Digitalizing the container supply chain

INTERMODAL SHANGHAI , MARCH 2017

BCG XCHANGE

Introduction

2014 Idea, conception, start

2015 MVP launch

2016 Worldwide roll-out

2017 80+ members

Johannes Schlingmeier

Christian Roeloffs

Head of Commercial &

Business Development

Head of Product and Operations

Our journey so far

Global container forecast: Cloudy

1. If prolonged bullish demand, ships will speed up and idled ships will come on line; effective capacity on water to increase by 0.5% in 2018, 1% in 2019 and 1.5% in 2020, Source: IHS World Trade Service (Q2 2016), Alphaliner, Drewry, BCG container flow model

Bull scenario1

Base case

Bear scenario

TEUDemand

Bull scenario1

Base / bear

TEUSuppl

y

TEU capacity on water vs. container demand (MTEU)

In 2020, excess capacity in the range of 800k–2M

TEU, the equivalent of 40–100 ULCV

Beyond current orderbook, some measured new orders and most of Idle fleet introduced

back to active fleet

2015 2016 2017 2018 2019 202018

19

20

21

22

23

7.5%—8.1% 7.7%—10.5%7.5%—11.0%

6.1%—10.4%3.7%—8.9%

7.7%

Short term supply growth driven by existing orders; no significant further

additions to book

As traditional levers are exhausted –digitalization opens new possibilities

low

Direct sales

Online self service for clients

Real time vessel monitoring

Predictive maintenance

Fleet bench-marking

Asset sharingData driven mgmt

Cloud based software solutions

Route optimization

highImplementation

effort

✓ Sales force effectiveness

✓Network optimization

✓ Slow steaming

✓ Idle time decrease

✓ Terminal cost optimization

✓D&D optimization

✓…

Traditional levers… … and new, digitally enabled levers

low

high

Impact

T&L players in related fields blaze the trail

Common success factors• Learn to think agile:

Iterate quickly, launch in beta and improve

• Find partners: Don't go it alone, leverage 3rd parties strength

• Listen to the data:Replace gut feeling with data based insight

• Chipping at the margin: In transportation, every cent counts

low

low

high

Impact

Direct sales

Online self service

Real time vessel monitoring

Predictive maintenance

Fleet bench-marking

Asset sharing

Data driven mgmt

Cloud based software services

Route optimization

highImplementation effort

Success stories from the industry

Route optimization

United Parcel Service

What: Eliminated left turns from delivery routes

Effect: Cost saving, improve reliability

Predictive maint.

Danish Railway

What: Analyzing all rolling stock data

Effect: Cost saving, service improvement

Data driven mgmt.

Amazon

What: Opening Logistics operations to realize same day del.

Effect: Increase in sales, quality and customer retention

Asset sharing exists elsewhere—full potential for container shipping yet to be unearthed

low

low

high

Impact

highImplementation

effort

A proven concept in B2C/C2C…

… with ample applicability to container shipping

Asset sharing

Direct sales

Online self service for clients

Real time vessel monitoring

Predictive maintenanceFleet

bench-marking

Data driven mgmt

Cloud based software solutions

Route optimization

A digital opportunity with major cost savings potential: asset sharing

Interchange potential per country as

percentage of imbalances5% 95%N/A

Interchange potential per region as

percentage of imbalancesxx%

29%

14%

25%

16%

Latin

America

Europe

Middle

East/ISC1

Asia

North

America

15%

1. Indian Subcontinent. Note: The percentage for the interchange potential is calculated as the number of potential container interchanges divided by the sum of container surpluses or deficits, as reported by marketplace participants. Source: BCG xChange data; BCG analysis.

$15-20M annual savings available for average global carrier

Annual avoidable empty moves

Potential

120-250,000

25,000 95,000

RemainingInterchanges today

Backup

xChange:Digitalize your container supply chain

• Enable an agile workflow and real time insight in the containers supply chain

• Collaborate with new partners and leverage win-win potential

• Organize your data, gain access to new business intelligence tools

• Continue to save cost to maintain a competitive edge

Increase your efficiency,Kickoff your digital agenda

The container supply chain – digital end to end

1Post your equipment problem

2Match with available partners

3Negotiate and agree the terms

4Receive release refs and gate outs

5Track your containers online

• Costly surplus• Specific one-

way demand

• 80+ partners with active opportunities

• Multiparty agreement for quick resolution

• All relevant info and docs in one place

• Overview over your shared equipment

Let's discuss this further…

Take a tour and try xChange

Discuss your digitalization agenda in container logistics

Explore immediate cost saving opportunities

Booth G32