LQ SymposiumApril 20, 2006

Where is the Logistics Service Provider (LSP)

Industry Going?

Global Logistics Market Trends

Global Logistics Market Value

0

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Year

US

D (

Bil

lio

ns)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

%G

row

th

Actual

Estimate

Source: Datamonitor D A T A M O N I T O R 2005

Logistics market continues to expand rapidly

Market Segmentation 2004

71%

16%

7% 4% 2%

Retail

Automotive

Hi-Tech

Pharmaceutical

ConsumerElectronics

Source: Datamonitor D A T A M O N I T O R 2005

Geographic Share 2004

35%

33%

29%

3%

Asia-Pacif ic

US

Europe

Rest of the World

Source: Datamonitor D A T A M O N I T O R 2005

Market Shared betweenKey regions

Key Drivers for LSPs

• Changes in sourcing behavior – pursuing lower costs with adequate quality– This ‘globalization’ creates logistics complexity

• Changes in outsourcing behavior – – This increase in complexity drives the desire for simplicity

• More and more companies are pursuing business strategies to outsource more and more bundled business processes

Future Industry Trends

• Evolution towards broad supply chain solutions

• Increased outsourcing of transaction based activities

• Enhanced 3PL provider technology capabilities

• Deeper client industry focus and expertise by 3PL providers

• Continued expansion, acquisition and consolidation of 3PL industry

• Expansion into global markets

• Further clarity and usage of 4PL(LLP) solutions

• Enhanced long term relationship management capabilities

Source: CAP Gemini - Findings from the 2004 Ninth Annual Study

Outsourcing Triggers Mean Rating

1.171.191.22

1.45

1.921.972

2.662.73

Approached by an external service firm

Unsuccessful software implementation

Outgrew existing infrastructure

Merger or acquisition

Business transformation

Conducted thorough internal cost analysis

Software upgrade

Hardware/system upgrade or refresh

New management team

Source IDC The New Face of BPO: Customer Adoption Patternsfor Logistics BPO

% Logistics Budget Outsourced

15.1%

10.7%

56.9%$100 - $499 M

$500 - $999 M

$1B +

Co

mp

an

y S

ize

Source IDC The New Face of BPO: Customer Adoption Patternsfor Logistics BPO

Service Provider Rationalization

ProfessionalServices

SingleLogisticsService

Supply ChainSolutions

MultipleLogisticsProducts

No. of Services

Com

plexity of Solution

Bundling

SC Integration

Evo

lut io

n

Integration and Alignment

• Integration – the linking of business processes from previously independent activities

• Collaboration – the ongoing effort of sharing pertinent information to continuously align expectations

Process 1

Process 2

Process 3

Process 1

Process 2

Process 3

Transactional

Commodity Price Interchangeable

Product Highly specified

deliverables

Shared risks & investment

Deeply integrated Mutually

dependent

Some customization

Flexibility/levels of service

Special knowledge

Customized/ individualized

Process & data integration

Solutions oriented Shared rewards

Collaborative

Partnership

Enhanced

Both want the progression but don’t have a framework to manage the journeyLow

ValueHighValue

Source: Mike Nevin Consulting - 5 year cross industry study

Collaboration Trends

Summarizing . . .

• Globalization means more complex supply chains

• Manufacturing costs down but …Logistics complexity & costs up

• Global logistics integration is the challenge

• Maintaining Relationship Alignment is key to successful collaboration which leads to strong partnerships

DB Logistics has four strong business units

Land Operations

Transport & Logistics

Air &Sea Freight

Contract Logistics

Rail Freight Transport

UPS 17.8%

FedEx 16.1%

BAX/Schenker 9.8%

DHL/Exel 2.5%

DHL/Exel 4.7%

TNT 2.4%

KN 1.3%

Ryder 1.0%

Wincanton 0.9%

BAX/Schenker 0.8%

BAX/Schenker 7.0%

DHL/Exel 12.6%

UPS 4.6%

Panalpina 4.5%

KN 3.6%

EGL 3.0%

USA Integrated Heavy Weight

FreightNo. 3

Combined, we hold excellent market positions in global air, sea freight and logistics

Global Contract Logistics

No. 6

Global Air Freight

No. 2

KN 5.5%

DHL/Exel 5.4%

BAX/Schenker 3.2%

Panalpina 2.9%

SDV 1.9%

Expeditors 1.9%

Global Sea Freight

No. 3

BAX/Schenker 2.1%

DHL/Exel 2.0%

DFDS Transport 1.1%

Dachser 1.0%

Geodis 1.0%

ABX 0.7%

European Land Transport

No. 1

BAX and Schenker