companies formany years, concentrating our activities in Europe, NorthAmerica and Asia – three continents that are mutuallyconnected by a close-knit transportation network. TheEurope-US trade lane was the area in which freight trafficin this industrial field was heaviest in 2003.

Focus on airfreight When freight consists of pharma-ceutical products, it has to move fast. It is not unusual forparticular products to be urgently needed somewhere inthe world, so delivery must be immediate and efficient. Butit is not only emergency consignments that must betransported speedily. Pharmaceutical products are sen-sitive and expensive, which is why they are very oftenairfreighted. This naturally applies particularly to medicines required forthe treatment of acute conditions, but it is also true of thetransportation of test samples, which Panalpina handlesexclusively for a Swiss industry leader.

In safe hands Safety is crucially important in the health-care segment, and of course safety also means clean pay-load space and transshipment facilities. Panalpina looksafter the entire transportation chain for its pharmaceuticalcustomers, from collection and the organization of theshipment to consignment tracking, notification of arrival,customs clearance and delivery to the addressee. Conse-quently Panalpina is responsible for ensuring that thegoods reach their destination without losses, in perfectcondition and on time. It thus ensures the transparency ofroutes and processes, the correctness of freight docu-mentation, and compliance by all parties with recognizedsafety standards.

Secure, flexible, reliable

Delicate goods, special transportation It is often notenough, however, for pharmaceuticals to be forwardedfrom the manufacturer to the processor or purchaserwithout delay or disruption, in hygienic conditions and insafe hands. Panalpina transports extraordinarily complexproducts such as vaccines, which have to be kept at aconstant temperature and humidity, in Envirotainers.These innovative “cooltainers” are equipped with thermo-stats and dry ice, enabling the temperature to be activelycontrolled.

Online interaction and know-how transfer Innovationis a must in the healthcare segment. This applies to thetransmission of data no less than the transportation ofgoods. Panalpina is thus developing systems that willenable us to carry out all exchanges of information withmajor customers by purely electronic means. Orders willbe transmitted digitally to the e-hub, which will be linkedto “Intrac”, Panalpina’s tracking and reporting system.Confirmation of orders, consignment documentation,transportation, invoicing: everything will be handled viathis online platform.



Speaking the customers’ language

Acting for companies in the oil & gas industry for severaldecades has given Panalpina extensive experience in thefield. Its customers include oil and gas producers, seismo-logical companies, oil-platform operators and supplyships, drilling companies, supplier companies, design andengineering firms and shipping lines. This variety makes itclear that very heavy demands are made on the logisticscompany, and that it requires an enormously wide rangeof knowledge. Besides haulage and transportation ser-vices, Panalpina also offers agency services, organizessupplies to extraction and production facilities and carriesout project and heavy-loads transportation. With our flex-ible capacity planning and a close-knit route network thatspans the globe, Panalpina provides customer-specificservices and individual solutions. Our customer-care staffspeak their customers’ language, think like them andidentify with their business.

Growth in almost all regions Panalpina further con-solidated its position in this key market in 2003. Businessperformance in West Africa was very positive, and Angolain particular has huge future potential. In the year underreview Panalpina moved into a new and ultra-modernbuilding in Luanda with office and storage facilities. Coastalshipping services that Panalpina provides for the oil indus-try are an important element in our range of services inWest Africa. Whereas “African Star II” is tied to a fixedschedule, the “Merlin I” and “Merlin II” service the oil com-panies and their contractors as required. This year the“Merlin I” will be decommissioned and replaced by a newship. The “Merlin III” will be the fifth Panalpina-operatedship on the coast of West Africa.Business developed well in Central Asia and the CIS.Positive developments were also achieved in the Maghrebstates. We shall in future substantially reinforce our


presence in the up-and-coming economic regions ofIndia, China and Singapore. The economic situation inVenezuela and Brazil was less encouraging.

Health, Safety and Environment (HSE) Panalpinaattaches great importance in its activities to strict compli-ance with its HSE standards. To this end it has developeda worldwide training program to ensure that staff through-out the Group are aware of the importance of this seg-ment. Panalpina’s HSE standards were a decisive factorin securing a major contract with a global oil company onthe Caspian Sea.

Everywhere present, always prepared Panalpina iden-tifies new markets at an early stage and approaches themproactively. This means that we can give our customersvaluable support when they commence activities in those

markets. The company’s strengths are particularly effec-tive in regions where the infrastructure is deficient andoperating conditions are less than satisfactory.


Information Technology

Goods anddata transportFreight transportation is not possible without a modern ITinfrastructure. Panalpina takes no decisions with implica-tions for IT unless they have a direct bearing on business,and conversely no business strategies are defined until theconsequences for the IT field have been clarified. The purchase or development of software and hardwareinvolves the careful weighing up of a large number offactors: specific needs, existing preconditions, the cost/benefit ratio, the implementation phase, and so on. Thesequestions cannot be answered either by IT experts or bythe managers of the traffic divisions alone: they need to bediscussed by all of them. Their wants and demands oftendiffer widely: the IT experts want the best, most moderntools regardless of the time and money they will cost todevelop, while traffic managers want applications that are cheap and multifunctional – and they want themtomorrow.

IT and transportation go together Panalpina’s businessis global freight forwarding, supported by data transfer.The same applies to top-class customer service, whichthe company is able to deliver by a sophisticated mix ofsales, execution and IT. Factors such as superlative dataquality, the transparency of the freight chain and efficientexecution at all interfaces are crucially important from thecompetitive angle. Panalpina has modern IT tools and ittrains its employees in their use. Absolute reliability at thedata-input stage lays the foundation for optimum systemutilization and customer satisfaction.

Electronic and physical freight chains The electronicchain runs in parallel with freight flows. From the receipt ofthe order to invoicing, systems are available that preciselymeet the requirements of each stage. This applies equallyto making the booking with the carrier, collection, consoli-dation, transshipment at the interfaces, interim storage,forwarding, customs clearance and delivery.

Multiple systems – single entry The access point toPanalpina’s electronic world is the e-portal, which links allapplications together – even external systems and theGF-X freight exchange. Forwarding systems are used toprepare the documentation for a particular transport andto transmit the data to the interfaces. Detailed customerrequirements and consignment data are processed via the Customer Order Management logistics platform, andthe Tracking & Tracing module enables the goods to betracked in real time. To this end an Event & Alert applicationis being developed that instantly highlights irregularitiesand substitutes action for reaction. Carrier selection,bookings and central capacity management are handledby AirWarder and SeaWarder, jointly developed byPanalpina and a partner for the specific needs of our in-house carriers ASB-Air and ASB-Sea and phased induring the year under review. They increase productivityand reduce errors to an absolute minimum. SAP applica-

tions are used for financial bookkeeping, financial controland customer data. In the field of warehousing Panalpinahas developed a software package for transit warehousesthat manages the data for all items in store. These centersare now largely automated, resulting in a substantialimprovement in service quality. Even where storagefacilities are managed by third parties, Panalpina retainscontrol of the data relating to its goods.

Human Resources


In the field of human resources Panalpina builds on uni-form global standards that govern procedures, processesand decisions. However, the regionalized Group manage-ment structure gives personnel managers the freedom totake account of local circumstances when applying globalguidelines. Thus Panalpina’s specified requirements interms of service and quality are combined with local cul-tural factors, enabling us to collaborate with our businesspartners in an atmosphere of flexibility, openness andmutual understanding.By the end of the year under review, our established HRpolicies were being broadly implemented, to a greater orlesser degree, in all regions. Pressing on with the regionalimplementation of Panalpina’s core processes in the fieldof personnel policy will remain at the center of our atten-tion during the current year. What is ultimately at stake hereis “excellence in HR services execution”: the effective exe-cution of defined personnel processes is an importantfactor for the Group’s operating efficiency.

Local customer servicebacked up by global standards


Main offices worldwide

Algeria Hassi Messaoud

Angola Cabinda, Lobito, Luanda, Soyo

Argentina Buenos Aires

Australia Brisbane, Melbourne, Sydney

Austria Graz, Hoechst, Innsbruck, Linz, Vienna

Azerbaijan Baku

Bahrain Manama

Bangladesh Chittagong, Dhaka

Belgium Antwerp, Brussels, Liège, Voeren-Fouron

Brazil Belo Horizonte, Campinas, Curitiba, Guarulhos, Joinville, Macaé, Manaus, Porto Alegre, Rio de Janeiro, Santos, São Paulo, Viracopos

Cameroon Douala

Canada Calgary, Edmonton, Fort Erie, Kitchener, Mississauga (Toronto),Montreal, Ottawa, Quebec, St. Laurent, Richmont, Surrey, Vancouver, Windsor, Winnipeg

Chile Iquique, Santiago, Valparaíso

China Beijing, Chengdu, Dalian, Guangzhou, Haikou, Hong Kong,Macau, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin, Urumqi, Wuxi, Xiamen, Xi’an, Zhuhai

Colombia Barranquilla, Bogotá, Buenaventura, Cali, Cartagena, Medellín,Pereira

Congo Pointe-Noire

Costa Rica San José, Santa Maria

Czech Republic Prague

Denmark Copenhagen

Dominican Republic Santo Domingo

Ecuador Guayaquil, Quito

Egypt Cairo

El Salvador San Salvador

Equatorial Guinea Malabo

Finland Helsinki

France Blois, Bordeaux, Le Havre, Lille, Lyon, Marseille, Metz, Mont-pellier, Mulhouse, Nantes, Paris, Strasbourg, Toulouse, Trappes

Gabon Libreville, Port Gentil

Georgia Poti, Tbilisi

Germany Bad Waldsee, Berlin, Bremen, Cologne, Dresden, Düsseldorf, Frankfurt, Hagen, Hamburg, Hanover, Kassel, Kehl, Kiel, Leipzig, Ludwigshafen, Munich, Münster/Osnabrück, Nurem-berg, Stuttgart

Ghana Accra, Takoradi, Tema

Hungary Budapest

India Ahmedabad, Bangalore, Chennai, Cochin, Coimbatore, Hyderabad, Kolkata, Mumbai, New Delhi, Pune, Tirupur

Indonesia Jakarta, Semarang, Surabaya

Ireland Dublin, Shannon

Main offices worldwide


Italy Biella, Bologna, Civitanova Marche, Como, Florence, Genoa, Milan, Rome, Turin, Vicenza

Japan Nagoya, Osaka, Tokyo

Kazakhstan Aksai, Aktau, Aktobe, Almaty, Atyrau

Korea Busan, Seoul

Kyrgyzstan Bishkek

LuxembourgLuxembourg

MalaysiaKuala Lumpur, Penang

MexicoCancún, Guadalajara,Mexico City, Monterrey, Puebla, Tijuana

MoroccoCasablanca

NetherlandsAmsterdam, Eindhoven, Maastricht, Moerdijk, Rotterdam

New ZealandAuckland

NigeriaApapa (Lagos), Abuja, Kaduna, Kano, Port Harcourt, Warri

PanamaColón, Panama, Tocumen

PeruArequipa, Callao, Lima

PhilippinesManila

PortugalLisbon, Oporto

Puerto RicoSan José

QatarDoha

RussiaEkaterinburg, Moscow, Nakhodka, Noyabrsk, Samara, St. Petersburg, Usinsk, Yuzhno-Sakhalinsk

Saudi ArabiaAl Khobar, Jeddah, Riyadh

SingaporeSingapore

South AfricaCape Town, Durban, East London, Johannesburg, Port Elizabeth

SpainBarcelona, Bilbao, Madrid, Valencia

Sri LankaColombo

SwedenGothenburg, Stockholm

SwitzerlandBasel, Bern, Geneva, Lugano, St. Gallen, Zurich

TaiwanKaohsiung, Taichung, Taipei

ThailandBangkok, Laem Chabang

TurkeyIstanbul, Izmir

TurkmenistanAshgabad, Turkmenbashi

United Arab EmiratesDubai, Sharjah

United KingdomAberdeen, Birmingham, Glasgow, London, Manchester, Prestwick

Ukraine Borispol, Kiev

United States of AmericaAnchorage, Atlanta, Baltimore, Boston, Bradley/Hartford,Charleston, Charlotte, Chicago, Cincinnati, Cleveland, Columbus,Dallas, Denver, Detroit, El Paso, Foster City, Greenville/Spartan-burg, Houston, Huntsville, Indianapolis, Laredo, Los Angeles,Memphis, Miami, Milwaukee, Minneapolis, Morristown, Nash-ville, New Orleans, New York, Norfolk, Orlando, Philadelphia,Phoenix, Portland, Raleigh/Durham, SanDiego, San Francisco,Seattle, St. Louis, Tulsa, Washington/DC

UruguayMontevideo

UzbekistanTashkent

VenezuelaCaracas, Maiquetía/ La Guaria, Maracaibo, Puerto Cabello, Puerto La Cruz, Puerta Ordaz, San Antonio del Táchira, Valencia

VietnamHanoi, Ho Chi Minh City


Publishing details Press cuttings

PanalpinaWorld Transport (Holding) LtdViaduktstrasse 42PO BoxCH-4002 Basel, Switzerland

Phone +41 61 226 11 11Fax +41 61 226 11 [email protected]

Panalpina World Transport (Holding) LtdCorporate Communications

Gruner & Brenneisen, Basel

The Panalpina Annual Report is published in German and English.

For additional copies please refer to theabove address or send us an e-mail.An electronic version can be downloadedat www.panalpina.com

Editor

Concept/Design

Peter Maurer; Ursula Sprecher; Envirotainer; Automotive Logistics; Peter Brom, Fotopersburo Dijkstra; Novartis (p. 29); Focus (p. 16/17); Zefa (p. 01); getty images (pp. 14/15,18/19, 24/25, 26)

Picture credits

Lithoteam, Allschwil/Basel

Lithography

Basler Druck+Verlag AG, bdv, Basel

Printed by

Address

Panalpina World Transport (Holding) LtdViaduktstrasse 42, PO Box, CH-4002 Basel, Phone +41 61 226 11 11 Fax +41 61 226 11 01, [email protected], www.panalpina.com

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