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DB Schenker in CIS – challenges, prospects
Uwe Leuschner ,
Vicepresident DB Schenker
Logistics, Business Development
CA and CIS
Astana, November 07, 2013
1Åberg June 2012
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2Uwe Leuschner, 21.04.23
Logistics … New ideas, new solutions – new ways for international tradelanes …
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Trends in politics….
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Eurasian Union is planned from 1.1. 2015
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Trends in globalization….
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Russia is after nearly 20 years WTO – member …, Kazakhstan soon …
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Trends in the markets …
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Contract Logistics market for 2010 in CIS valued at about EUR 1.9bn – Russia with the largest share
Market concentration is low, the share of its five largest logistics operators do not exceed 12% in total
As CIS countries transform from traditional heavy industries towards more sophisticated industries such as Automotive and High-tech, increased need for more sophisticated supply chain management
1.86
+11%
2016
3.47
2010
Contract Logistics - market size estimates for CIS
in bn EUR
Rest of CIS 1%
Belarus 1%
Ukraine 1%
Kazakhstan 3%
Russia 94%
Source: GSL market model based on InnoZ data; GSL estimates
CAGR
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6DB Mobility Logistics AG, GSL, Jördis Deutschmann, 01/12/2012
The CIS region shows an attractive GDP growth above level of the industrialized countries
1 Commonwealth Independent States 2 North Africa and Middle EastSource: IMF, GSL
Relative growth by region, 2010-2015Real GDP 2010-2015, Index: 2010 = 100
2010 2011 2012 2013 2014 2015
Industrializedcountries
150
135
120
105
100
Sub-Sahara
NME2)
Latin America
DevelopedAsia
CIS1)
Eastern Europe
Macroeconomics
Relative growth by country, 2010-2015Real GDP GAGR 2010-2015, in %
2.8
3.8
4.1
4.2
4.4
5.0
5.4
5.8
6.1
6.6
7.5
Armenia
Ukraine
Kazakhstan
Uzbekistan
Turkmenistan
Moldova
Tajikistan
Kyrgyz Republic
Azerbaijan
Belarus
Russia
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77
CIS contains important industrial areas fundamental for cross-border transports with Europe
Source: GSL analysis, GTAI, Destatis, Bundesanstalt für Geowissenschaften, Asian Development Bank, web search
Commonwealth of Independent StatesMajor cities, industry and raw material clusters
CIS main industrial markets beyond a large raw material source are Russia, Kazakhstan, Ukraine
Russia is equipped with vast reserves of raw materials (e.g. oil, gas, metals)
The main industry clusters and largest cities can be found in the European part of Russia
Major industrial clusters are primarily located at the Western border of Ukraine to Russia as well as at the Northern border of Kazakhstan to Russia
In China, main industry clusters are concentrated on the coastal line
TranssibirischeEisenbahnTranssibirischeEisenbahn
China
Russia
KZ
Belarus
Ukraine
Moldova
Armenia
Azerbaijan
Turkmenistan
Uzbekistan
Tajikistan
Kyrgyzstan
Raw material cluster Industry cluster Major cities
Macroeconomics
7DB Mobility Logistics AG, GSL, Jördis Deutschmann, 01/12/2012
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8DB Mobility Logistics AG, GSL, Jördis Deutschmann, 01/12/2012
Main trade flows in the region1) - SchematicTotal Import/Export values in bn EUR, 2010
Based on import and export values, trade between Europe, Russia and China significant
Macroeconomics
1 Includes all modes of transport; Europe meaning all European countries except Russia and TurkeySource: GTAI, IMF, GSL estimates
1 2 3Europe China Europe Russia China Russia
TranssibirischeEisenbahnTranssibirischeEisenbahn
99 9
10
130
152
24
18
137
78
3
8
137
25
1
2
3
Europe
China
Russia
Main trade flows are between Europe and Russia, China and Europe as well as Russia and China
Major share from China to Europe is currently transported by ocean freight – not via the Transeurasian land bridge
Most volumes are moving westbound into Europe
Germany as major trade partner of Russia and China in Europe
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9DB Mobility Logistics AG, GSL, Jördis Deutschmann, 01/12/2012
For CIS countries rail and road are major transport modes – whereas in China, waterways are by far dominating
1 Excluding Tajikistan and Turkmenistan – no data availableSource: National freight transport volume from National Statistics agencies; GSL analysis
Freight transport volumes by transport mode 2010
in bn tkm
Transport and Logistics
294 266 140
Rest of CIS
Ukraine
Kazakhstan
Russia
2,369
China
13,517
Rail
85%
Road8%
Waterways
7%
Air
0%
Rail72%
Road27%
Waterways
1%
Air
0%
82%
Rail
15%
Road
3%
Waterways Air
0%0%
Air
4%
Waterways
40%Road56%
Rail20%
Rail
32%
Road
48%
Waterways
0%
Air
% % of total share of total tkm in CIS
77% 10% 9% 5%
1)
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Especially the road network in CIS requires immense investments in the future – rail network historically well supported
10DB Mobility Logistics AG, GSL, Jördis Deutschmann, 01/12/2012
Transport and Logistics
Rail freight
Road network has its main routes along the important railway routes
In the so called „Stan-countries“ road network seems more dense than rail network
In general road infrastructure is of far lower quality than rail infrastructure in the CIS
Increasing significance for long distance
Road freight Ocean freight Air freight
Rail dominates freight transport
Monopolies of unreformed old-style national rail company for traction – increased privatization of equipment
Imparity of gauge width between Europe (1435 mm) and CIS (1520 mm)
Underdeveloped infrastructure - density rather low
Important ports are connected to the main Asian rail and road network
Maritime transport is one of the most important modes of international trade for Russia
For other CIS countries, ocean freight not a key transport mode (mainly no access to sea)
Currently only minor share in terms of tkm (generally below 4%)
Mainly used for transport of mail, as well as unique or expensive goods
Rising fuel prices reduce cost efficiency of aircraft
Investments are not primarily made into airport infrastructures
Source: GTAI, RBC 2007, AHK 2010, Progtrans 2010/2011, GSL
Key characteristics of freight transport modes in CIS
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The transport and logistics market is subject to challenges resulting from different trends
Source: GSL
Privatization
Growing competition
Market liberalization
Internationalization
e.g. CIS countries shift from heavy industries towards more sophisti-cated high-tech sectors
Key challenges transport and
logisticsmarket
e.g. customs union only easing cross-border trade between Russia, Belarus and Kazakhstan
e.g. limited availability of rail tracks supports shift to road; road with highest growth rates
§
e.g. global cooperation like VW open subsidiaries in CIS countries
e.g. increased privatization of rail equipment by RZD and KTS
e.g. change from the cross-border operations to dom-estic services of internat. 3PL players like DHL
Infrastructure shortage
Industry shift
Transport and Logistics
DB Mobility Logistics AG, GSL, Jördis Deutschmann, 01/12/2012
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12DB Mobility Logistics AG, GSL, Jördis Deutschmann, 01/12/2012
Agriculture, Automotive, and Electronics as main industries with future potential – DBS’ strong expertise in these sectors as chance
Major industry trends in major markets
Increased private income invested in status symbols like new, modern cars, but also in the acquisition of white goods and electronics, e.g. TVs
Automotive in Russia already strongly developing – ongoing trend Suitability of former car production facilities for minor assembling with cheap labor costs
will also benefit automotive industry, e.g. in Ukraine Governments of CIS countries actively searching for investors for automotive industry In particular for agricultural modernization and industrial production new machinery is
required – Germany as a main supplier
PRELIMINARY
Agriculture2) Metals and Mining
Automotive
Building materials3)
Chemicals4
)
Oil&Gas
Consumer5
) IndustrialsElectronic
s
Russia
Kazakhstan
Ukraine
Belarus
Strategic implications
1) Main industries also interesting for logistics services 2) includes food and meat base production; 3) related to construction; 4) without Oil and gas; 5 includes prepared food, 5) in particular FMCG 6) Machinery and white goods; excludes high-tech electronicsSource: National Statistics; National Ministries of Economic Development; GTAI; press articles; GTAI, OECD, PWC, Industry reports, Factiva, GSL assumptions 2011
Stagnant trendPositive trend
Current Relative importance of industry in terms of GDP contr.mediu
mhigh
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Manzhouli (CN) - Zabaykalsk (RU) border
Alashankou (CN) – Dostyk (KZ) border
Sea-Rail intermodal transfer
Explanation
Transshipment and transit customs clearance/ Gauge Change
1
1435 mm normal gauge
1520 mm wide gauge
Customs Union
2
Sea
Rail
Rail (block train
only)
RU
KAZ
CN
MN
Shanghai
Moscow
Yingkou
Overview of DB Schenker rail network covering main cities in China and Russia
For shipments to Russia we offer both direct rail service and sea-rail solutions
Irkutsk
NovosibirskYekaterinburg
Vostochny
Shenzhen
St.Petersburg
Omsk
1
Samara
Vladivostok
Khabarovsk
Sovgavan
Taishet
Beijing
Chengdu Chongqing
Guangzhou
2
Chita
Remark:DB Schenker currently focused on the Northern Route connecting China to Russia, while the Southern Route is only applied for company block train
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Rail reaches most cities in Central Asia and Mongolia with competitive prices and lead times
Shanghai-Almaty Beijing-Almaty
Rail Mode Full Rail Full Rail
Lead Time (Door-Terminal) 30 days 29 days
Est. Cost / 40’HC $9,000 $8,700
based on single wagon solution, door-terminal service
KAZ
CN
Shanghai
Shenzhen
Beijing
Chengdu Chongqin
gGuangzhou
Urumqi
Almaty
Lianyungang
Tianjin
Astana
Ashgabat
Tashkent
Dushanbe
Bishkek
MNShanghai-Ulanbator
Rail Mode Truck-Rail
Total Transit Time 10 days
Est. Cost / 40’HC $7,000
Ulanbator
Bonded truck-rail multimodal solution based on single wagon solution, door-terminal service
China to Central Asia Route Example
China to Mongolia Multimodal Route Example
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Russia
KAZ
China
MN
Shanghai
Moscow
Novosibirsk
Case study 1: Shanghai/Shenzhen to Moscow/ Novosibirsk rail transport for a cosmetic brand
Shenzhen
Overview
Customer: a global skin/body care company
Cargo: cosmetics Routing: Shenzhen / Shanghai (CN) –
Moscow / Novosibirsk (RU) Lead Time: 28~32days (door-terminal) Volume: 100 FEUs per year
Potential demand:Ocean-rail solution via Lianyungang to Central Asia (e.g. Kazakhstan)cargo from U.S. and North Asia
Achievement
Consolidation center built in Shanghai & Guangzhoucollecting cargo from local suppliers with small volume shipment
Reduction of transit time by more than 25 days (compared to ocean-rail via Europe), and achieve reduction in transport cost at same time
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Case study 2: Suzhou-Kazakhstan for a leading machine manufacturer (oversized equipment)
KAZ
SuzhouNanjing
AlmatyAktau
Aktobe
MN
RU
CN
Overview
Customer: a leading machine manufacturer Cargo: finished vehicle (Oversized)
Route 1: Suzhou – (bonded truck) – Nanjing – (rail) – Kazakhstan cities (in gauge)
Route 2: Suzhou – (bonded truck) – Alashankou – (rail) – Kazakhstan cities (out gauge)
Lead time: average 31days (door-terminal)
Bonded truckRail
Achievement
Additional protective packing, packing solution designed for customer
Flat wagon lashing for the vehicles
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Case Study 3: Regular block trains from Chongqing to Duisburg for leading electronics customer
RU
KAZPL BY
CN
MN
Chongqing
Duisburg
Overview
Customer: a leading hi-tech producer Goods: electronic goods (notebook) Routing: Chongqing (CN) – Duisburg (DE)
(10,800km) & on-carriage to the Netherlands
Lead Time: 22days (door-door) Volume: 41-50 FEU per train Frequency: regular weekly
Achievement
Door-door lead time reduction by 12-15 days, compared to previous ocean freight
‒ Time to market advantage‒ Cost of capital reduction
DB Schenker as the pioneer of block train runner on southern route
Innovative security concept based on DB Schenkersmartbox enable real-time cargo status monitoring
High flexibility to accommodate additional volume (alternative solution)
‒ Special train‒ Sea-air solution
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We are present on three different key lanes
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Via Almaty (ALA)
International Airport
From Chongqing
From Zhengzhou
From Chengdu
To Amsterdam (AMS)
To Frankfurt/Main (FRA)
1
2
3
Rail-Air-Solution
1
DBSL RLF | JS 11.09.2013
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Product sheet
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2
Relation: from China via Kazakhstan / Rail-Air mode change / Destination Europe
Product specifics
Services
Product type Combined rail-air container shipments
Based on blocktrain
Container provision (included) Smartbox (included) Audited Supply Chain Security
Product platform DB Schenker Chinatrain
Product offer Single container Optional: Winter solution
Rail-Air transshipment
Bonded and guarded trucking from Almaty-1 rail station to Almaty Airport
Customs transit formalities at mode-change from rail to air
Rail-Air-Solution
DBSL RLF | JS 11.09.2013
Air: 1 day Rail: 9-10 days
Door-Door time: 12-14 days
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The Eurasian Landbridge: One Team, One Mission
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Thank you for your participation!
DBSL RLF | JS 11.09.2013