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Panalpina World Transport (Holding) Ltd
Company Profile
Reference Code: 0A716B71-2315-4845-87F0-B1672969FED2 Publication Date: Jun 2007
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Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)
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Table of Contents
TABLE OF CONTENTS Facts & Overview........................................................... 4 Business Description .................................................... 5 History ............................................................................ 8 Major Products & Services ......................................... 10 Revenue Analysis ........................................................ 11 Key Employees ............................................................ 12 Key Employee Biographies ........................................ 13 Locations & Subsidiaries............................................ 17 Company View ............................................................. 20 SWOT Analysis ............................................................ 22 Top Competitors .......................................................... 29
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Company Overview
COMPANY OVERVIEW
Panalpina is a leading provider of intercontinental air and ocean freight forwarding services and associated supply chain management solutions. The group primarily operates in North America and Europe. The group is headquartered in Basel, Switzerland and employs about 14,304 people. The company recorded revenues of CHF9,301.2 million (approximately $7,631.6 million) during the fiscal year ended December 2006, an increase of 12.3% over 2005. The operating profit of the company was CHF261 million (approximately $214.1 million) during fiscal year 2006, an increase of 57.6% over 2005. The net profit was CHF183.5 million (approximately $150.6 million) in fiscal year 2006, an increase of 52.5% over 2005.
KEY FACTS
Head Office Viaduktstrasse 42 Basel CH-4002 CHE Phone Fax Web Address # Employees Turnover (CHF Mn) Financial Year End 41 61 226 11 11 41 61 226 11 07 http://www.panalpina.com 14,304 9,301.2 December
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Business Description
BUSINESS DESCRIPTION
Panalpina is a Switzerland based intercontinental air and ocean freight forwarding services and associated supply chain management solutions provider. The group operates through more than 500 offices in 90 countries and also maintains its presence in another 60 countries by partnering with other companies. The group divides its business into three segments: air freight; ocean freight; and supply chain solutions. Panalpina Group provides air freight forwarding services in 150 countries through its airfreight segment. The group operates a system of hubs and gateways across Frankfurt, Luxembourg, Paris, Chicago, Huntsville, Los Angeles, Miami, Dubai, Macao and Singapore. During 2006, Panalpina transported a total of 874,000 tons of air freight, registering an increase of 10.5% over 2005. With this the company holds the number three position in the industry. The airfreight services of the group are divided into the following types: priority, standard, economy, and now. The priority airfreight services are provided with transit time of 1 to 2 days from departure airport to destination airport. This service is provided for time-critical shipments and all these consignments are scheduled for the next direct flight or fastest available connection. The standard airfreight services are provided with transit time of 3 to 4 days from departure airport to destination airport. This service is provided for cost-effective and timely-critical shipments and the group serves most destinations several times a week and major centers daily. The economy services are provided with a transit time of 5 to 6 days from departure airport to destination airport. The now services are provided for urgent and ultra-secure shipments and employs the fastest route. This service is primarily provided though onboard couriers, charters, helicopter transfers or any combination of transport methods. The group also provides various supplementary services including high value cargo handling (HVC), dangerous goods handling (DGR), shock sensitive cargo handling, temperature controlled transportation, cargo insurance, letter of credit processing (LC), certification and legalization of documents, food and drug administration filing (FDA), and advanced cargo information filing (ACI). In addition to this the company also provides customs clearance including electronic pre-filing, customs consultancy and documentation processing as well as security sealing and certification services for its customers. Panalpinas ocean freight provides its customers a variety of ocean freight services, which include full container load product, less than container load product, non
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containerized load product. And all these divisions are based on the product load and product type. Full container load services are transit-time-to-cost combination product for full container loads and offers complete schedule flexibility. Less-than-container load services are used for transporting less than container loads of the customers. Non-Containerised Load service carries oversized loads or those unsuitable for container loading. All these services are provided with various service options including door-to-door, door-to-port, port-to-door and port-to-port deliveries. The group provides ocean freight forwarding services in 90 countries, and through its partner companies in an additional 60 countries. The group also provides various supplementary services including high value cargo handling (HVC), dangerous goods handling (DGR), shock sensitive cargo handling, temperature controlled transportation, cargo insurance, letter of credit processing (LC), certification and legalization of documents, food and drug administration filing (FDA), and advanced cargo information filing (ACI). In addition to this the company also provides customs clearance including electronic pre-filing, customs consultancy and documentation processing as well as security sealing and certification services for its customers. Panalpina offers various solutions in the field of logistics and supply chain management, but only in conjunction with its air freight and ocean freight operations. The group categories its supply chain solution across single source solutions, logistic solutions, and information solutions. Through single logistic solutions, the group establishes cooperation between a client and its logistics partner and manages the entire supply chain, to streamline clients operations. The logistics services offered comprise warehousing, secondary distribution, just-in-time and just-in-sequence delivery, along with value added services such as order management, repackaging, order picking, labeling and reverse logistics. The group also offers Internet-based consignment tracking, reporting and logistics management software plus integrated applications for order and warehouse management. The information solutions provided by the company include Pantrace solutions; and panlogic solutions. The pantrace solutions allow the customers an immediate web access to track their consignments at shipment level. The panlogic application suite includes various solutions such as Integrated Track and Trace; order management; material management; customer billing; warehouse management; and event management. All the solution uses EDI (Electronic Data Interchange) enabled Supply Chain Management system to communicate directly with both customers and suppliers via a web interface.

The group also maintains special competence centers comprising of a group of expert teams working in specified industry groups to design and implement integrated supply chain model for a particular industry.
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History
HISTORY
In 1935, Rhine Shipping shifted business activities into the forwarding sector following the takeover of Hans im Obersteg. The company became independent under the name Panalpina in 1954. In the 1950s and 1960s the group established many new branches in North America, Latin America, Africa, Asia and Australia. During the 1970s, Panalpina introduced Air Sea Broker, a company providing centralized procurement and management of global air freight and ocean freight capacity. During the same period, the group also acquired Houston based J P Harle Group to improve its oil and gas industrys supply chain business. During the 1980s and 1990s, Panalpina strengthened its position in specific segments. Also during the same period, the group launched combined air freight and ocean freight operations between the Far East and Europe, Africa, Oceania and India. It also initiated scheduled air freight services between Luxembourg and the US, South Africa and Brazil. In 2004, Panalpina acquired a license to develop its own operational organization in China. In the same year, the group acquired the Scottish firm Grampian International and South Korea based International Aero Sea Forwarders to improve its oil and gas supply chain business. In the following year, Panalpina acquired the Singapore based logistics provider Janco Oilfield Services and the Overseas Shipping Group, a Norway based ocean freight carrier. Panalpina was listed on the SWX Swiss Exchange for the first time in 2005. In the same year, Panalpina acquired the Overseas Shipping Group based in Oslo. Also in the same year Panalpina opened a logistics service center in Montgomery, Alabama to serve automotive business in the region. Panalpina (PWTN) was included in the SWX index basket SMIM in July 2006. In the same year, the company announced the opening of a logistics center in Dubai Logistics City. This logistics center will be part of Dubai World Central at Jebel Ali, UAE. Panalpina was awarded a contract from Schlumberger Oilfield Services, A leading service provider to the worldwide oil and gas industry, in September 2006. As per the contract, Panalpina agreed to provide logistics and distribution services for Schlumberger in the Europe, Caspian and Africa region. In the same month, Panalpina opened a logistics center in Dubai Logistics City, which is a part of Dubai World Central at Jebel Ali. The new terminal includes air-conditioned temperaturecontrolled facilities and dedicated space for both ocean and air freight cargo and provides the value added Supply Chain Management services to the customers.

History
In January 2007, Panalpina partnered with NYK to support each other both in Japan and internationally. As per the agreement, the NYK subsidiary Yusen Air & Sea Service (YAS) will become Panalpinas agent in Japan while Panalpina will represent YAS interests in various countries in addition to its existing network.
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Major Products & Services
MAJOR PRODUCTS & SERVICES

Panalpina World Transport (Panalpina) is a leading provider of forwarding and related logistics services based in Switzerland. The companys key products and services include the following: Air freight: Priority Standard Economy Now Ocean freight: Full container load Less than container load Non-containerized load Supply chain solutions: Single- solutions Logistics solutions Information solutions Special competencies Other services: High value cargo handling (HVC) Dangerous goods handling (DGR) Shock sensitive cargo handling Temperature controlled transportation Cargo insurance Letter of credit processing (LC) Certification and legalisation of documents Food and drug administration filing (FDA) Advanced cargo information filing (ACI)
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Revenue Analysis
REVENUE ANALYSIS
The company recorded revenues of CHF9,301.2 million (approximately $7,631.6 million) during the fiscal year ended December 2006, an increase of 12.3% over 2005. For the fiscal year 2006, Europe/Africa/Middle East/CIS, the companys largest geographic market, accounted for 57.1% of the total revenues. Panalpina generates revenues through three business divisions: air freight (48% of the total revenues during fiscal year 2006), ocean freight (36.5%), and supply chain management (15.5%). Revenues by Division During the fiscal year 2006, the air freight division recorded revenues of CHF3,713 million (approximately $3,046.5 million), an increase of 8.9% over 2005. The ocean freight division recorded revenues of CHF2,826 million (approximately $2,318.7 million) in fiscal year 2006, an increase of 17.8% over 2005. The supply chain management division recorded revenues of CHF1,196 million (approximately $981.3 million) in fiscal year 2006, an increase of 4.7% over 2005. Revenues by Geography Europe/Africa/Middle East/CIS, Panalpinas largest geographical market, accounted for 57.1% of the total revenues in the fiscal year 2006. Revenues from Europe/Africa/ Middle East/CIS reached CHF4,418 million (approximately $3,625 million) in 2006, an increase of 12.4% over 2005. North America accounted for 22% of the total revenues in the fiscal year 2006. Revenues from North America reached CHF1,699 million (approximately $1,394 million) in 2006, an increase of 10.6% over 2005. Asia/Pacific accounted for 12.3% of the total revenues in the fiscal year 2006. Revenues from Asia/Pacific reached CHF948 million (approximately $777.8 million) in 2006, an increase of 15.5% over 2005. Central and South America accounted for 8.7% of the total revenues in the fiscal year 2006. Revenues from Central and South America reached CHF670 million (approximately $549.7 million) in 2006, an increase of 1.2% over 2005.
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Key Employees
KEY EMPLOYEES
Name Rudolf W. Hug Wilfried Rutz Gunther Casjens Yuichi Ishimaru Glen R. Pringle Roger Schmid Monika Ribar Jurg Honegger John Klompers Jorg Eggenberger Christoph Hess Sandro Knecht Lukas Fischer Robert Timmerman Karl Weyeneth Josef Zech Job Title Chairman Vice Chairman Director Director Director Director President and Chief Executive Officer Chief Financial Officer Chief Marketing and Sales Officer Chief Operations Officer General Counsel and Corporate Secretary Regional Chief Executive Officer, Europe operations Regional Chief Executive Officer, Asia/Pacific/Atlantic Regional Chief Executive Officer, China/Taiwan operations Regional Chief Executive Officer, North America Regional Chief Executive Officer, Latin Senior Management America Senior Management Senior Management Senior Management Senior Management Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Non Executive Board Senior Management Senior Management Senior Management Senior Management Senior Management Total Annual Comp. -
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Key Employee Biographies
KEY EMPLOYEE BIOGRAPHIES

Rudolf W. Hug
Board: Non Executive Board Job Title: Chairman Mr. Hug has been elected as the Chairman of Panalpina in May 2007. He has been a Director of the company since 2005. Previously, he worked in several positions for Schweizerische Kreditanstalt (today Credit Suisse) from 1977 to 1997. During the period from 1987 to 1997, he ran the international division and served as member of the executive board of Credit Suisse and Credit Suisse First Boston. In 1985, he participated in the Executive Program of the Graduate School of Business at Stanford University. Mr.Hug also serves as management consultant since 1998.
Wilfried Rutz
Board: Non Executive Board Job Title: Vice Chairman Mr. Rutz has been the Vice Chairman of Panalpina since 2005 and as its Director since 2003. Previously, he served as the Chief Executive Officer of the Debrunner Koenig Group from 1992 to 2004 where he still is a member of its Board of Directors. He has been a Director of several Swiss companies in the private and the public sector.
Gunther Casjens
Board: Non Executive Board Job Title: Director Mr. Casjens is currently a Director of Panalpina. Previously, he served at Hapag-Lloyd from 1976 to 2004 and held several positions including Deputy Director of its Europe / Far East Services in 1983 and as Managing Director of its North America Services in 1987 and as Managing Director of its North and South America Services in 1988. Later, he became Deputy Member of the executive board of Hapag-Lloyd n 1990. He was also a member of the Executive Board of Hapag-Lloyd from 1991 to 2004. He became Managing Partner and Chief Executive Officer of Nordcapital Holding in 2004.
Yuichi Ishimaru
Board: Non Executive Board Job Title: Director

Mr. Ishimaru has been a Director of Panalpina since 2005. Previously, he worked for the Marubeni since 1963. Mr. Ishimaru served as a Director of Marubeni from 1995 until 1998 and also served as the Chief Operating Officer for Marubeni America, New York. Mr. Ishimaru served as the Chief Executive Officer for Europe and Africa for Marubeni, London from 1998 to 2000. He also serves as the Executive Vice President of Marubeni and since 2003 and has been acting as Special Advisor to Marubeni.
Glen R. Pringle
Board: Non Executive Board Job Title: Director Mr. Pringle has been a Director of Panalpina since 2005. He started his career as a State Director of sales for CENCO Instrument Company. Thereafter, he worked at WVMI / WBIL Radio Station as a Manager of sales. Mr. Pringle held the position of Development Director for the Alabama Development Office from 1986 to 1995. Later, he served as the Development Director of Retirement Systems of Alabama.
Roger Schmid
Board: Non Executive Board Job Title: Director Mr. Schmid has been a Director of Panalpina since 2003. Previously, he was legal counsel and director at Bank Leu, a subsidiary of Credit Suisse from 1991 until 1995. Roger Schmid also works as the Executive Director of the Ernst Gohner Foundation.
Monika Ribar
Board: Senior Management Job Title: President and Chief Executive Officer Ms. Ribar has been the Chief Executive Officer of Panalpina since 2006 and its Member of the Executive Board since 2000. She joined the group in 1991 and held several positions within the Groups controlling, IT and global project management departments. From 2000 to 2005, she held the position of the Chief Information Officer of the group. Ms. Ribar was appointed as the Chief Financial Officer of the group in 2005 and served in this position until 2006. She holds a university degree in Finance and Controlling from the University of St. Gall. She participated in the Executive Program of the Graduate School of Business at Stanford University, Palo Alto, California, in 1999.
Jurg Honegger
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Board: Senior Management Job Title: Chief Financial Officer Mr. Honegger has been the Chief Financial Officer (CFO) since 2006. He started his career as Controller and Auditor for companies in Mexico and Switzerland. Later, he was employed by the Volcafe Group from 1994 to 2004, initially as Assistant to the Group Chief Financial Officer at their Headquarters, thereafter as Head of Finance in Colombia and later as Managing Director for its subsidiary in Uganda. He also served as its Chief Financial Officer from 1999 to 2004. Later, he served as its Group Treasurer and Divisional Finance Director, based in London, until 2006.
John Klompers
Board: Senior Management Job Title: Chief Marketing and Sales Officer Mr. Klompers has been the Chief Marketing and Sales Officer of Panalpina since 2006. He joined ChartAir Europe in 1995 (a company acquired by Panalpina in 1996) as Marketing and Sales Executive. In 1997, he was appointed as Branch Manager of Panalpina Eindhoven and Global Account Manager for a leading electronics company. He became Managing Director of Panalpina Netherlands in 1999, and Managing Director of the Benelux area in 2003, which includes Panalpina country organizations in the Netherlands, Belgium and Luxembourg. He was nominated as Regional Chief Executive Officer for Europe in 2005.
Jorg Eggenberger
Board: Senior Management Job Title: Chief Operations Officer Mr. Eggenberger has been the Chief Operations Officer of Panalpina since 2005. In this position, he is responsible for Air & Ocean Operations, Air & Ocean Procurement, Business Processes & Quality, Agent Relations, Security and Panprojects. Mr. Eggenberger joined Panalpina in 1977 and has held several positions. From 1981 to 1982, he held a management position at Panalpina London, after which he returned to the marketing and sales department at the Swiss company. He held another management position with Panalpina in Melbourne from 1985 to 1988. In 1989, he was assigned for a management position in Taipei and in 1990 he held the position of a branch manager at Panalpina Melbourne. Mr. Eggenberger worked as Manager of the companys Far East division of Air Sea Broker from 1990 to 1991. In 1991, he became the Director of the Ocean Freight division at the corporate head office. In 1998, Mr. Eggenberger became Managing Director of the West Africa Division of Air Sea Broker. In 2000, he became a Member

of the Executive Board as Chief Operating Officer Eastern Hemisphere. In 2002, he was appointed Regional Chief Executive Officer of the Africa / Middle East / Central Asia / CIS division.
Christoph Hess
Board: Senior Management Job Title: General Counsel and Corporate Secretary Mr. Hess has been General Counsel and Corporate Secretary and a Member of Executive Board of Panalpina since 2006. In this position, he is responsible for corporate legal services, insurances and corporate communications. Mr. Hess joined the Groups head office as General Counsel and Secretary in 1994. Mr. Hess holds a degree in law from the University of Basel and has been admitted to the bar in Switzerland.
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Locations & Subsidiaries
LOCATIONS & SUBSIDIARIES

Panalpina Transportes Mundiais Navegacao and Transitos Rua Kima Kienda Estrada de Boavista Luanda AGO Panalpina Transportes Mundiales Navegacao and Transitos Rua Kima Kienda Estrada de Boavista Luanda AGO T: 244 222691000 F: 244 222310034 Panalpina Asia-Pacific Services 3388/93, 25th Floor Sirinrat Building Rama IV Road Klongton, Klongtoey Bangkok 10110 THA T: 65 2 3486000 F: 65 2 3486069 Panalpina Welttransport Kurhessenstr 12 Morfelden 64546 DEU Panalpina Trasporti Mondiali Rho Centro Via San Francesco dAssisi Lucernate di Rho Milan 20017 ITA T: 39 02 932681 F: 39 02 93268450 Panalpina Gulf Al Moosa Tower 1 15th Floor Suite 1503 Sheikh Zayed Road Dubai ARE T: 971 4 3311214 F: 971 4 3311274 Panalpina Welttransport, China 33/F Pos Plaza, 1600 Century Avenue Pudong New Area Shanghai 200122 CHN T: 86 21 61051500 F: 86 21 5820153 Panalpina, California Lagoon Drive 1 Suite 250 Redwood Shores California 94065 USA T: 1 650 226 1660 F: 1 650 (650) 226 1635 Panalpina Regional Center Europe Elisabethenstrasse 2 CH - 4051 Basel CHE T: 41 61 226 1222 F: 41 61 226 1223 Panalpina Welttransport Richard Strauss Strasse 31 Vienna 1230 AUT Safcor Panalpina 20 Wrench Road Isando 1600 ZAF T: 27 11 5706062 F: 27 11 5706278 Panalpina Central Asia 44 Ataturk Avenue Baku AZ1069 AZE T: 994 12 4120061 F: 994 12 4361980
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Panalpina, Brazil Avenida Lino de Moraes Leme 1 138 Villa Santa Catarina BR 04360 000 Sao Paolo BRA T: 55 11 2165 55 00 F: 55 11 2165 55 01 Panalpina Welttransport, Austria Richard Strauss Strasse 31 Vienna 1230 AUT T: 43 1 61442 0 F: 43 1 61442-1111 Panalpina , Canada Cantay Road 6350 Mississauga ON L5R 4L7 CAN T: 1 905 7554500 F: 1 905 7554599 Panalpina Transportes Mundiales, Argentina Avenida Paseo Colon 728 piso C1063ACU Buenos Aires ARG T: 54 11 43484500 F: 54 11 43484510 Panalpina Welttransport , Germany Post Box 1329 Kurhessenstr 12 Morfelden 64546 DEU T: 49 6105 937 0 F: 49 6105 937 729 Panalpina World Transport , India RZ 60 A Block Mahipalpur Extension National Highway No 8 New Delhi 110 037 IND T: 91 11 26781174 F: 91 11 26781384
Panalpina World Transport,Australia Post Box 164 Rosebery Cnr Bourke Road Doody Street Alexandria , New South Wales 2015 AUS T: 61 2 96932600 F: 61 2 96933000 Panalpina Central Asia, Baku 44 Ataturk Avenue Baku AZ1069 AZE T: 994 12 4120061 F: 994 12 4361990 Panalpina , Switzerland Post Box 8058 Zurich-Airport Eichstrasse Glattbrugg 8152 CHE T: 41 44 8294111 F: 41 44 8294101 Panalpina Czech, Praha Na Hurce 1077 Praha 16100 CZE T: 420 2 3503 1111 F: 420 2 3503 1199 Panalpina , Brazil , Sao Paulo Aeroporto Avenida Lino de Moraes Leme Vila Santa Catarina 04360-000 Sao Paulo BRA T: 55 11 2165 5500 F: 55 11 2165 5501 Panalpina World Transport, Japan Hanwha Bldg 7F 4 10 1 Shiba Minato ku Tokyo 108 0014 JPN T: 81 3 34517866 F: 81 3 34517866
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Panalpina World Transport, Russia Ul Novoryazanskaya 31/7 Business Center Nemetskaya Sloboda korp.2 pod.4, Moscow 105066 RUS T: 7 495 9612553 F: 7 495 7254279
Panalpina France Transports Internationaux 95707 Roissy CDG Cedex 6, rue du Chapelier Zone de Fret No 4 95707 Roissy CDG FRA T: 27 11 5706062 F: 27 11 5706278
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Company View
COMPANY VIEW
A statement by the Board of Directors of Panalpina World Transport is given below. The statement has been taken from the groups 2006 annual report. In 2006 Panalpina once more confirmed its position as one of the world market leaders in forwarding and logistics, with impressive increases in net forwarding revenue (+11.3%) and net earnings (+52.5%). Share-price development The Panalpina share price has performed extremely well since flotation, demonstrating that investors find the Groups strategy and asset-light business model convincing. But the performance of the share price in the short term is not a high priority for the Board of Directors. They regard it as an expression of confidence, and of appreciation for the Groups achievements during the financial year - but they are sticking to their declared strategy of pursuing sustained, long-term growth. Shareholder structure Contrary to original expectations, the shareholder structure is now gratifyingly broad and international. The Ernst Ghner Foundation is still Panalpinas major shareholder, with more than 40% of the equity. As of the reporting date, no other investor held more than 5%. The company itself holds 0.71% as treasury shares in connection with current employee share-option programs. Board of Directors The Board of Directors has settled in extremely well following its expansion to seven members in August 2005. It is a guarantor of continuity and specialist expertise. Rudolf W. Hug, the new Chairman Designate, is an international businessman of proven abilities, with extensive experience in the working of supervisory boards. Executive Board Monika Ribar was appointed CEO in October. An accomplished manager, she has been with the company for 15 years - and she has a wealth of experience to draw on, having been responsible for the areas of finance, controlling and IT. During the flotation she played a key role in gaining the confidence of investors. She was succeeded as CFO by respected financial specialist Jrg Honegger. John Klompers (Chief Marketing & Sales Officer) and Christoph Hess (General Counsel and Corporate Secretary) joined the Executive Board.
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Company View
Results In a market environment that was generally favorable for a global transport services provider, the Group succeeded in increasing net forwarding revenue by 11.3% to CHF 7,735 million and net earnings by 52.5% to CHF 184 million. The Board of Directors is particularly satisfied with the continued significant increase in profitability, clear proof that Panalpina is consistently pursuing its business strategy and keeping costs under control. Once again all reporting regions posted impressive growth. Asia/Pacific (net forwarding revenue +15.6%) has the unremitting economic boom in Asian markets to thank for its continued vigorous growth. North America (+10.6%) also maintained its positive development. It exceeded its target of breaking even and went into profit - proving the success of its reorganization. Panalpina continued to maintain its leading global position in both air and ocean freight in 2006. Revenues Revenues increased by 8.9% in air freight and as much as 17.8% in ocean freight, where the landmark volume of one million TEUs was exceeded for the first time. Both areas increased their market shares: tonnages were up by 10.5%, volumes by 17.4% - once more significantly ahead of market growth rates. Supply chain management activities also posted a nice growth, at 4.7%: an impressive confirmation of the value placed by customers on Panalpinas logistics services. Dividend increase The Board of Directors will submit a proposal for a dividend payment of CHF 3.00 at the General Meeting of Shareholders on 15 May 2007. The resulting dividend payout ratio is at the top 30 to 40% band indicated by Panalpina. Dividend yield, based on year end share price, is 1.81%.
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SWOT Analysis
SWOT ANALYSIS
Panalpina is a Switzerland based intercontinental air and ocean freight forwarding services and associated supply chain management solutions provider. The group operates through more than 500 offices in 90 countries and also maintains its presence in another 60 countries by partnering with other companies. The group divides its business into three segments: air freight; ocean freight; and supply chain solutions. The diversified business offerings and global network ensures that the group does not rely on any one segment for a majority of its revenues and substantially reduces the business risks for the group. However, higher fuel prices are likely to have a direct impact on the groups operating expenses thus directly affect its margins.
Strengths Diversified business offerings Global network Asset-light business model Opportunities Growing volumes of container market Emerging logistics market in Asia/Pacific region Positive outlook for the oil and gas sector Weaknesses Comparatively weak revenue growth Lack of scale in shipping business Employee productivity Threats Volatile oil prices Competitive pressures Economic slowdown in Europe and the US
Strengths
Diversified business offerings Panalpina is a Switzerland based intercontinental air and ocean freight forwarding services and associated supply chain management solutions provider. The group divides its business into three segments: air freight; ocean freight; and supply chain solutions. The group provides various airfreight solutions such as priority, standard, economy, and now. These services are differentiated based on the transit times and weight of the parcels. This business division accounted for 48% of the total revenues of the group in 2006. Panalpinas ocean freight provides its customers a variety of ocean freight services, which include full container load product, less than container load product, non containerized load product. And all these divisions are based on the product load and product type. The ocean freight segment accounted for 36.5% of overall revenues for the group. Panalpina offers various solutions in the field of logistics and supply chain management, but only in conjunction with its air freight and ocean freight operations. The group categories its supply chain solution across single

SWOT Analysis
source solutions, logistic solutions, and information solutions. This division accounted for remaining 15.5% of revenues in 2006. All operating divisions contributed significantly to the total revenues of the group. The diversified and evenly spread revenue base ensures that the group does not rely on any one segment for a majority of its revenues and substantially reduces the business risks for the group. Global network Panalpina operates one of the worlds largest networks for air and ocean freight forwarding. The group operates on six continents through a network of about 500 branches in more than 90 countries (representing over 90% of the global GDP). Further in 60 countries, the group closely cooperates with the selected partners. Panalpina provides air freight forwarding services in 150 countries through its airfreight segment. The group operates a system of 15 hubs and sub-hubs from which air freight traffic is diverted. The group has specialist competencies in various industries including oil and gas, hi-tech, automotive, healthcare, retail and fashion and industrial projects, with a key focus on oil and gas. The groups extensive network enhances its market position and provides with a competitive advantage. In addition to this, the company maintains dominant market position among the leading providers of forwarding and related logistics services, specializing in intercontinental air freight and ocean freight shipments and associated supply chain management solutions. The group is the third largest air freight forwarder in the world and transported a total air freight of about 874,000 tons in 2006. It has the fourth largest market share worldwide in the ocean freight segment, and transported a total ocean freight of about 1084,000 twenty-foot equivalent units (TEUs) in 2005. The group also has a strong presence in the major Asia-Europe-Asia and transatlantic trade lanes. Panalpinas strong market position provides it with significant bargaining power. Asset-light business model Panalpina operates an asset-light business model that provides the group with significant operational and financial flexibility as well as reduces its exposure to business cycles. The model involves outsourcing peripheral services, particularly overland transport and warehousing, to subcontractors. Panalpinas Asset-light flexibility rather than high-risk infrastructure minimizes the amount of resources tied up by its supply chain management operations, unlike its chief competitors, who use their own infrastructure to provide most of their contract logistics and are often forced into risky investments. The group instead focuses on the service aspects of contracts, delegating subtasks to a group of supply partners. As a result of this, the group

SWOT Analysis
recorded higher gross profit margin in this sector. For the fiscal year 2006, the gross profit of this segment stood at CHF412 million (approximately $338.1 million), representing the gross profit margin of 34.4%. The airfreight, and ocean freight segments, the major segments of the group recorded the gross profits margins of 18.5%, and 17.4% respectively, which are significantly lower than the gross profit margin of supply chain management division. The asset light business model minimizes the use of groups own financial resources and improves the profit margins.
Weaknesses
Comparatively weak revenue growth Panalpina recorded weak revenue growth for the period 2002-2006 as compared to its competitors. During this period, the revenues of the group grew at a CAGR of 10% to reach CHF9,301 million (approximately $7,631.5 million) in 2006 from the revenues of CHF6,364 million (approximately $5,221.7 million) in 2002. Where as, the revenues of its competitor Kuehne+Nagel International (Which has significant operations in Europe) reached to CHF18,194 million (approximately $14,928.2 million) in 2006 from the total revenues of CHF8,805 million (approximately $7,224.5 million) in 2002, recording an average revenue growth rate of 21.3%. The revenues of another competitor, CH Robinson Worldwide (with significant operations in Europe) recorded a CAGR of 19% to reach the revenues of $6,556.1 million in 2006 from the revenues of $3,294.5 million in 2002. The groups inability to increase its revenues in line with its competitors weakens its market position. Lack of scale in shipping business Though the group has strong global presence, it lacks the scale to compete with the larger competitors in the seafreight business. In this segment the company competes with players such as A.P. Moller-Maersk and Neptune Orient Lines with higher number of container vessels and other required infrastructure. In 2006, the group operates with an annual volume of nearly 1,084,000 Twenty foot Equivalent Units (TEU). During the same period, Maersk Line, the seafreight division of A.P. Moller-Maersk transported 6.1 million FEU (forty-foot equivalent container units). And another competitor, Neptune Orient Lines transported around 2,097,000 FEU in the same period. In addition to this, the group doesnt operate any terminals, where as the competitors in the seafreight business operates a significant number of terminals. Lack of large number of facilities limits the groups potential to benefit from the existing global presence in the seafreight business. Employee productivity
0A716B71-2315-4845-87F0-B1672969FED2 Page 24

SWOT Analysis
Panalpina posted weak revenues in proportion to the total number of employees. During 2006, the company recorded total revenues of CHF9,301.2 million (approximately $7,631.6 million) with a total of 14,304 employees. The revenue per employee of the company stood at CHF.65 million (approximately $.53 million), as compared to the average revenue per employee of the industry stood at CHF.32 million (approximately $.26 million) during the same period. Though the revenue per employee of the group is higher than the industry average, it is significantly lower when compared to its competitors. For instance, the revenue for employee of CH Robinson stood at $.98 million in 2006, significantly higher than the revenue per employee of Panalpina. And also the revenue for employee of Logista, another competitor stood at CHF1.01 million (approximately $.82 million) in 2006. The weak revenue per employee of the company compared to the competitors indicates its weaker productivity and operational inefficiency.
Opportunities
Growing volumes of container market The worldwide container market has recorded strong growth during the last five year period, 2002-2006. The market has recorded a total container volume of 120 million TEU (Twenty-foot Equivalent Unit) in 2006 compared to the container volume of 79 million TEU in 2002. The container volume also grew by 9 per cent in 2006 from the volume of 110 million TEU in 2005. Most of the demand was generated by the AsiaPacific region, primarily China. Compared with 2005, traffic from Asia to Europe increased by 17 per cent, acting as growth engine for global container shipping. Also, on the transatlantic routes, cargo volume increased at 5 per cent compared with the previous year. Further more, the total container volume of the market is estimated to reach 155 million TEU by 2010, representing a growth rate of 30% over the total volume in 2006. In 2006, the groups seafreight segment handled 1,084,000 Twenty foot Equivalent Units (TEU), equal to 17.4% volume growth. The gross profit of this segment has also increased by 22.1% to reach CHF492 million (approximately $403.7 million) in 2006. Though , the group lacks global scale in this segment compared to the competitors like Maersk Line, Nepture Orient Lines, its has the opportunity to improve its operations in this growing business. Emerging logistics market in Asia/Pacific region The logistics market in Asia/Pacific region witnessed in strong growth during the recent period. The logistics market in Asia-Pacific generated total revenues of around $220 billion in 2006, representing an increase of more than 10% over the previous years value. This also equates to a compounded annual growth rate (CAGR) of

SWOT Analysis
around 8% for the five-year period spanning 2002-2006. The markets value is generated primarily through the retail, automotive, consumer, hi-tech and pharmaceuticals segments. It is estimated that the Asia-Pacific logistics market may register a total value of $276.4 billion by 2010, representing an increase of around 35% from 2006. More over, due to the additional trade with Asia and the countries of Eastern Europe, international logistics business has increased by about 8% during 2002-2006. Panalpina has been expanding its contract logistics operation in this region. For instance, in 2006, the group opened 19 new locations and three new national contract logistics offices in this region. The group also doubled its warehousing space from 80,000 to 150,000 square meters at 42 locations. The company also initiated its development activities in India at six new locations during the fiscal year 2006. In Japan, the group opened a logistics centre in Tokyo marked to commence its contract logistics activities. Though the group has less revenue base from this region, it is witnessing a high growth. The emerging logistics market in Asia-Pacific would help the group to expand its geographical base. Positive outlook for the oil and gas sector The continued high level of oil prices, geopolitical constraints, new technologies and rising concession costs have led many oil companies to make huge long-term investments. Global exploration and production (E&P) spending by oil and gas companies has been on high side. Total investment in the global oil industry is expected to reach 3.1 trillion over the period 2001- 2030, with 72% of this devoted to exploration and development for conventional oil. Also, with funds released for more E&P, expenditures for deepwater oil and gas production have been increasing rapidly and are expected to reach $20 billion per year by 2010. Cumulative investment in the natural gas supply chain over this period will also be $3.1 trillion, more than half of it in exploration and development. Panalpina offers a wide variety of supply chain services for the oil and gas sector. The group mainly covers the upstream operations (exploration-related activities). Panalpina supplies drilling sites with construction materials, spare parts, fuel and food and also provides agency services for drilling and production facilities, organizes crew replacements, handles the warehousing required for pipelines, operates special supply ships and ships gigantic plant components. The group also maintains its presence in all three strategically important oil and gas hubs, in Houston, Aberdeen and Singapore. The group could leverage the positive outlook for oil and gas sector to boost its revenue base.
Threats

SWOT Analysis
Volatile oil prices Prices in the international oil markets recorded an upward trend in 2006. The price per barrel of Brent Crude reached a record level of $78 in August 2006. Although the prices returned to lower levels over the remainder of the year, the average in 2006 was approximately 20% above the previous years level. Higher transportation costs as a result of increased oil prices also had a substantial impact on materials expense of the group in 2006. Further, the oil prices have moderated to $50.5 per barrel in January 2007. However, according to the forecast of the US Energy Information Administration (EIA), soft crude oil prices are unlikely to last long at this level, and expect crude oil prices to average $64.7 per barrel in 2007 and $64.6 per barrel in 2008. Standard and Poors expects crude oil prices to average $62 per barrel in 2007. The group uses its own fleet of vehicles and third party transportation facilities for its logistics and services operations. Higher fuel prices are likely to have a direct impact on the groups margins since price volatility in fuel costs may cause an increase in operating expenses of the group disproportionately to its sales volume. Competitive pressures The logistics market is fragmented and therefore highly competitive. This market consists of several multinational companies such as Deustche Post, Fedex, Logista, Pacific CMA, Kuehne+Nagel, and UPS. Each of these companies offers a comprehensive range of services through a global marketing platform. As a result of it, pricing pressures are intense, and maintaining a low delivery time is a crucial determinant of the success or failure of firms operating in this field. Product differentiation is low, and players seek to differentiate their services by offering faster delivery times and extended services to attract market share. Moving forward, the market also faces significant cost pressures including pressure on rates, falling volumes and rising costs. In response to these market conditions, firms are using various strategies such as improved IT systems to allow more efficient service planning and to optimize operations and productivity in order to increase earnings. Players are also investing in heavier trucks in order to optimize delivery and boost ton-miles, a key measure of efficiency. The companies have also looked to expand their operations in order to exploit revenue growth, and leading players are rapidly buying up land surrounding key international airports and seaports. Therefore, working in such a competitive environment could put additional pressures on the operations of the group. Economic slowdown in Europe and the US
0A716B71-2315-4845-87F0-B1672969FED2 Page 27

SWOT Analysis
The group primarily operates in North America and Europe, with significant operations in the US. During 2006, the group generated revenues of CHF3,929.0 million (approximately $3,223.7 million), representing 56.5% of its total revenues from Europe. Also, the group generated the revenues CHF1,536.0 million (approximately $1,260.3 million), representing about 22% of its total revenues from Americas with a major part of its revenues from the US. According to the Organization for Economic Cooperation and Development (OECD), GDP growth in the US and Eurozone is expected to slowdown in 2007. While the GDP growth of the US economy is forecast to slow down from an estimated 3.6% in 2006 to 3.1% in 2007, the GDP growth in the Eurozone is forecast to decline from an estimated 2.2% in 2006 to 2.1% in 2007. More importantly, the US has seen 17 successive interest rate hikes over the past few years leading to the current high of 5.25%. The freight forwarding and logistics businesses are tied to the performance of the economy in which the company operates. Healthy economic growth is therefore a precondition for positive growth rates of this business. The companys particular focus in this regard is the economic performance of Europe and the US, two major geographic segments of the company. Therefore, a weak economic outlook for the US and Eurozone would put pressure on the revenues of the group.
0A716B71-2315-4845-87F0-B1672969FED2 Page 28

Top Competitors
TOP COMPETITORS
CNF Inc. Deutsche Post AG Kawasaki Kisen Kaisha, Ltd. Neptune Orient Lines Limited Nippon Express Co., Ltd. United Parcel Service, Inc.
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Panalpina World Transport (Holding) Ltd

Reference Code: 0A716B71-2315-4845-87F0-B1672969FED2 Publication Date: Jun 2007

Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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Panalpina World Transport (Holding) Ltd

Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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Panalpina World Transport (Holding) Ltd

Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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MAJOR PRODUCTS & SERVICES

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Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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KEY EMPLOYEE BIOGRAPHIES

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LOCATIONS & SUBSIDIARIES

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Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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Panalpina World Transport (Holding) Ltd

Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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Panalpina World Transport (Holding) Ltd Datamonitor (Published Jun 2007)

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Panalpina World Transport (Holding) Ltd