Beyond a pandemic:

An update on Philippine logistics 2021

Elisha Camus

General Manager, Sales and Marketing

Celine Girard

General Manager, Air Logistics

Meet your speaker

Elisha CamusGeneral Manager for Sales + Marketing

>15 years of experience in the logistics industry

Commercial leadership

Key account management

Key vertical development

2.5 years with Kuehne+Nagel

A proud father of three (Oreo, KitKat and Twix)

and a LEGO lover

Meet our speakers

Celine GirardGeneral Manager for Air Logistics

>15 years of experience in the logistics industryAccount and trade lane management, with focus on trade lanes such as France, Latin America, Japan, among others

Operations and Customer service management and program implementation

More than five years with Kuehne+Nagel, focusing on air logistics

A very big fan of dogs

Learnings from 2020

How the industry reacted

The shift in customer behaviour

The undeniable demand for

digitalization

Playing out the “new normal”

Carrier behaviour

Import and export behaviour

Things to keep

an eye on

1 2Agenda

Learnings from 2020

Air Logistics Capacity DevelopmentGlobal Air Cargo Capacity -16% (28 Dec – 10 Jan 2021 vs. same two weeks last year)

-32

-37

-29

-16-18 -21

-23

-77

-60-16

Source: Seabury Consulting

(Current situation – updated January 15th)

-48 -54

-14

-31

2

01

-21-2

Large freighters (B747/B777) out of service, by year

Number of aircraft

COVID-19 - Capacity ImpactFreighters could not catch a break in 2020 - even at the turn of the year

Source: Capacity Tracking

Seabury Consulting Analysis (January 2021)

Global Container Growth by Trade Oct 2020 vs. 2019

YOY % growth for corresponding timespan

Represents volume and direction of trade flow

Source: Seabury January 2021

Global containerised cargo growth 5.2%

% Increase

% Decrease

Trade Flow Width represents the

absolute amount of

containers transported

4

-1-2

-10

-513-3

-7

5

-3

1

6

4

-5131

23-4

-2

6

-x

x

12

Key Developments Overview:

Global Index January 14th

Drewry’s composite World

Container index continue to increase

up 0.3% to $5,237.83 per 40ft

container

Virtually all trades are affected

by this trend

Facts:

Source Drewry

Rate Development Explained

Carriers responded to early Covid -9 lack of

demand with massive vessels lay-ups

As economies re-started carriers cautiously

re-instated capacity

In many regions (example North America)

consumption spiked due to more disposable

income available to consumers: less spending

on services such as vacation travel, but

higher spending's on consumer durables boost

container shipping and rates

Spike led to equipment imbalance and

shortages

Facts

Sources Drewry (Rates on 8 major routes to /

from US Europe and Asia) and

Kuehne+Nagel Data

Post CNY Peak

Post CNY Peak

+ Covid-19 Crisis

?Space Reduction by Carriers

Lack of equipment + congestion

The industry has been generally

reactive to the situation – no one was

prepared for the pandemic and what it

would entail to continue with the

business WHILE ensuring the safety of

everyone involved.

Coping with the government guidelines

While there is a preference to

stay at home, for most

businesses and individuals,

the need to minimize supply

chain disruption is a must.

However, each delay in a logistics milestone

snowballs down the road.

DELAY STORAGE INVENTORY PRODUCTION

How the industry reacted

Huge spike in pricing from carriers, and less flexibility

Limited port/airport and authority handling capabilities

Adjustment to local ordinances (lockdown, paperwork)

Shift in customer focus from carriers

Inconsistencies on interpretation of government guidelines

Customers adapted in the best way

possible.

But the demand for logistics became

more dynamic and difficult.

The initial dichotomy (first months of the lockdown)

There were simply

no goods to ship

Businesses could not facilitate their

logistics due to partial workforce or their

industry was not allowed to operate

Businesses did not want to transact

with the high freight rates

Keep the supply chain

running

For the businesses that can operate, the

logistics players cannot fully

accommodate (also due to partial

workforce and a lot of additional

requirements)

This is especially seen in the consumer,

healthcare, industrial (food production

and essential goods-related), aerospace

(with focus on MRO)

As lockdown continued, there was a battle of urgency

“I need my

cargo

yesterday”

Regularly operating industries

Industries on skeleton workforce

Industries WFH

Restarted industries

Unique protocols in

every country

Since then and today, we have seen definite change of

demand from our customers

RATE SECURITY

Volatile prices demands a loose

budget – which most businesses

now do not have the luxury of

Airlines and carriers are changing

prices EVERY DAY

There is a need for them to

compensate for the lost

sailings/flights as well as the

higher cost of continuing

operations

CARRIER SCHEDULE

With limited flights and sailings,

knowing the ETAs and ETDs are

essential for a continuous

production line

Sudden government policies

greatly impact the reliability of a

port schedule (ports may be

temporarily closed the next day)

Carriers would prefer to

consolidate shipments in one

schedule rather than moving two-

thirds empty five times a week

VISIBILITY AND

CONTINUED LOGISTICS

Yes, it’s a volatile market and

delays are everywhere – but

knowing where the shipment is in

the supply chain is critical

Lack of digital infrastructure

requires manual tracking – which is

simply not possible for some

(especially with reduced workforce)

HEALTH AND SAFETY

Tasks that can be executed from

home can remain at home

Challenge is to ensure an

unhampered facilitation of the

supply chain across multiple

locations (staff homes,

office, etc.)

How do you address these demands?

THE DEMAND

Rate security

Carrier reliability

Visibility and

continued logistics

Health and safety

HOW YOUR LOGISTICS PROVIDER CAN ADDRESS THIS

Leverage on carrier relationship and volume forecasting

Visibility of partner airlines / shipping lines performance backed by long-term

engagement

Digital platform to support the “new normal”

A sustainable business continuity plan to ensure continued operations

The undeniable need for digitalization:

A luxury VS a need

I need to book

my shipment

from home!

I need to know

where my cargo

is every day!

I cannot

physically sign

or receive the

document!

The banks are

closed but I

need to pay

the fees!

I need to know

which lanes is

possible for me

to move!

But what’s stopping complete digitalization?

Government needs

paperwork

Heavy reliance that

the “traditional way”

of doing things will

not fail us

Stakeholders did not

invest in technology

Limited vision of

the future

Playing out the

“new normal”

Market Outlook - Air LogisticsJanuary 2021 - Outlook for the next 3-6 months

No congestion

Moderate Congestion

High congestion

TO

FROM

Europe North

America

Latin

America

North Asia South Asia Middle East

& Africa

Europe

North America

Latin America

North Asia

South Asia

Middle East & Africa

3M 6M

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Sea Logistics Reefer Market Outlook: Outlook for next

three / six months

This Market Outlook is designed to

visualise how the Kuehne+Nagel

regions predict the sea logistics

market development in the upcoming

3 – 6 months on a region to region

basis

Severe space and equipment issues

ex Asia to Oceania

FactsReefer and Vessel

space availableTense Situation, proper

forecasting required

Only contracted, fixed

volumes per week accepted

TO

FROM

Europe North

America

LATAM Asia Pacific Middle East

& Africa

Europe

North America

LATAM

Asia Pacific

Africa

Middle East

3M

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Carrier behaviour

High rates due to congested ports and reduced operational capacity

Unreliable transit times

Refocusing of vessels and aircraft to other lanes

Identification and strengthening of capacity for alternative origin and

destination port/airport pairs

Import and export behaviour

Desperate battle for space (highly dependent on 3PL capability and

network)

Increase in demand as companies re-spark their supply chain

Desire for fixed rate

Search for a different 3PL

Things to keep an eye on

Countries strengthening the logistics sector

Gradual adaption to the digital way of doing things

Increase attractiveness of the alternative areas

Louder voice for the private sector

Slow revival of our economy

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