w rldmagazine

N°2/2005

www.kuehne-nagel.com

3contents

editorial Reinhard Lange 02

round the world Mining logistics on Sumbawa 04

Emergency hospital for New Orleans 04

On the move for United Biscuits 04

Expansion in Mexico 05

Going MBA 05

Shifting scenes for the State Opera 05

focus The business with freshness 06

interview Frank Ganse, Global Director

Perishable/Reefer Cargo:

«The industry needs

the logistics expert» 12

seafreight Goods meet at the gateway 14

customer solutions Seemlessly informed 16

contract logistics Going the extra mile 18

Supply the sky 20

The quantum leap 22

Organic growth 23

rail & road When rails travel by rail 24

The road gateway to the north 25

project logistics A heavy haul to the refinery 26

lead logistics Architects of the supply chain 28

customer interview Dennis Cohen Director Private Brand

Operations at Office Depot:

«It is important that

we share basic values» 30

human resources Global talent developers 32

people In dialogue with youth 34

Allergy research thanks

to Kuehne Foundation 34

Student aid 35

In the Hall of Fame 35

On the Management Board 35

IMPRINT

Published by Kuehne + Nagel International AG, P.O. Box 67, CH-8834 Schindellegi, phone +41 (0)44 786 95 11, fax +41 (0)44 786 95 95, e-mail: world@kuehne-nagel.comDesign/layout/editing: Edition Colibri Ltd – Rittmann, CH-4002 Basel; printed at Birkhaeuser + GBC AG, CH-4153 ReinachPhoto sources: Altermatt, Arndt, Frosta, Foto Herbst, Hapag Lloyd, istockphoto, ReutersWorld Magazine (print run 30,000) is published several times a year in German and English.

editorial

Seafreight, one of the main driving forces of world trade, has

been a major talking point these last months. Globally opera-

ting companies are claiming market leadership in the busin-

ess, which is characterised by steadily growing transport volumes.

Since its foundation, Kuehne + Nagel has consistently developed

its operations in this traditional business field and has achieved a

leading position in the world market. We are proud of our organic

growth, which for many years has far exceeded that of the market,

and are proud of our ability to meet the ever new requirements of

our many customers by providing qualified services. Did you know,

for instance, that even pianos are now transported in reefer or tem-

perature-controlled containers because the constant climate main-

tained in the boxes eliminates the need for time-consuming and

expensive retuning of the sensitive musical instruments when they

arrive at their destinations?

The “business with freshness” is also flourishing, and with it

Kuehne + Nagel’s reefer/perishables activities. Since 1999, when

the Management Board decided to extend capabilities and capacity

in this niche segment on a global level, a great deal has happened

in and around this “cool” business. In the next two to three years, it

is planned to double the present volume of approximately 50,000

TEU. We also offer innovative solutions in the field of consolida-

ted transport, as shown by the report on our LCL Multi Country

Consolidation Services.

In addition to the focus on seafreight, this issue contains many

more fascinating reports on the world of Kuehne + Nagel.

I wish you an enjoyable read.

Yours

Reinhard Lange

Chief Operating Officer Sea & Air Logistics

round the world

Expansion in MexicoNEW OPENINGS. Kuehne + Nagel has recently strengthened its presence in Mexico and Central America, and will further

extend its radius of action in this region. A fully operational facility has been opened in Managua (Nicaragua). The logistics pro-

vider has opened a new office in the Mexican coastal town of Cancun, and another in

San Pedro Sula (Honduras) is to follow shortly. Kuehne + Nagel is one of the

few logistics providers who are present with their own organisations in

the fast-growing markets of Mexico and Central America.

Mining logisticson Sumbawa

BENETE BAY. For the past five years, Kuehne + Nagel has been res-

ponsible for the supply of goods from all over the world to the Batu Hijau

mine on the remote Indonesian island of Sumbawa. The mine, which pro-

duces copper ore, is operated by the Indonesian joint venture PT New-

mont Nusa Tengarra (PTNNT). Kuehne + Nagel

coordinates the supply of goods from all over

the world to the port of Benete Bay which is lo-

cated 15 km from the mine. With the exception

of food, this includes everything from wheelbar-

rows to large electric shovels. When PTNNT

places orders with vendors worldwide, Kuehne

+ Nagel liases with the suppliers on the availa-

bility and delivery of the goods to its off-site re-

ceiving depots in Brisbane, Singapore and

Houston from where the goods are then ship-

ped to Benete Bay.

On the move for United Biscuits

CONTRACT SIGNED. People are fond of British biscuits in more places than just their home

country. The well-known products of the British manufacturer United Biscuits, one of Europe’s

leading producers of biscuits and savoury snacks, are in demand and on sale in more than

90 markets. For this reason, United Biscuits recently signed an agreement with Kuehne

+ Nagel for the comprehensive management of its export logistics by a single pro-

vider. The contract covers efficient transport solutions (sea, air and land trans-

port), customs brokerage, visible tracking and tracing of shipments, and

many value-added services including e-booking. At present, the annual export

volume of United Biscuits amounts to roughly 3,000 TEU.

Emergency hospital for New Orleans

RELIEF EFFORT. In close cooperation with the logistics providers

Kuehne + Nagel and Schenker, in September Lufthansa Cargo flew

a mobile emergency hospital from Frankfurt am Main to Atlanta follo-

wing the devastation wreaked by the hurricane “Katrina”. The 20 ton-

ne shipment was transported to Atlanta on board the “Southern

Connex”, a regular B747-200 charter flight of the two logistics servi-

ce providers. From there the emergency clinic was carried on to New

Orleans. The cargo consisted of two large containers. Following an

inquiry by the German humanitarian organisation “Luftfahrt ohne

Grenzen” (Aviation without Frontiers), Kuehne + Nagel spontaneously

agreed to provide the necessary freight capacity.Shifting scenes for

the State OperaON TOUR WITH THE OPERA. The Bavarian State Opera re-

cently gave guest performances of a number of its productions in

Japan. Kuehne + Nagel was responsible for the complete planning,

implementation and monitoring of the transport of the 145 tonnes of

freight that went on tour with the company. Stage sets, costumes,

technical equipment and musical instruments were transported to

Japan by sea and air. The part carried by sea filled 26 high-cube

containers. Nine tonnes of lighting equipment and 11 tonnes of mu-

sical instruments were carried by air. In Japan, Kuehne + Nagel also

handled the efficient transport of the goods between the three opera

houses in Tokyo and Yokohama.

5News fromKuehne + Nagel

Going MBA

AT THE KUEHNE INSTITUTE. In mid-Oc-

tober, four students from Kuehne + Nagel were

able to put on their mortar boards after passing

the final examination in the Executive MBA

course in logistics management at the University

of St. Gallen. They took part in the first EMBA

course to be held at the Kuehne Institute for Logistics.

Klaus-Michael Kuehne, who initiated and sponsored the

foundation of the institute, could not miss this opportunity

to present himself together with his high-calibre students.

7focus

ties and turn them into new business,”

says Frank Ganse, Global Director,

Reefer/Perishable Cargo in the logi-

stics group. The hub of this “cool” bu-

siness is located at Kuehne + Nagel’s

long-established office in Bremen.

Valuable experience

With Frank Ganse, Kuehne + Na-

gel has the services of a product mana-

ger whose expertise enjoys a recogniti-

on in the market which extends well

beyond the logistics provider’s sphere

of activity. But that is not all: Ganse is

a home-grown product of Kuehne +

Nagel. When he first learned the pro-

fession of forwarding merchant after

completing his military service in

1988, he did so with Kuehne + Nagel.

Following his vocational training as a

forwarding merchant, he studied logi-

stics at Bremerhaven University of Ap-

plied Sciences from 1990 until 1993.

In the following years, he gathered va-

luable professional experience in com-

merce and industry, always being in-

volved in activities related to tempera-

ture-controlled goods. The know-how

and contacts he gathered during those

years are an asset that stands him in

good stead today, Ganse says. Since

1999, both his old and his new em-

ployer has been Kuehne + Nagel and

his assignment, following the strategic

decision on the future development of

the reefer business, has been to push

forward with the purposeful expansi-

on of this field. “In retrospect we can

say we started virtually from scratch.”

When Kuehne + Nagel speaks of “pe-

rishable/reefer cargo”, it is referring

exclusively to maritime transport.

Real teamwork

In the first three years, it was a mat-

ter of creating a systematic basis for

the development of this field which

until now had been somewhat neglec-

ted. But another major task was to

rouse the enthusiasm of the people

through out the Kuehne + Nagel

Group for the product “perishable/

reefer” and to make it clear to them

that this product field presented a

very big logistics challenge. They also

had to be made aware – an important

consideration – that there is good mo-

The businesswith freshnessLogistics with perishables and reefer cargo is a“cool” business in the truest sense of the word. Ithas been one of Kuehne + Nagel’s strategicallydefined core growth areas for the past five years.

Two annual figures speak more

eloquently than a thousand

words: In 1999, the Kuehne +

Nagel Group transported 3,000 TEU of

reefer cargo worldwide. By the end of

2005, the company will have shipped

around 50,000 TEU of reefer con-

tainers across the world's oceans. In

other words: the strategic realignment

of the reefer business, which took pla-

ce in 1999 and defined the field as a

medium- and long-term growth area, is

now beginning to bear fruit. “The de-

monstrable increases in cargo volumes

are no reason for us to sit back and re-

lax, but on the contrary they are an in-

ducement for us to stick firmly to the

course we have set, to recognise and

take advantage of market opportuni-

9focus

Cool facts...DID YOU KNOW that...

... in 1985, 80 per cent of the world’s refrigerated cargo was still carried in

conventional reefer ships.

... in 2005, 57 per cent of the reefer cargo volume is carried over the world’s

oceans in refrigerated containers, while the rest is carried on conventional

reefer ships.

... Chile is now among the biggest producers of deep-frozen salmon.

... Brazil has now become the world’s leading producer of melons.

... Ecuador produces more deep-frozen broccoli than any other country.

... 60 per cent of the plants and flowers transported throughout the world

are inspected by specialised Dutch firms.

... Even valuable pianos are now transported in reefer containers. The rea-

son: The controlled-temperature facility enables a constant environment

to be maintained throughout the journey. This eliminates the need for ex-

pensive re-tuning of the sensitive musical instruments when they arrive at

their destination.

gether with them in mapping out their

future collaboration. Ganse and his

staff do not limit their attention solely

to the big market players. “I consider

it very important that we should have

a very broad-based clientele with

small, medium-sized and naturally

also large customers, without which

no company can manage.”

On the road for 150 days per year

The advantage of this policy is that

it makes the business independent of

sudden fluctuations in the market. An

impressive figure gives us an idea of

Ganse's intensive travel activity. He

spends 150 days per year, as he puts it,

“travelling all over the place”. But

anyone who is familiar with the world

of logistics knows that travel is hard

work which imposes a heavy physical

and mental strain.

The Kuehne + Nagel Perishable/

Reefer Cargo division possesses no

fixed assets of its own such as trucks,

special warehouses or containers.

What it needs, it buys in as services.

Ganse sees Kuehne + Nagel as an

ideal service provider for transport

users (industry, trade, importers and

exporters) as well as for members of

the transporting sector such as for-

warders and in particular maritime

carriers.

Over the years, many shipping

companies have expanded their reefer

activities – today, all big modern con-

tainerships are equipped with impres-

sive refrigeration facilities (expressed

as the number of on-board reefer con-

tainer connections) – but by their very

nature, shipping companies are “only”

carriers of goods across the sea.

Ganse: “The shipping companies have

an unrivalled strength in the transport

of goods from A to B. But they need

to invest a great deal more, particular-

ly on the personnel side, if they want

to have control of the complete cold

supply chain. And this is precisely

where our strengths and opportunities

lie. For as logistics providers we are

the ideal partners for the shipowner.”

The utmost precision needed

In Ganse’s view, an important fac-

tor for success in the fast-growing pe-

rishables/reefer market is “the deve-

lopment of a true relationship of trust

between the customer and the service

provider.” What is equally important

is an understanding of the special

needs of the customer’s products.

Ganse: “This business calls for the ut-

most precision on the part of the logi-

stician.” One other thing is also es-

sential: “We must clearly show our

customers that as specialised logistics

providers we are able to offer them

true added value. In order to do this,

we as logistics provider are constantly

called upon to develop new ideas and

solutions. In short: We must always

stay creative and innovative.”

ney to be earned in this business. Pro-

vided one goes about it the right way,

that is.

Development process completed

Today, in 2005, the development

process has been largely completed.

By their combined efforts, Ganse and

his team have laid the foundations

and they have built them rock-solid. A

firm believer in teamwork, he attaches

great importance to this fact: “What

we have achieved is the result of a

joint effort. If I had been working on

my own, I would have soon reached

the limits of my capabilities.”

All Kuehne + Nagel country orga-

nisations that are major players in the

reefer business now have their own

reefer specialists and their own “Ree-

fer Country Coordinator”. The coor-

dinators have the proverbial direct

line to the reefer and perishable cargo

hub in Bremen. This ensures that the

people in the city on the Weser are al-

ways kept up date on what is hap-

pening in the market. In plain figures,

this means that around the world,

some 80 employees are engaged

exclusively in this business. Ganse:

“In my opinion, one of the essential

strengths of these country experts lies

in the fact that they dispose of an out-

standing stock of know-how that is

not easily surpassed.”

Ganse visits “his” staff at regular in-

tervals and gains a valuable insight

into what is happening on the ground

in the individual countries. Together

with employees who are familiar with

local conditions, he visits the custo-

mers, takes note of their wishes and

also of their criticisms, and gets to-

UNLOADING. Rapid unstuffing

and stuffing of the containers as-

sures the quality of the products.

COLD STORAGE. Sufficient ca-

pacity for intermediate and trans-

fer storage must be available.

MINUS 21°C. Regular temperatu-

re measurements ensure an un-

interrupted refrigeration chain.

TEAMWORK. The worldwide pe-

rishables business calls for per-

fect teamwork.

11focus

Artichokes and beans from Egypt

It is a well-known fact that for many

years Egypt has been an important

supplier of potatoes for the European

market. Egypt now exports other pro-

ducts too such as artichokes, peas or

beans. The Kuehne + Nagel organisa-

tion makes a major contribution to

help this North African country take

advantage of its market opportunities

for agricultural products. For reefer ex-

pert Frank Ganse, this is further proof

that “as a logistician one maintains

and further develops a high level of

creativity.” The result is a highly sophi-

sticated supply chain solution that

would hardly have been conceivable

only a few years ago: Fresh products

such as fruit and vegetables from

Egypt are transported by reefer contai-

ner to the north Italian port of La Spe-

zia. The sea transport leg takes three

days. The containers are unstuffed in

Fish there, concentrated fruit juice back

Fish is and remains a popular and es-

sential food, and world demand for it is

growing. New and ever more remote fis-

hing grounds are constantly being ope-

ned up. This creates a growing need for

a transport logistics system that enables

the valuable cargo to reach the consu-

mer markets.

One example is the popular Alaskan

pollock, which is used mainly in the pro-

duction of fish fingers. Large quantities

are caught by Russian fishing fleets in

the Sea of Okhotsk, an arm of the Paci-

fic Ocean. These are processed on bo-

ard the factory ships where they are fro-

zen into blocks before being unloaded

at the South Korean port of Pusan.

This is where the Kuehne + Nagel logi-

stics chain comes into action: The fish,

packed in cardboard boxes, is stowed

in reefer containers and transported by

ship to Bremerhaven. There, the boxes

Bread and pizza for North America

They sell like hot cakes even in over-

seas markets: deep-frozen conven-

ience products “made in Europe”. As

a result, large quantities of pizzas are

now being shipped as reefer cargo to

the USA and Canada. But even large-

scale bakers, particularly in Germany,

find appreciative buyers of their goods

in the North American market. For

these highly sensitive goods in

particular, Kuehne + Nagel offers

tailor-made door-to-door reefer

solutions.

The range of services extends from the

supply of the containers to the Euro-

pean food processing plants through

overland transport to the ports, loa-

ding onto the ship, complete docu-

mentation and on-carriage to special

reefer logistics centres on the other

side of the ocean. The goods must he

handled with special care. For in-

stance, the packagings of the pizzas

must not be damaged since this would

lead to an immediate impairment of

their quality.

The pizzas themselves are transported

in reefer containers equipped with ex-

tra-powerful refrigeration units. Every

week, Kuehne + Nagel ships more

than a dozen reefer containers to

Canada/Montreal for a well-known Eu-

ropean producer of deep-frozen foods.

are unloaded and the fish is transpor-

ted in the container to the processing

plants.

The now empty reefer containers are

then cleaned and transported to Austria,

where they are loaded with concentra-

ted fruit juice and transported back to

the port. The concentrated juice is desti-

ned for the Japanese market. On arrival

there, the valuable reefer equipment is

returned to the fish transport chain.

Ganse: “With a concept like this, we also

help the shipping operator to make opti-

mum use of his expensive equipment.”

the Italian port and the sensitive

goods are loaded into refrigerated

trucks. Ganse: “Although this means

interrupting the cold chain, by doing

so we save more than three days

compared with transporting the

goods by sea all the way to Rotter-

dam. So the products get to the con-

sumer earlier.” This “cross-docking”

system is used mainly for transport

chains to Central and Eastern Europe.

To ensure that everything goes

smoothly, close monitoring of the

shipments is needed.ON THE MOVE IN EGYPT.

FISH FINGERS FROM POLLOCK.

IN THE PORT OF MONTREAL.

In the electronics and automotive indu-

stries, international cooperation has

been taking place for a considerable

time. Do you think such a develop-

ment is also possible in the food

industry?

Absolutely. I have already mentioned

poultry meat from Brazil. Meat is

brought to Europe as a raw material

and processed and marketed here. Such

divisions of labour are also possible for

other product groups such as fish. Here I

have in mind particularly labour cost-

intensive processing operations. Even if

this is not our line of business, one ex-

ample that springs to mind are the deli-

cious North Sea shrimps. These are no

longer processed in Germany, Denmark

or Holland, but in Morocco. This, how-

ever, is too challenging for the industry

to handle alone and it needs the logistics

expert.

The reefer business still operates on

the basis of FCL containers. But if we

look at developments in other trans-

port modes, such as overland trans-

port, less than full loads have been

transported for a long time. In the ma-

ritime cargo business these corre-

spond to LCL shipments. Do you con-

sider LCL-based reefer transport to be

feasible?

I think so. But a great deal of home-

work has to be done before it can be

launched. The small consignments call

for a supply chain planned with almost

military precision. With all respect, this

would be too big a job for a shipping

company to handle. The transport of

13interview

F rank Ganse, Kuehne + Na-

gel’s Bremen-based Global

Director Reefer/ Perisha-

ble Cargo, speaks about the

medium- and long-term

development possibilities in the

perishables and reefer

business.

Mr. Ganse, you can look back on a

successful initial development phase.

What further milestones do you want

to set?

In the reefer/perishables business we

fortunately have a global growth mar-

ket. I see one important objective in the

generation of a stable yet rapidly gro-

wing supply of freight which is indepen-

dent of season. One such source of freight

is the global meat market. Just think of

South America. Countries like Brazil

and Argentina are among the main pro-

ducers and suppliers of high-quality

meat products. Brazil is already regar-

ded as a leading producer of poultry

meat. In future we want to capture a

good-sized slice of this attractive cargo

cake. Example two: flowers and plants.

Here too, South America has long been

seen as the greenhouse for the world

market. Not least as a result of impro-

ved container technology and ever more

sophisticated logistics, it presents an at-

tractive potential for transport by mari-

time container. Here, as a logistics pro-

vider, I see us in the role of an ideal

partner to the established maritime car-

riers. They naturally have a strong inte-

rest in better filling the capacity of their

ships departing from South America.

with the first example. Trade between

the Asian countries involves transport

over enormous distances which include

sea passages. This presents attractive po-

tentials for the Kuehne + Nagel organi-

sation, which has a long-standing pre-

sence in Asia and is developing this

market at a rapid pace.

Solving these problems naturally de-

mands a great deal of money. Where

is that to come from?

That’s true, and of course our organisa-

tion too doesn’t operate according to the

motto “the sky’s the limit”. The alloca-

tion of the resources has to be carefully

thought through. But we have the ad-

vantage that our organisation stands on

a rock-solid financial base. That makes

things a lot easier. And by the way:

The Kuehne + Nagel Board has defined

Reefer Cargo/Perishables as a core gro-

wth area.

Let’s stay on the subject of growth po-

tentials. The cruise ship business is

booming all over the world. That me-

ans that these ships also have to be

supplied all over the world. Would this

kind of special business be the thing

for you?

Indeed. We already have our eye on this

market. The supply of cruise ships de-

mands very high standards. Many pas-

sengers want not only delicacies from

exotic cuisines, but also products from

their own home countries. This is an in-

teresting market which is also financial-

ly attractive. So we are right on the ball

here too.

such LCL shipments across the sea is

not the problem. The challenges arise in

the ports of departure and destination,

including pre- and post-shipment trans-

port. There is a need for suitable tempe-

rature-controlled refrigerated capacity

and a tailor-made IT system with

which these shipments can be conti-

nuously tracked and monitored.

If we look at the reefer business, we

see that there are important flows bet-

ween South American and Europe, for

instance, or between Australia/New

Zealand and Europe as well as the

USA. Where do you envisage new

fields of activity for the future?

Two regions immediately spring to

mind: inner-Asian traffic and the

Middle Eastern market. Let us stay

Frank Ganse, Global Director

Reefer/Perishable Cargo

Kuehne + Nagel Bremen

“The industry needs the logistics expert”

Frank Ganse• High school certificate: 1987

• Vocational training: Training as for-

warding merchant with Kuehne + Na-

gel, Bremen (1988–1990)

• Studies (1990–1993) at the Bremer-

haven University of Applied Sciences,

with graduation as Industrial Engineer

for Transport.

• Post-graduation career: Production

logistics manager with the Unilever

Group (Frozen Fish International), Bre-

merhaven (1993–1996); purchasing

manager with Hussmann & Hahn,

Cuxhaven (1996–1999)

• Since 1999, Global Director Reefer/

Perishable Cargo with Kuehne + Nagel

15seafreight

NORTHPORT. One of the three

harbours in Port Klang, Malaysia.

Goods meet at the gatewayKuehne + Nagel has created a unique network for worldwide Less thanContainer Load cargoes (LCL). The hubs of this network are centralgateways such as Port Klang.

Less than Container Load servi-

ces, LCL for short, have a long

tradition with Kuehne + Nagel.

As early as in the 1960s, when cargoes

first began to be transported in contai-

ners, consolidated containers were

shipped from Bremen (Germany) to

the United States and Canada. This de-

velopment continued steadily until, by

the year 2000, a global LCL network

had been created with regional respon-

sibility centred in Toronto, Chicago,

Bremen, Hong Kong, Buenos Aires and

Dubai.

Kuehne + Nagel now maintains

more than 250 direct LCL services

across the world, serving over 1,000

destinations. This network is to be furt-

her expanded in order to be as inde-

pendent as possible of cargo co-loaded

by Non Vessel Operating Common

Carriers (NVOCC).

Multi Country Consolidation

One of Kuehne + Nagel’s success-

ful initiatives in the LCL sector is the

introduction of Multi Country Con-

solidation (MCC) services. In these

services, consignments from a num-

ber of countries are grouped together

at central gateways such as Port Klang

(Malaysia), where they are sorted ac-

cording to specific ports of destinati-

on, consolidated in containers and

shipped. After arriving in the ports of

destination, the consolidated contai-

ners are then sent on directly (e.g. by

rail) to the individual receiving stati-

ons, which are often located inland,

such as Budapest (Hungary) or Linz

(Austria). The advantage: by minimi-

sing the number of times the indivi-

dual consignments are transloaded,

the risk of damage is substantially re-

duced. This type of transport also

considerably shortens transit times,

simplifies the cost structure and redu-

ces the amounts of cargo co-loaded

with third parties.

Just by the creation of the gateway

in Port Klang, more than 2,000 new

routes were created in the Kuehne +

Nagel LCL network. With the support

of the worldwide Kuehne + Nagel in-

formation system KN Login (see page

16), which allows consignment data to

be accessed round the clock, and the

barcode implementation that is now

in progress, Kuehne + Nagel can offer

its customers an almost seemless in-

formation chain which permits effec-

Shipper Several Origin Central Freight Stations (CFS) Container Packing Gateway Ocean Transport One Destination CFS Customs Consignee

tive transport management for its cus-

tomers.

“Our medium-term aim is to trans-

port the same number of freight tonnes

in consolidated containers (LCL) as in

the form of full container loads (FCL).

This would reinforce our leading posi-

tion in the seafreight sector. With the

creation of ‘Multi National Gateways’

in Benelux, Germany and the Middle

and Far East, we have already got a

good deal nearer this aim,” said Paul-

Ulrich Strozny, Global LCL Manager

with Kuehne + Nagel. The annual

freight volume in the LCL segment

currently amounts to 1.3 million cubic

metres.

MULTI COUNTRY CONSOLIDATION SERVICES. Consignments from different origins are transported to the gateway, consolidated according to their overseas destination, and shipped direct to the receiving station.

CONSOLIDATED. Goods for the

same destination shipped together.

Port Klang – the LCL hub in Asia

CONSOLIDATION POINT. Since December 2004, the Malaysian port of Port

Klang has been one of the most important gateways in the Kuehne + Nagel LCL

network. Here, LCL cargoes from many Asian countries are consolidated and

shipped directly to the individual destinations in Europe. Port Klang also serves

as a hub for LCL traffic from Europe bound for regional Asian destinations.

With the development of Port Klang into Kuehne + Nagel's LCL hub in Asia, im-

porters and exporters can now benefit from in the region of 100 weekly direct

services between Asia and Europe.

During the build-up phase of its LCL network, Kuehne + Nagel was initially inter-

ested in the southern Malaysian port of Tanjung Pelepas as an Asia Pacific hub,

where the company in April 2004 established its LCL gateway. By December, the

company had decided to shift the hub further north to Port Klang, which offered

even greater efficiencies in terms of connectivity to Europe, competitive pricing

and a skilled labour force.

What does LCLmean?

DEFINITION. Less than Container

Load (LCL) is a consignment of cargo

that does not fully fill a shipping contai-

ner. In such situations, the contents are

grouped with other consignments

bound for similar destinations and held

in a freight station where they are con-

solidated in a container before ship-

ment to their destination.

Together with FCL (Full Container

Load), LCL is a main pillar of Kuehne +

Nagel’s seafreight activities.

17customer solutions

In order to enhance the efficiency of one’s supply chain, one must be ableto analyse and monitor one’s business processes. Kuehne + Nagel’sCustomer Solution teams provide transparent solutions.

In today’s world of global busin-

ess, the management and

exchange of logistics informati-

on and data has the same value as ac-

tually moving the goods themselves.

As world trade continues to grow, ex-

porters and importers are facing in-

creasing challenges in optimally mov-

ing their products around the globe.

Lead times have to be reduced, in-

ventories kept lean and inefficiencies

in the supply chain eliminated in or-

der to stay competitive.

Addressing these challenges and

looking for ways to save time, effort

and money requires the review and

redefinition of many, if not all, supp-

ly chain-related processes combined

with the application of innovative

tools and technologies. Tracking, tra-

cing, visibility and monitoring along

the supply and process chain are only

some of the prerequisites that have to

be fulfilled.

However, the collection and eval-

uation of all the logistics information

required to generate such efficiencies

is a resource intensive task. Logistics

know-how and a profound knowledge

of the various major industries are

needed in order to arrive at industry

and customer-specific solutions. This

is where Kuehne + Nagel’s Customer

Solutions teams come in. The teams

help customers in industry and trade

by analysing their business processes

relating to procurement, sea, air and

overland freight transport, distributi-

on, documentation and all other logi-

stics needs. The teams are located

across the world, at regional centres

such as Zurich, New York, Hamburg,

Hong Kong and Buenos Aires.

Individual solutions

Be it for the retail trade, the phar-

maceutical, high-tech or automotive

industries, or in niche markets such

as the hotel supply, ship and aviation

spare parts or wine and spirits sec-

tors, their specialised industry know-

ledge allows the Customer Solutions

teams to create a solution tailored to

the requirements of each individual

customer.

At the beginning of each new cu-

stomer project, the Customer Soluti-

ons team will, in close cooperation

with the customer, review current

processes. It will then seek efficiency-

enhancing solutions, such as changes

in order processing or comprehensi-

ve consolidation services at origin,

paperless operation and alternatives

for transport and last mile delivery

services.

Visibility with “KN Login”

For comprehensive visibility and

monitoring of the supply chain,

Kuehne + Nagel has developed the

internet-based IT solution “KN

Login”, which is made up of various

modules and can be adapted to the

specific needs of the customer.

Based on the customer’s informa-

tion and visibility requirements,

Kuehne + Nagel’s Customer Solution

teams develop a tailored solution by

drawing from the comprehensive range

of KN Login tools. This can include a

whole range of issues such as cargo

documentation and data flow, custo-

mer integration through inbound and

outbound data exchange (EDI), ex-

ception monitoring and alerting, or-

der progress information flows, or re-

porting. Together with its product de-

velopment and implementation spe-

cialists, Kuehne + Nagel is conti-

nuously driving the design and creati-

on of new and innovative products,

anticipating future needs of its

customers.

Seamlessly informed

LOGGING IN. Via the KN Login web

portal, the supply chain becomes

visible.

KN Login Solution Suite

The internet-based customer solution

“KN Login” (www.kuehne-nagel.com)

consists of four core products.

– KN Login Tracking and Tracing

– KN Login Shipment Visibility and Mo-

nitoring (SVM)

– KN Login Order Visibility and Monito-

ring (OVM)

– KN Login Network Visibility and Mo-

nitoring (NVM)

“KN Login Tracking and Tracing” allows

customers to find basic shipment and

shipping information through reference

numbers (BAL, B/L and H/AWB etc.).

“KN Login SVM” offers more detailed

shipment and shipping information and

further provides proactive monitoring

tools, a data extract tool for customised

reports and statistics etc. “KN Login

OVM” is an integral part of Kuehne +

Nagel’s order management solutions

and covers the complete process from

order placement to delivery at destinati-

on. Finally, “KN Login NVM” allows the

customer to view and monitor inter-

connected supply chain processes ba-

sed on information supplied from diffe-

rent service providers and data sources.

19contract logistics

Going the extra milePirelli, the world leader in high-performance tyres, has selected Kuehne +Nagel to implement a new North American supply chain solution, includingoptimisation and management of its warehousing and distribution network.

Tyre makers know a great deal

about tread profiles. For they

are a crucial quality feature of

their product. Likewise, the profile of

a company is an important quality cri-

terion when it comes to deciding on

future collaboration.

And it was the profile of Kuehne +

Nagel that convinced Pirelli, the

world's leading maker of high-perfor-

mance tyres, when it decided to ent-

rust the logistics provider with imple-

menting a new supply chain solution

for its tyre products in North America.

This included in particular the mana-

gement and optimisation of Pirelli’s

North American warehousing and dis-

tribution network.

Proven logistics partner

Since the end of last year, Kuehne

+ Nagel has managed the inbound re-

ceipt, storage and outbound distribu-

tion of Pirelli tyres to customers

across America from two dedicated

facilities in McDonough, Georgia in

the east and in Fontana, California in

the west of the USA.

Pirelli’s search for a new logistics

partner was part of a new Logistics

and Customer Care Action Plan, tar-

geted to enhance its total client servi-

ce. The choice fell upon Kuehne +

Nagel because of its proven experien-

ce of optimisation in this field of in-

dustry. “We listened very intently to

our trade customers in order to better

understand their needs, particularly

with respect to delivery service,” said

Guy Mannino, President and Chief

Executive Officer of Pirelli Tire

North America. “We believe this new

arrangement with Kuehne + Nagel

will represent a major step forward in

our logistics service and a major con-

tribution to expanding our business

in North America.”

Satisfied customer

Rocco Rinaldi, Pirelli Tire Distribu-

tion Manager, commended Junior

Gonzales, Kuehne + Nagel distributi-

on centre manager of the McDonough

Millions of screws for car parts supplier Agrati

HIGH QUALITY. Since the end of March 2004, on several

thousand sqm in its Duisburg-Kasslerfeld logistics centre,

Kuehne + Nagel has provided all warehouse logistics servi-

ces for Agrati Deutschland GmbH, a subsidiary of Agrati

S.p.A Italy and the principal supplier of high-quality special

bolts, screws and screw connections for the European au-

tomobile industry. At the end of April, the millionth small load

carrier (SLC reusable container) since the cooperation be-

gan in the spring of last year was dispatched to the auto-

motive industry.

The contract with Agrati covers a range of services that ex-

tends from incoming goods management through storage,

customer-specific just-in-time picking and scanner-control-

led warehousing processes

to empties management.

These services are provided

in strict conformity with the

requirements of the German

Automobile Industry Asso-

ciation (VDA). All warehouse

procedures are supported

by Kuehne + Nagel’s own

inventory management system CIEL FW and are integrated

into Agrati’s procurement and order processes.

READY FOR STORAGE. Pirelli

tyres in the logistics centre.

logistics facility and his staff for hel-

ping start up distribution operations

despite adverse weather conditions.

“You showed Pirelli that you are wil-

ling to go the extra mile; it is greatly

appreciated. Despite the bad weather

and a heavy workload, you guys came

through.”

21contract logistics

AWARD PRESENTATION IN BERLIN.

The smiling winners of the 2005

German Logistics Prize.

Supply the skyKuehne + Nagel wins the German Logistics Prize 2005 for its integratedlogistics solution for the aviation industry.

Supply the sky – this is the motto

for success of the recent winner

of the 2005 German Logistics

Prize. The Bundesvereinigung Logistik

(BVL) conferred the award on the logi-

stics concept for the aviation industry

which Kuehne + Nagel has developed

over the past few years from various

other fields of application and which

puts the focus on the aircraft in all pha-

ses of its life cycle. “As a service provi-

der we feel particularly honoured to

have won the German Logistics Prize –

it is 13 years since it was last awarded

to a service provider,” said Klaus-Michael

Kuehne at the presentation ceremony in

the Deutsche Oper in Berlin. “I am also

delighted that we have won with an in-

dustry solution that radiates innovation

and originality.”

Entering into contract logistics

The cornerstone for the successful

candidacy was already laid ten years

ago. “At that time Kuehne + Nagel

entered the field of contract logistics

with the aim of playing a leading role in

this sector of the world market as it did

– and does – in sea and airfreight for-

warding. We wanted to take the top slot

in at least one branch of industry,” said

Dirk Reich, Member of the Management

Board and Executive Vice President

Contract Logistics.

The company chose the aviation in-

dustry as a sector which – like Kuehne +

Nagel itself – is innovative, global and

has high quality requirements. In additi-

on, strong growth was forecast for this

sector. Nevertheless, it was initially con-

sidered to be complex and characteri-

sed by a high value-added depth as well

as by strong reservations against the ou-

tsourcing of logistics services. It was

therefore a special challenge to develop

an exemplary service portfolio precisely

for the field of aviation.

“We wanted to set an example and

create awareness among our custo-

mers and potential customers that

anyone able to fulfil the high demands

that this sector imposes to the custo-

mer’s complete satisfaction is also able

to do so in any other field of industry,”

said Reich. At the beginning there was

very little competition. The company’s

competitors preferred to concentrate on

the automobile or pharmaceutical indu-

stries, or on the retail sector.

Logistics focused on the aircraft

It was clear from the beginning that

the Kuehne + Nagel service was to pro-

vide the aircraft with logistics support in

all phases of its life cycle: In the con-

struction phase with the focus on the

manufacturer, in the equipping and mo-

dification phase with the focus on the

component suppliers, and in the actual

flight phase with the focus on supplying

the airlines with in-flight (ground service)

material and spare parts, as well as with

material and know-how during emer-

gencies (incident management)

This holistic approach was new and

it was only possible to implement it

step by step. Spare parts logistics ser-

vices were established first, then the in-

flight service. From orange juice to ser-

viettes and the soap dispenser in the

toilet, Kuehne + Nagel guarantees that

all material and food – up to 1,000

items per flight – are on board the

aircraft in good time and in the right

quality and quantities. “In the meanti-

me, we have become the market lea-

ders in this sector and have cornered

over 45 per cent of the market,” Reich

pointed out.

In time-critical spare parts logistics,

where every hour that an aircraft has to

spend on the ground costs a great deal

of money (EUR 100,000 per day and

aircraft), Kuehne + Nagel has managed

to reduce the delivery times of 45,000

different parts from twelve to six hours

in Europe and to between six and 48

hours worldwide after receipt of the

order. At the same time, through the

application of information technology

and intelligent utilisation of different mo-

des of transport, costs could be signifi-

cantly reduced.

The IT-based management concept

also comes into its own in procurement

logistics. Here, on its own responsibility,

Kuehne + Nagel manages deliveries

from suppliers for equipment and modi-

fications according to the wishes of the

airline placing the order: It organises the

timely collection of parts from all over

the world, customs handling, temporary

storage until installation, and delivery to

the assembly plants. Goods worth an

average of EUR 1.4 million per aircraft

are moved. Advantages for customers

include one contact partner and an

average handling cost reduction of aro-

und 60 per cent compared with logi-

stics managed by the supplier.

Airbus – the crowning success

The spare parts logistics solution was

then enlarged by incident management

services. This enables the airlines to

achieve high utilisation rates for their

aircraft. The acme of success was the

winning of logistics contracts from the

European aircraft manufacturer Airbus.

When Kuehne + Nagel shouldered res-

ponsibility for the production logistics for

the Airbus A380 in Hamburg, Bremen,

Laupheim and Madrid, the development

reached its zenith for the time being.

The parts have impressive dimensions,

with a maximum length of 20 metres

and a weight of up to 8,000kg. Kuehne

+ Nagel has also reduced the warehou-

sing space required by Airbus.

Since entering aviation logistics, on

average five new customers have been

gained each year. 60 of the world’s

leadng airlines, maintenance and ground

handling companies and caterers are now

among Kuehne + Nagel’s customers.

23contract logistics

Organic growthThe Contract Logistics business unit is growing in Europe with theexpansion and new construction of multifunctional logistics facilities.

Madrid, Leipzig, Norrköping,

Vantaa und Geel – there is no

end to the building activities

and start-ups of new facilities. In the last

few months, with numerous investments

in new logistics centres, Kuehne + Nagel

has laid the foundation for further growth

in the Contract Logistics business unit all

over Europe.

In September, two new facilities came

into operation in Finland and Sweden: A

new multifunctional logistics centre with

6,000 pallet slots and 7,000 sqm of ware-

housing space went on stream in Vantaa

near Helsinki airport, while Norrköping

in Sweden saw the start-up of a state-of-the-

art facility with a handling and logistics ca-

pacity amounting to nearly 20,000sqm.

In Grosslehna near Leipzig the com-

pany has invested EUR 9 million in ex-

panding the handling and warehousing

area of its facility to nearly 15,000 sqm,

while in October the warehousing space

of the logistics centre in Mejorada del

Campo near Madrid has been enlarged

to 27,500 sqm with an investment of EUR

8.3million.

Finally, Kuehne + Nagel is investing

another 30 million Euros in the construc-

tion of a state-of-the-art logistics facility in

Geel in the Flemish-speaking part of Belgi-

um. The first ground was broken in Octo-

ber in the “Geel Punt Industrial Park”.

FEVERISH CONSTRUCTION: Above,

from left: Leipzig and Madrid;

centre, from left: Norrköping and

Vantaa. Below: breaking the first

ground in Geel, Belgium.

ACR Logistics – the new member of the Kuehne + Nagel Group

ACR Logistics is a logistics provider headquartered in Pa-

ris (France) with around 15,000 employees at 140 locations

in eleven European countries. It has a strong presence in

the retail, telecommunication, automotive and fast moving

consumer goods markets. The services offered by the com-

pany include supply chain management, distribution and

transport management, factory support (e.g. pre-assembly)

and extensive value added services (e.g. call centre mana-

gement, repair management). The company also manages

nearly 3 million sqm of warehouse space.

“We are delighted to be joining such a dynamic and succes-

sful group as Kuehne + Nagel,” commented Xavier Urbain,

CEO of ACR Logistics. “I am convinced that our customers

will welcome this development. They will benefit from the

global presence and capabilities of Kuehne + Nagel and a

broadened product offering. With joined forces, we will ded-

icate our efforts to playing a leading role in the global logi-

stics market.”

From February to December 2004, the ACR Group genera-

ted a turnover of EUR 1.2 billion.

The quantum leapThe acquisition of ACR Logistics marks a new era in contract logistics forKuehne + Nagel.

The logistics industry is on the

move, and Kuehne + Nagel is

moving with it. At the begin-

ning of October, subject to the approval

of the antitrust authorities, Kuehne +

Nagel acquired the contract logistics

group ACR Logistics (formerly Hays

Logistics), headquartered in Paris (Fran-

ce), from the US-based Platinum Equity

for a price of around 440 million euros.

To finance the deal, Kuehne + Nagel

has placed 1.7 million of its treasury

shares with institutional investors at a

price of CHF 295.50 (EUR 191) per

share. Following this transaction, the

Kuehne + Nagel free float has increased

from 34.3 to 41.4 per cent. In terms of

geographic reach and industry focus as

well as its track record in management

and IT excellence, ACR Logistics repre-

sents a perfect strategic fit for Kuehne +

Nagel.

In the last two years, ACR Logistics

has successfully expanded its position

as one of the strongest contract logistics

providers in Europe. The acquisition –

the largest in Kuehne + Nagel’s history

– elevates it among the top five global

providers in this business segment. The

takeover will increase the number of

employees in the logistics group from

its present figure of 25,000 to 40,000

worldwide.

HANDSHAKE. Xavier Urbain,

CEO of ACR Logistics (left),

with Klaus-Michael Kuehne.

The road gateway to the northTRAILER HUB. Directly at the mouth of the river Trave in the north of

Germany is the biggest of Lübeck’s port terminals with nine berths – the

Skandinavienkai. Together with the other Lübeck port terminals, the

Skandinavienkai is the hub for traffic to north and northeast Europe. It is

also one of Kuehne + Nagel’s locations.

The Kuehne + Nagel office in Travemünde has now existed for 40 years.

It started purely as a customs office for the clearance of cargo from the

Nordic countries for customers in Germany. With the expansion of the

EU, the management of trailers for overland freight traffic to Scandinavia

was concentrated at this strategic location.

Kuehne + Nagel coordinates the deployment of tractor units for southbo-

und loaded trailers coming ashore in Travemünde from Sweden, Finland

or Norway. All orders for northbound truck cargo are also handled at Tra-

vemünde. Here, arrangements must be made at lightning speed for the

optimum pick-up of the goods and their efficient transport to the north.

Prime considerations are the minimising of empty kilometres, the obser-

vance of all laws and regulations and making allowance for the different

types of trailers.

Joint vehicle fleet – new EDP management programme

The Nordland Trailer Pool, which was established in February 2004, is

proving a great advantage in this connection. Sweden, Norway and Fin-

land now have access to a common vehicle fleet. This allows the trailers

to be used for all cargoes irrespective of their destination.

In addition, Kuehne + Nagel recently introduced a computerised mana-

gement programme tailor-made for overland trailer traffic. With the aid of

this programme, all trailers, tractors and cargoes can be managed, coor-

dinated, scheduled and deployed in Travemünde in real time.

25rail & roadLONG RAILS. Each train unit

carried 36 rails with a length of

120 metres.

When rails travel by railRailway lines have to be transported to the place where they are laid. For long distances there is only one possibility: the railway.

By rail from the German pro-

duction plant to the construc-

tion site in Finland and back

with a round-trip time of only two

weeks. This is the service that Kuehne

+ Nagel offered to ThyssenKrupp

Verkehr GmbH for the transport of

rails with a length of 120m between

June and September this year. The

heavy-duty vignol rails, made by the

Oberhausen-based firm of TSTG

Schienen Technik GmbH, were desti-

ned for the Kerava-Lahti line in Fin-

land, where they were laid directly on

the sleepers without intermediate sto-

rage. 24 six-wagon units, each loaded

with 36 long rails, travelled to Finland

during the said period. Placed end to

end, this corresponds to a track

length of roughly 55km. But before

the first long rail could be fixed in

place, extensive and detailed logistical

preparations were needed.

Placing in the correct position

The wagon groups with a length of

roughly 140m were loaded at the steel-

works in Oberhausen. Care had to be

taken to place the rails in the correct

position so the train could be unloaded

at the construction site along the new

section of track. Deliveries in Finland

always had to be made on Monday and

Wednesday, in which connection the

Monday train needed to be unloaded

by Wednesday and the Wednesday

train by Friday: An average of 1.5 rails

per hour were laid, so that a maximum

of 2.5 days was planned for the com-

plete unloading of the train. Only with

the observance of these conditions

could the dependable circulation and

punctual reloading of the wagons be

guaranteed.

Special train ferry

From the production plant in Ober-

hausen the wagons were routed in the

Nordic Rail system of Kuehne + Na-

gel to the ferry port of Lübeck-Skandi-

navienkai. Here the indivisible wagon

group was shunted on to a special rail-

way ferry and shipped to the Finnish

port of Turku/Pansio. On arrival in

the ferry port of Turku, the wagon

combination was converted to the Fin-

nish rail gauge in only an hour on a

state-of-the-art axle changing facility

with no manipulations on the freight

itself.

Overnight the rails then travelled to

their destination, where they were shif-

ted off the wagons at the construction

site with a so-called ESKO rail pusher.

After unloading, the empty wagon

combination returned to Germany by

the fastest route in order to pick up

more rails and return in accordance

with the schedule.

The Kuehne + Nagel railway office

in Hamburg, which was responsible for

the successful “rail transport”, has now

obtained a follow-up contract for a

track renewal project on the west coast

of Finland which follows seamlessly on

from the project described.

140 METRES. The train units were

each made up of six wagons.

TRAVEMÜNDE. At the Skandinavienkai in the port of Lü-

beck, Kuehne + Nagel manages trailers travelling to and

from Scandinavia.

the local environmental authorities.

Handling and transport activities were

permitted only on workdays between

seven in the morning and six in the

evening.

The project included another 350

truckloads of general equipment sup-

plied from all over Europe for the

Preemraff oil refinery near Lysekil.

strictions, the heavy lift vessels could

not be moored directly alongside the

jetty in Basteviksholmen. Therefore a

barge was positioned between the ves-

sels and the jetty to act as a pontoon

and facilitate the direct discharge of

the heavy cargo with the ships’ own

cranes onto multi-axle special trailers.

Ballasted with 7,500 tonnes

To maintain the stability of the

barge and bring it level with the pier

during these unloading operations

from the ocean vessels it was balla-

sted with 7,500 tonnes of seawater.

For transport from Basteviksholmen

hydraulic and self-propelled modular

trailer platforms had to be hired in

the Netherlands to master the chal-

lenges of the narrow access road to

the site with 6% gradients and 90 de-

gree turns.

At a speed of five kilometres per

hour the trailer platforms with up to

20 axles and a width of six metres

crawled cautiously up the road with

their heavy loads. They made only an

occasional stop to give right of way to

the local school buses.

Throughout the operation the

Kuehne + Nagel project teams took

appropriate measures to protect the lo-

cal communities and marine life

against undue disturbances. The noise

level of the heavy haulage operations

was reduced to a minimum by special

insulation of the engines of the trailers

and the barge.

All operations were executed under

the strict supervision and control of

27project logistics

A heavy haul to therefineryFor the expansion of an oil refinery near Lysekil in Sweden, enormous compo-nents weighing hundreds of tonnes had to be shifted by sea and land. A chal-lenge for the Kuehne + Nagel project teams in Gothenburg and Rotterdam.

The area round the little town

of Lysekil in southern Sweden

(to the north of Gothenburg)

with its offshore group of islands is a

tranquil part of the world. The lands-

cape is marked by only a few roads

and scattered settlements. Only the

Preemraff oil refinery stands out

against the somewhat barren but

picturesque natural scenery.

In the past few months, the indu-

strial plant and Basteviksholmen, a

spot five kilometres away on the coast,

have been the scene of heavy trans-

port operations that brought excite-

ment into the normally uneventful life

of this region.

Two giant reactors and other outsize

components with weights of up to 575

tonnes, lengths of 50 metres and

heights of 20 metres, were carried to

the refinery by means of special trans-

port equipment. The huge compo-

nents from Japan and various Europe-

an countries were needed for the

expansion and modernisation of the

plant.

Event of the year

During the operation, which lasted

for a total of six months, the handling

and transport activities were watched

by fascinated spectators who lined the

road between Bastviksholmen and the

refinery. The local media named it the

event of the year.

The heavy lift project was under the

management of the Kuehne + Nagel

project teams in Gothenburg and Rot-

terdam, and months of preparatory

work and consultations with the va-

rious local authorities were needed

before the actual work of transport

could commence. Offloading of the

oversize components at Bastevikshol-

men and the delivery to the refinery

required the construction of a separate

pier as well as a road link in order not

to interrupt ongoing production at the

refinery. Similar work was also requi-

red at the loading port in Gdynia in

Poland. 336 tonnes of heavy compo-

nents were individually transported to

and assembled at the port. An operati-

on for which a special ramp had to be

built and the pier strengthened.

Five heavy-lift and ro/ro vessels

were contracted to carry the huge

components from Japan, Italy, Spain

and Poland. Due to the draught re-

IN BASTEVIKSHOLMEN. A pier and a special road link to the refinery had to be constructed.

29lead logistics

Architects of thesupply chainMaking the parts fit together. The new businessfield Lead Logistics Solutions offers complexlogistics solutions from a single source.

If you want to build a new house or

remodel your existing one, you

need the services of a competent

architect as a planner and coordinator

who works together with selected spe-

cialists to bring the project to a success-

ful conclusion.

Much the same applies with regard to

the organisation and realisation of new,

customer-specific logistics solutions for

industrial and commercial companies.

Corporations that want to increase the

efficiency of their supply chains are best

advised to place responsibility for them

in the hands of a single, expert logistics

specialist who, in the role of lead logi-

stics provider, plans, controls and moni-

tors all processes within the chain. The

lead logistics provider then chooses the

appropriate external logistics providers

for the implementation of the project

and forms a seamless interface between

the customer and the subcontractors.

Information technology also plays a de-

cisive part in the creation of lead logis-

tics solutions.

The idea of the lead logistics provider

is by no means a new one. As long ago

as the 1990s, lead logistics concepts

were developed by various innovative

Kuehne + Nagel country organisations.

Under a variety of names, they all pur-

sued the same objective: To create ad-

ded value for the customer’s supply

chain which goes beyond the execution

of classical warehousing and transporta-

tion services.

New business field

Last year, the Kuehne + Nagel Board

decided to integrate the various lead lo-

gistics activities and departments into an

independent business field. Under the

name Lead Logistics Solutions, based

on a common strategy and a global or-

ganisation structure, complex and inno-

vative logistics solutions are now offered

and realised for a growing number of

customers.

For the European market a Lead Lo-

gistics Control Centre (LCC) has been

established in Luxembourg. In America

the Lead Logistics Centre is located in

Raleigh in the state of North Carolina,

and for the Asian region an equivalent

centre will shortly be opened in India.

The LCC team in Luxembourg is at

present implementing a lead logistics

solution for a major industrial custo-

mer. This project involves the Europe-

wide reorganisation of all transport to

and from the individual production

plants. “When we started the project in

May this year, we knew that we had to

replace most of the existing service

providers and subcontractors in the

various European countries and inte-

grate them into a completely reorgani-

sed network,” comments Project

Manager Sebastian Arndgen on the job

now in hand.

A total of eight production sites be-

longing to the industrial company had

to be connected with the customer’s de-

manding clientele, cross-dock stations

needed to be set up and an integrated

IT system had to be configured in order

to continuously optimise the flows of

goods. “To introduce such a complex so-

lution as this in a period of only seven

months is a real challenge,” adds the

head of the Luxembourg LCC, Heinz

Bamberger.

From theory to practice

The build-up, implementation and

management of a lead logistics solution

(LLS) takes place in several phases and

in collaboration with the specialised

competence teams.

The whole process starts with the

collection of an enormous amount of

data showing the current flows within

the existing customer network. These

data enable the Supply Chain Design

team to simulate possible future scenari-

os, the most efficient and effective of

which is then chosen.

This model is then transferred from

theory to practice by the Carrier Mana-

gement team, which selects the right

partners for its implementation and

builds up a comprehensive network for

the customer.

The management of the day to day

flows and their optimisation is in the

hands of the so-called Planning and

Scheduling team. In effect, this team

acts as the pacemaker of the LLS opera-

tions. Its task is to monitor shipping

space procurement and transport plan-

ning, and to look after communication

between the shipping points and the in-

dividual carriers. It also maintains its

own customer service which proactively

informs the customer about any inci-

dents or deviations from the plan that

take place during the transport process.

Last but not least, the Controlling

and Freight Settlement team provides a

professional billing and compensation

system with all the necessary reports

and statistics that allow both partners to

keep a constant track on financial per-

formance.

LIKE A JIGSAW. Lead Logistics

Solutions means fitting the

right parts together.

SuccessfulLLS teamsSTRONG DEMAND. The Kuehne

+ Nagel business field Lead Logi-

stics Solutions is growing rapidly all

over the world. This year, the Lux-

embourg team has gained five new

customers.

In North America, an attractive con-

tract has been landed with the in-

flight internet provider Connexion by

Boeing, Many other new customers

are “in the pipeline”.

The LLS team in Luxembourg also

provides innovative solutions to high-

tech customers. Global supply

chains for low-inventory distribution

concepts in Europe and integrated

management of reverse flows of

goods are successfully handled for

leading companies in the computer

and printer industry all over Europe.

HIGH-TECH TEAM. Providing so-

lutions to the high-tech industry.

LCC TEAM. At the Lead Logistics

Control Centre in Luxembourg.

course suggest strong growth for the

coming years. In what ways does Kueh-

ne + Nagel help you leverage and acce-

lerate your growth in direct imports?

Kuehne + Nagel has been successful in

servicing Office Depot by managing day-

to-day activities while investing in the

future. This also involves quickly adapti-

ng to changes in our business and is a

key to profitable growth. From a volume

standpoint, continued execution lever-

aging our increasing volume for best pri-

ce while securing capacity is a further

important element. Global coverage is

another significant aspect of our busin-

ess. As we source from new countries, we

depend on Kuehne + Nagel to manage

the business seamlessly for Office Depot

and to train us on local processes.

Kuehne + Nagel has developed a spe-

cial Cargo Management software tool

tailored to your logistics information

and visibility requirements. How does

Office Depot use this data to manage

e.g. inventory stock and store reple-

nishment processes?

The Cargo Management tool has been

key to our growth and I believe a great

example of Kuehne + Nagel making a

strategic investment in a value-added

service. Basically, it gets all stakeholders,

(factory, buying agents, transportation

providers, warehouses, inventory plan-

ners, financial institutions) viewing the

same data presented in a manner to best

manage their part of the business.

Through EDI, it interfaces directly with

our mainframe systems to integrate di-

rect import information in our replen-

ishment planner’s daily routine.

Office Depot is already established in

the European market, and Kuehne +

Nagel has set up a dedicated team in

Rotterdam that, in close cooperation

with its Hong Kong supplier manage-

ment team, handles Office Depot car-

go to Europe. Mirroring the solution for

your U.S. market and applying it to Eu-

rope, what are some of the benefits

you as a global company are seeing?

Most importantly, Kuehne + Nagel

clearly understands Office Depot’s com-

mitment to its customers. Additionally,

Kuehne + Nagel understands the busin-

ess is significantly different and will re-

quire diverse expertise to be successful,

both on the import side and distribution

in Europe. Also, Kuehne + Nagel is seek-

ing to leverage services such as sea

freight, customs processes, and IT where

it makes sense.

It is Kuehne + Nagel’s claim to operate

as an extension of the customer’s busi-

ness. To what extent does this hold true

for the partnership with Office Depot?

While the foundation of our relation-

ship is based on execution at a value

price, it is important that our compa-

nies share basic values. These must be

part of everyday business between all

the various stakeholders that Kuehne +

Nagel acts with on behalf of Office De-

pot. Integrity and accountability are

values that are never in question in our

dealings. Also, Kuehne + Nagel has a

keen understanding that they must con-

tinue to earn our business on a daily

basis.

31customer interview

K uehne+Nagel manages

all direct imports from the

Far East to the USA and

Europe for office supplies mar-

ket leader Office Depot. Dennis

Cohen, Director Private Brand

Operations with Office Depot,

spoke about its relationship with

its logistics provider and the

long-standing partnership bet-

ween the two companies.

Mr. Cohen, Office Depot recently ho-

noured Kuehne + Nagel with the title

Most Cooperative Vendor of the Year.

This award came in the form of a giant

pencil. Why a pencil?

It is a great symbol of Office Depot’s core

business and a reminder of how “giant”

the global market for office supplies real-

ly is. It is also symbolic of how Office

Depot’s Private Brand organisation seeks

to differentiate itself in every way from

our competition. We hope our winners

will display this unique award proudly

and seek to earn it every year.

In the late 1980s and 90s, Office Depot

itself managed sourcing from national

suppliers in the U.S. What ultimately

convinced you to outsource these ac-

tivities to Kuehne + Nagel in 1998?

Prior to 1998, our direct import vol-

umes, relationships and transactions

were minimal and we could manage

them in house. At that time, though,

our import business started growing ex-

ponentially and we benchmarked indu-

stry leaders for best practices. When we

prioritised the complex tasks involved

in building Private Brand, we evalua-

ted core competencies to determine what

we could outsource without significant

cost or service impacts. Kuehne + Nagel

was initially our number two provider.

When the team from Dallas was given

a chance to work on some of our busin-

ess, they impressed us a great deal. They

were given a chance to bid on our bu-

siness via RFP and have earned the bu-

siness every two years since.

How has the relationship developed

over the years?

Our teams in Delray, Dallas, and Asia

have been working together for a few years

and have great relationships. First, we are

always focused on meeting the needs of our

customers through service and cost manage-

ment. Second, we have a business relations-

hip as client and customer. Kuehne + Na-

gel has consistently delivered value in a

number of areas, including systems, customs

processes and cost management.

2000 saw Kuehne + Nagel forward

some 900 TEU from the Far East to the

U.S. for Office Depot. Meanwhile, volu-

mes have dramatically increased to over

10,000 TEU a year – figures that of

Dennis Cohen

About Office Depot

Office Depot is an international, stockmarket-listed company and one of the

world’s largest sellers of office supplies and products. It employs 47,000 people

and is headquartered in Delray Beach, FL, USA. Internationally, the company ope-

rates under the Office Depot, Viking Office Products, Viking Direct, Guilbert, and

Tech Depot brand names. Its range of distribution channels includes retail stores,

direct mail through its catalogue, a call centre and the internet, a contract sales

force, and business-to-business delivery network via 22 delivery centres and 60

local sales offices.

Each year, the company honours one of its business partners with the title Most

Cooperative Vendor of the Year. Most recently, the choice fell upon Kuehne + Nagel.

“It is important that we share basic values”

A GIANT PRIZE. Kuehne + Nagel

was recently honoured.

33human resourcesAN IMPORTANT RESOURCE.

Able and contented staff at

all levels.

Global talent developersFrom reactive personnel administration to proactive staff management.Human resource management at Kuehne + Nagel means entrepreneurialco-determination and worldwide personnel development.

The professional management

and targeted development of

its human resources is one of

the basic principles of a company like

Kuehne + Nagel, which plans to suc-

cessfully further expand its global bu-

siness activity by continuous organic

growth and the acquisition of suitable

firms. This credo was clearly expressed

by the participants at this year’s Inter-

national Managegement Meeting

(IMM).

In view of the global character of

the Kuehne + Nagel business model

and the resultant worldwide demand

for personnel, human resources de-

velopment cannot be handled by in-

dividual countries. This task must be

placed in the hands of a worldwide,

professional human resource mana-

gement team.

International meeting

At an international meeting in Au-

gust of this year, the human resource

managers of the regions and the ma-

jor Kuehne + Nagel country organisa-

tions established and formulated

their tasks and objectives for the futu-

re. These include attracting and retai-

ning skilled labour, development

measures, recognising and rewarding

performance and results delivered by

employees and managers, securing a

lifelong learning process, and proac-

tively supporting Kuehne + Nagel’s

ongoing change and improvement

endeavours.

For the realisation of these objec-

tives, Kuehne + Nagel needs human

resource managers on a regional and

national level who not only administer

HR processes but play a determining

entrepreneurial role and see themsel-

ves as partners capable of maintaining

a dialogue with the business unit

heads and the top management.

This change from a reactive person-

nel administrator to a proactive hu-

man resource manager calls for a shift

of accent in personnel management.

In addition to efficient personnel ad-

ministration, the human resource ma-

nagers must play an active part in im-

plementing organisational changes

and contribute to company-wide ta-

lent management. The best results,

the personnel managers agreed at

their meeting, are achieved through

internal staff development, i.e. by the

harmonised interaction of training, in-

job study and selective job rotation in

a person’s career as a specialist or ma-

nager. Particularly in management de-

velopment, local thinking has given

way to an intensive international

exchange of personnel in which, with

the support of the whole Kuehne +

Nagel management, the identification

and promotion of persons with a high

potential and their development by

the provision of challenging positions

is seen as a common task.

The fact that Kuehne + Nagel is

able to fill more than 75 per cent of its

senior management positions internal-

ly is regarded as a great success by the

participants at the international mee-

ting of HR managers. However, the

human resource managers do not want

to rest on their laurels. Particularly in

growth regions such as Eastern Europe

and Southeast Asia, executive training

is to be selectively stepped up. In or-

der to keep up with this development,

trainee programmes are being further

expanded on a national and an inter-

national level.

Some regions lag behind

In some regions on the Kuehne +

Nagel map, however, proactive human

resource management is still in its in-

fancy. The establishment and further

development of personnel care, parti-

cularly in the growth regions, and the

transfer of know-how and the profes-

sionalisation of local personnel mana-

gement operations, are therefore regar-

ded as further important milestones.

Training programmes play a central

role in human resources activities. In

2004, the training programmes of all

regions were brought into line with

the objectives of the individual busin-

ess fields and harmonised. Under the

name “Kuehne + Nagel Academy”, a

worldwide learning network of all per-

sons with responsibility for training

has been established. Here, in interna-

tional teams, training and further edu-

cation programmes are developed and

implemented. Examples include an

international induction programme

for new recruits, standardised training

courses for all IT applications, a glo-

bal key account sales training pro-

gramme, management and project ma-

nagement training courses, and

Kuehne + Nagel-specific business si-

mulations in which the participants

can experience and learn to under-

stand the core business processes.

There are also logistics training cour-

ses for managerial staff of Kuehne +

Nagel customers, for which there is

growing demand.

Learning management platform

All training measures within the

Kuehne + Nagel group are publicised,

managed and monitored worldwide

with an extremely effective learning

management platform. The integration

of virtual conferences and instruction

courses and the provision of compu-

ter-based learning units will take place

shortly.

In 2004, more than 1,800 training

events across the world were organised

through the learning management sy-

stem, and this year their number will

increase to roughly 3,000.

WORKSHOP. At an international

meeting of human resources

managers in Switzerland...

... exciting concepts and soluti-

ons for the human resources

management of the future.

... on the lofty heights of the

Holzegg near Brunni, the per-

sonnel heads developed...

This honour was conferred upon

Klaus-Michael Kuehne in recognition

of his entrepreneurial

achievements in

the field of

freight for-

warding

and his

personal

engage-

ment as a

sponsor of

training and

further educa-

tion as well as of

scientific study and re-

search in the fields of transport and

logistics. The members of the Logi-

stics Hall of Fame include such pro-

minent figures as Malcolm McLean,

the “father of containerisation” or

Taiichi Ohno, the developer of basic

logistic methods such as the “Pull

Principle”, “Just in Time” and

“Kanban”.

On the Management Board

Did youknow...?

The name of KLAUS-

MICHAEL KUEHNE has recently

come to grace the Logistics Hall

of Fame, an initiative of the German

trade and business magazine Logistik

Inside. Figures from business, science,

politics and history are admitted to the

hall of fame who have rendered outs-

tanding services to the development

of logistics in the German-speaking

countries.

35people

On 1 October 2005, EWALD

KAISER was appointed as a new

member of the Management

Board of Kuehne + Nagel with

responsibility for the business

unit Road & Rail Logistics. His

appointment underlines the stra-

tegic importance of these activities

for the globally operating logistics

company.

Since 2001, Ewald Kaiser has been

Managing Director of Kühne + Nagel

(AG & Co.) KG in Germany, the

Group’s largest national organisation

which now has 7,500 employees. In

his new position, besides the further

development of the national land

transport organisations, in a next step

he will take responsibility for building

up a network in the main European in-

dustrial countries.

Student aid

KEEN INTEREST. Students at the

Lyceum Alpinum Zuoz talk with

Klaus-Michael Kuehne.

COMMITTED EFFORTS. Students

at the Graduate School of Manage-

ment WHU in Vallendar (Germany) en-

gage in more activities than just re-

search, as for instance at the Kuehne

Centre for Logistics Management. In

support of a project for the establish-

ment of a gynaecological hospital in

Herat (Afghanistan), at the beginning of

2005 they collected not only money

but also many donations of basic me-

dical supplies and equipment for the

hospital. These included 100 hospital

beds, sterilisers, incubators and wound

dressings.

In Germany, the aid goods were

packed in three containers financed by

donations. As the principal sponsor,

Kuehne + Nagel took over their ship-

ment to Bandar Abbas in Iran and their

on-carriage by truck to Herat. At the

end of May, WHU students and repre-

sentatives of the hospital project took

delivery of the goods in Herat. The

containers now serve as storage spa-

ce for the hospital.

ENERGETIC. WHU students load

100 hospital beds.

ON THE SPOT. Students unloa-

ding the container at destination.

In the Hall of Fame

Klaus-Michael Kuehne in dialogue with youth

RETURN VISIT. At the end of

August, interested students at the tra-

dition-rich Lyceum Alpinum Zuoz in

the Swiss Engadine were invited to

the headquarters of Kuehne + Nagel

International AG in Schindellegi. The

visit was a follow-up to a talk given by

the Executive Chairman entitled “Logi-

stics and Globalisation – a Symbiosis”

within the framework of the “Forum

Alpinum”, a platform created by stu-

dents at the Lyceum to promote poli-

tical, social, economic and cultural

dialogue.

The interest in Kuehne + Nagel and

the theme of logistics was so great

that Klaus-Michael Kuehne invited the

students to make a return visit to

group headquarters and found time to

continue the discussion with them.

Besides a tour of the headquarters,

members of the staff gave the stu-

dents further glances into the globa-

lised and complex world of logistics.

Allergy researchthanks to KuehneFoundationPRIVATE SPONSORSHIP. Prof.

Felix Sennhauser, medical director, and

Louis Landolt, hospital director at the

Zurich University Children’s Hospital,

have good reason to be pleased. On

the initiative of Christine Kuehne, mem-

ber of the Advisory Council of the

Kuehne Foundation based in Schindel-

legi (Switzerland), a centre for allergy re-

search is to be established in the Child-

ren’s Hospital in Zurich. It is the first pri-

vately sponsored research centre at the

Children’s Hospital, and over the next

four years will receive support amoun-

ting to two million Swiss francs from the

Kuehne Foundation.

The Zurich Children’s Hospital is a

world leader in the field of paediatric all-

ergology. In collaboration with the

Kuehne Foundation, it is now able to

establish a centre for allergy research.

Research at the new centre will con-

centrate primarily upon how allergies

and inflammatory diseases develop, the

factors that trigger them and what

gives protection against them.

Sponsors and researchers (from left): Klaus-Michael Kuehne, Executive Chairman of

Kuehne + Nagel International AG, and Chairman of the Advisory Council of the Kuehne Foundation,

Dr. Roger Lauener, Head of the Department of Allergology, Zurich Children’s Hospital, Christine

Kuehne, member of the Advisory Council of the Kuehne Foundation, Prof. Felix Sennhauser,

Medical Director, and Louis Landolt, Hospital Director, Zurich Children’s Hospital, and Martin

Willhaus, General Manager Kuehne Foundation.