DHL 2005 Annual Report Download - page 45

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In global ocean freight, we oer less than container load (LCL), full container load (FCL)
and non-containerized transportation services. Our LCL services are provided via an
extensive network of collection centers organized either at country level or across bor-
ders. In addition, we plan and implement major logistics projects, in particular for the
oil and gas, petrochemical, energy, plant engineering, infrastructure and mining industry
segments.
We also expect that the growth rate in ocean freight will be lower than in the previous year.
Although we were able to li our volume above the market average, growth rates were
down year-on-year. New ships were launched in the year under review, thus increasing
overall capacity. In addition, the oil price hike sent the related surcharges levied by airlines
and shipping companies to record levels. ese are reported separately and can usually be
passed on to customers, albeit oen with a certain delay.
As planned, we established the LifeConEx joint venture with Luhansa Cargo and are thus
setting new quality standards for temperature-controlled transportation services for the
life science industry. We now also oer IT-based value-added services in Latin America
and the Emerging Markets, which has allowed us to gain new business.
Positive momentum for contract logistics
In the DHL Exel Supply Chain business, we provide value-added services along the en-
tire value chain. Our activities are focused on selected sectors, the most important being
automotive, pharma/healthcare, electronics/telecommunications, fast-moving consumer
goods and textiles/fashion. e majority of contracts in this area are longer term, hence
the term contract logistics. We were able to extend 85% of existing agreements in the
reporting year. e average contract term is three years.
A new EU directive provided us with additional contract logistics business: since August
2005, wholesalers and manufacturers in most European countries must take back waste
electrical equipment so that it can be tted with the latest technology and reused. is
means that the equipment must be collected, sorted, separated, labeled and reprocessed.
We already oer some of these services in a number of EU countries.
In economically dicult times, companies face growing pressure to cut costs by outsourc-
ing services, for example. Contract logistics are currently experiencing growth partly due
to increasing globalization and the growing demand for sophisticated end-to-end so-
lutions. is enabled us to gain important customer orders in the Czech Republic and
Slovakia.
Following its acquisition of Exel, Deutsche Post World Net has now also become market
leader in contract logistics, as can be seen in the following table. Both companies comple-
ment each other regionally: while Exel is strongly positioned in the United Kingdom and
the United States, we enjoy a leading position on the European continent.
Market shares in ocean freight 2004
Market volume for forwarding: 20.5 million TEUs1)
7.8% Kühne & Nagel
4.1% Schenker
4.0% Panalpina
75.7% Other
8.4% DHL Global
Forwarding2)
1) Twenty-foot equivalent units
2) Pro forma, amalgamation in 2005
Source: Global Insight Trade Databank, annual reports/
publications, company estimates
Deutsche Post World Net
41
Business and Environment
Group Management ReportConsolidated Financial StatementsAdditional Information