The Shippers’ Voice Seminars at Multimodal

1. The Shippers’ Voice Seminars at Multimodal

2. Cost savings for logistics and transport Chaired by Dr. Andrew Traill, Communications and Business Development Director, European Shippers' CouncilKevin O’Neill, Logistics Specialist, Expense Reduction AnalysistsMartin Dixon, Consultant and Research Manager, DrewrySteve Agg, Chief Executive, Chartered Institute of Logistics and TransportMark Lincoln, European Transportation Manager, Sealed AirAdrian Jones, Managing Director, MOL (Europe) Ltd

3. Cost Savings For Transport and Logistics Kevin O’Neill

4. Expense Reduction Analysts • 150+ Consultants across the UK and Ireland who negotiate terms and pricing with hundreds of suppliers every year. • Our world-class category experts specialise in dozens of common • overhead cost categories. • We’ve completed more than 14,000 cost- reduction projects in the last 15 years • – average savings across categories is 20%. • www.expense-reduction.co.uk

5. Four stages to getting best value

6. ERA Logistics Team • International Freight • Air / Ocean / Road • UK and European Distribution • Full Load / Part Load / Pallets / Parcels • Fleet Costs • Fuel and tyres • Warehousing Website: www.reduce-logistics-costs.co.uk

7. Opportunities for immediate savings

8. Transport and Logistics • Do you have a tariff, that is understood and agreed, for all the services that you use? • Do you regularly and consistently challenge rates and charges levied by your carriers for additional work? • Where you pay surcharges related to fuel costs do you understand and monitor the relevant indices and price escalation mechanisms? • Have you a thorough understanding of your traffic profile? • Are you tracking service levels delivered and assessing both whether you have received the services paid for or need that specific service level? • When did you last conduct an in-depth analysis of your logistics expenditures?

9. Case Studies • UK Road Distribution • Detailed review • Innovative pricing structure developed with supplier • Improved flexibility • More cost effective solution • 11% savings

10. Case Studies • Inbound Sea / UK and European Pallets • Detailed Review • Improved solutions • Savings range from 18.3% to 39.7%

11. Case Studies • Inbound Sea / UK pallet distribution / Pallets • Improved solutions to meet high growth levels • Change of terms / introduce new specialists / redesign of pallets • Savings ranging from 18% to 28%

12. Case Studies • Fleet - Fuel and tyres • Applied “know how” to purchasing process • Savings exceeding 25% with tyres

13. Cost savings for logistics and transport Chaired by Dr. Andrew Traill, Communications and Business Development Director, European Shippers' CouncilKevin O’Neill, Logistics Specialist, Expense Reduction AnalysistsMartin Dixon, Consultant and Research Manager, DrewrySteve Agg, Chief Executive, Chartered Institute of Logistics and TransportMark Lincoln, European Transportation Manager, Sealed AirAdrian Jones, Managing Director, MOL (Europe) Ltd

14. Cost Savings for Logistics and Transport Multimodal, Birmingham Martin Dixon Business Development Manager E mail: dixon@drewry.co.uk May 2, 2012

15. Freight costs Freight rate levels Market dynamics & provider economics Industry players & routes served Contract timing & duration Leveraging scale Cost SavingsOverview Source: Drewry’s Container Freight Rate Insight • Supply chain risk • Transit time & provider performance • Provider financial stability • Space Vs price • Volatility mitigation Source: Drewry’s Freight Shipper Insight

16. Freight rate level optimisation Tender against specific requirements Benchmark against publically available indices Issues Frequency of review Time, resource & cost implications Freight CostsOverview Source: Drewry’s Container Freight Rate Insight Sea freight rates and supply/demand on East-West trades • Market intelligence • Supply & demand balance • Provider choice & profile match • Breakeven levels & win-win • Contracting arrangements • Timing • Period • Leveraging scale via collaboration Source: Drewry’s Container Forecaster

17. Time to market & service selection Schedule options Transit time Provider performance Benchmarking performance Performance criticalities Performance monitoring Supply Chain RiskOverview Source: Drewry’s Carrier Performance Insight • Financial stability • Provider survivability • Z-Score • Provider dependency • Spreading risk amongst multiple providers • Leveraging volume scale Source: Drewry’s Freight Shipper Insight

18. Supply Chain RiskFreight Rate Volatility Far East Asia to Northern Europe 40ft Container Freight Rate Index (100 = 2009) Source: World Container Index assessed by Drewry & Drewry’s Container Forecaster • Will carriers prioritise capacity to annual-contract or to spot shippers? – RISK for annual contract shippers • Will carriers ask for rates renegotiation - RISK • Further spot rate increases expected - RISK • Can annual contracts cope with market volatility? – RISK • Contract rates agreed 2011/12 at low rates, well below carrier breakeven levels • Wide disparity between contract & spot rates • Hence, two coexisting markets pulling in different directions • Freight rate outlook will depend on carriers’ capacity and market share chasing decisions

19. Index-Linked ContractsConcept Contract period (one or more years) Shipper and carrier agree on contract period, external index, index price discount/base rate Index-linked rate falls if the external spot rate index falls Possible variations: “trigger points” (no change), maximum and minimum rates Index-linked rate goes up if the external spot rate index rises Source: Drewry Supply Chain Advisors

20. Implications & Conclusions • Freight rates Vs supply chain risk • Freight rates & supply chain optimisation • Supply chain risk of rising importance • Container freight rate volatility to continue • Continuing economic uncertainty • Overcapacity & carrier behaviour • Annual contracting not coping with freight rate volatility • Divergence between contract & spot rates • Legitimacy of contracting process in question • Index-linked contracts address the reality of volatility • Shipper gains supply surety; carrier gains market-based compensation • Longer term agreements • Reduces cost of retendering • Focuses contract relationship on service delivery • Index-linked contracts do not remove market volatility • Mechanism for managing contracting in volatility • Ultimately addressed via hedging

22. Cost savings for logistics and transport Chaired by Dr. Andrew Traill, Communications and Business Development Director, European Shippers' CouncilKevin O’Neill, Logistics Specialist, Expense Reduction AnalysistsMartin Dixon, Consultant and Research Manager, DrewrySteve Agg, Chief Executive, Chartered Institute of Logistics and TransportMark Lincoln, European Transportation Manager, Sealed AirAdrian Jones, Managing Director, MOL (Europe) Ltd

23. Sealed AirClient perspective on Freight SavingsMultimodal - 2nd May 2012

24. Introduction • $7 Billion turnover 2011 / 23,000 employees • $ 400 million freight spend globally • 4 main business areas • Protective Packaging • Food Packaging Solutions • Cleaning and Hygiene Solutions • “Other”: Medical packaging and Speciality Material • 60+ country footprint • 30+ manufacturing plants in Europe (not incl. joint ventures) Sealed Air Overview. End year 2011 picture

25. Cost Savings Overview • Tender Management and ongoing reviews • Innovation and Process/Efficiency improvements • Consolidation where it makes sense • Relationships and Buy in • Creating Visibility and Implementing Regional Strategies Cost Reduction - What methods we use

26. Consolidation where it makes sense • 20+ Import Brokers into 1 across Europe saving $500k per annum • Consolidation of Road Freight trunking saving $1 million+ per annum • Non consolidation in some countries/sites/products Consolidation where it makes sense

27. Relationships and Buy In • Building trust and a pragmatic approach • Quarterly reviews • European Framework contracts and SLA’s • KPI’s (Internal and Supplier) • EDI Development – Inbound and Outbound

28. Creating Visibility - equals Cost Savings 20+ different vendors across Europe. Limited visibility on process 300+ separate vendors across Europe

29. Thank You.

30. Supporting slides

31. Managing Complexity – Example

32. Examples of Cost Savings and Efficiencies • Creating a Tender Management Strategy • Consolidated Freight Invoicing • Self Billing • Consolidation of Import Brokerage • Import and Export SOP’s • Short Sea Opportunities • Moving to larger and fewer shipments

33. Cost savings for logistics and transport Chaired by Dr. Andrew Traill, Communications and Business Development Director, European Shippers' CouncilKevin O’Neill, Logistics Specialist, Expense Reduction AnalysistsMartin Dixon, Consultant and Research Manager, DrewrySteve Agg, Chief Executive, Chartered Institute of Logistics and TransportMark Lincoln, European Transportation Manager, Sealed AirAdrian Jones, Managing Director, MOL (Europe) Ltd

34. Cost SavinginContainer Shipping Adrian Jones Managing Director, MOL (Europe) Ltd 2nd May 2012

35. A Shipping Line that wants to save me money?!

36. Understanding the Shipping Line • Pricing is not straight forward • There are a lot of general assumptions included in spot pricing decisions • Working with Lines to understand constraints and possibilities can lead to a better price

37. Managing rate volatility 9th December 2011 The Shanghai Shipping Exchange measure for spot container rates to Europe fell below $500 this week, the lowest the SCFI index has reached in the world’s largest and most troubled container shipping market. 5th April 2012 World Container Index shows second large hike in Asia-to-Europe box rates in two monthsToday’s Shanghai-to-Rotterdam container freight rate assessment from the World Container Index (WCI) ... shows that container freight rates in the westbound Asia-Europe corridor increased by 28% this week, adding upwards pricing pressure on shippers only one month after the previous large rate increases. 25th April 2012 Average rates from China have jumped 36% this year, the fastest increase since the China Containerized Freight Index was established in 1998, as lines focus on earnings rather than market share.

38. Playing the market • Allows you to take advantage of price reductions when the market is falling, but you are also exposed to potentially huge price increases

39. The hidden cost of switching • Administrative cost • Increased chance of operational failure • Incurring ancillary charges

40. Specific tips • Consider cargo delivery and loading times • Manage your business to avoid ancillary costs: • Demurrage • Detention • Wasted journey and late cancellation charges

41. Working together as partners in long-term relationships is the way to ensure reliable and stable supply chains at the most economic price

42. Cost savings for logistics and transport Chaired by Dr. Andrew Traill, Communications and Business Development Director, European Shippers' CouncilKevin O’Neill, Logistics Specialist, Expense Reduction AnalysistsMartin Dixon, Consultant and Research Manager, DrewrySteve Agg, Chief Executive, Chartered Institute of Logistics and TransportMark Lincoln, European Transportation Manager, Sealed AirAdrian Jones, Managing Director, MOL (Europe) Ltd

43. The Shippers’ Voice Seminars at Multimodal