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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.
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