1 Grow Asia China Strategy Frank Appel 11072012

DHL Asia Pacific and China Strategy

Frank Appel Shanghai, 11 July 2012

Deutsche Post DHL | PageFrank Appel | Shanghai | 11 July 2012 2

Asia: Most dynamic global growth region


Population: ~ 56% (3,871 mn)

GDP: ~ 30% (EUR 14.77 trillion)

Export: ~ 33% (EUR 4.84 trillion)

~ 30% Dom. demand: (EUR 14.43 trillion)

Asia Pacific: Strong and stable growth rates

Asia Pacific: Fastest global growth region

0

5

1020

15F

2014

F

2013

F

2012

F

2011

2010

2009

2008

2007

GDP growth (real) in % (yoy) Share of absolute GDP growth (2010-2015)

9.8%

13.7%

27.7%

48.8%

Forecast

Asia Pacific: A major driver

of the world

Asia Pacific: An important growth engine for global GDP …

Source: IHS Global Insight (Deutschland) GmbH, 2012

OtherEuropeAmericasAPAC


Source: Seabury Cargo 2012; Air Cargo & Containerized Ocean Freight in Metric Tons*) CAGR 2010-2015; for information: Europe<->Asia: 13% of total trade (2015), CAGR 6.4%; North America<->Asia: 13% of total trade (2015); CAGR 6.4% 2010-2015

… in the centre of gravity for global trade

Intra<->Asia Trade32% of total trade (2015)CAGR 7.4% *)

Middle East-Africa<->Asia9% of total trade (2015)CAGR 7.6% *)

Latin America<->Asia5% of total trade (2015)CAGR 11.2% *)

More than 40% of global trade expected to originate from three triangles of trade around Asia by 2015

Example: Air Cargo & Containerized

Ocean Freight


Clear market leadership in Asian TDI

No. 1 in air freight, No. 2 in ocean freight

Market leader in contract logistics in Asia

Revenue 20111): EUR 11.4bn



DHL Asia: A strong contributor to the Group

1) External revenue = revenue generated by the divisions from non-Group third parties; 2) incl. DHL Freight

Asia Pacific

Others

30%

Others

Asia Pacific

26%

Others

Asia Pacific9%

Asia Pacific

Others

19%Revenue 20111)2): EUR 38.9bn


Source: DHL, “DHL Business Strategy in China” (ICFAI Center for Management Research, 2004)

We are pioneers in Asia, continuously expanding operations

19801980 19901990 20002000 20052005 20102010

DHL established presence in China through Int’l Express

DHL expanded into global forwarding and contract logistics segments

DHL established presence in dom. transportation services

Future Investments

NOT EXHAUSTIVE

1986DHL established JV with Sinotrans

1998Danzas Z.F. Freight Agency Co. established as a JV

2002DHL acquires stake in Air Hong Kong

2005DHL inaugurates Oceania Hub at Sydney Airport

Today1980DHL entered China through an agency agreement with Sinotrans

2000Central Asia Hub (Hong Kong) begins operations

2004DHL acquires 68% stake in Blue Dart (India)

North Asia Hub,Shanghai(Express)

1991DHL Danzas Air & Ocean started from a representative office

2003DHL acquires stake in Sinotrans

2009DHL opens domestic transportation hub (supply chain) in Shanghai

2007DHL first int’l provider of dom. airfreight services in China

MegaHub,Hong Kong (Supply Chain)

New openings


Key growth levers in Asia

Improving connectivity, facilitating trade growth Next day delivered everywhere in EU

Intra-Asia andTrans-Pacific routes Following growth westward

North Asia Hub for EXPRESS in Shanghai

Early bird Overnight Europe from Pearl River Delta

Trans Pacific FlightsGoWest

DHL is the most reliable and fastest Express services provider in Asia


New projects in Asia in 20121) New openings in China

EXEMPLARY

Round-the-world-flight, linking Hong Kong, Los Angeles and Leipzig Mar. 2012

DHL Door-to-More direct distribution solution from Asia to Europe (Global Forwarding)Jun. 2012

Distribution center for Life Sciences & HealthcareJun. 2012

Mumbai

Continuously expanding in Asia

1) Multitude of other investment projects ongoing, for example upgrade and enhance capacity & capability of AFR/OFR/RFR/multimodal products/facilities in Mid-West China, furthermore upcoming launch of multi-national LCL gateway in Korea; 2) Shenzhen Qianhaiwan Free Trade Port Area

North Asia HubShanghai

Supply Chain MegaHub

Hong Kong

DHL Integrated Logistics Center

Shenzhen2)

July 2012

December 2012

Airfreight bonded facility expansion

Shanghai

New multi-user warehouse Jun. 2012

Jakarta

LCL global forwarding hubAug. 2012 (planned)

Korea

New International Service CenterMay 2012

Hong Kong

Direct flights from Hong Kong to Chengdu and Ho Chi Minh CityJune 2012

Hong Kong


China: Global hub and dynamic domestic market


Origin of Growth 2010 – 2025

Origin of Absolute GDP Growth

(EUR bn)

Real GDP Growth

(Indexed 2010 = 100%)

China

APAC w/o ChinaWorldNorth AmericaEurope

Source: Copyright © IHS Global Insight (Deutschland) GmbH, 2012

China will remain the engine of the global economy until 2025

300

250

200

150

02025202020152010

3,664

Europe

4,616

RoW

4,519

North America

4,408

APAC

9,719

5,103(China)


The China of tomorrow

China in 2025

• 5 million buildings– Half of the world’s buildings constructed until 2025

• 50,000 skyscrapers – The equivalent to constructing up to 10 New York cities

• 5 billion square meters of road will be paved– Today it’s only half of it and even less than in Germany

• China’s urban population increase by 350 m– More than the population of today’s United States

• 221 cities with more than one million people– Europe has 35 today

Source: McKinsey Global Institute “Preparing for China’s urban billion”, 2009


Logistics has a key role to play in China’s development

• Help accelerate the pace of innovation with intelligent logistics solutions

• Help international players to be successful in China and support Chinese „heroes“ in their quest for internationalization

• Support shift to environmentally conscious business practices with green logistics solutions

• Help China integrate stronger with the global economy by facilitating international and domestic trade flows

As China continues on a path of globalization, logistics has a key role to play:

• Offer efficient logistics solutions as key enabler of growth


DHL Express in China: First foreign express company to enter China in 1980

(DHL – Sinotrans)

Key strategic growth levers

Emerging industries: Consumer electronics, Automotive, Healthcare, Engineering & Manufacturing, Fashion

Specific Initiatives:Growth initiatives targeted at specific industry sub-segments at city or provincial level, e.g. Wedding Gowns from Suzhou

High Potential Regions:Southwest (Chengdu & Chongqing), central cities (Wuhan & Zhengzhou, Northeast Region (Dalian, Qingdao, Jilin, Shenyang)

• >30 years of experience in China• Covering >400 cities in China• >110,000 customers• Appr. 6,000 employees• >30% market share in time definite

international


DHL Global Forwarding in China: No. 1 Freight Forwarder in the market


Expand customer portfolio:From global multi-nationals to fast-growing enterprises and local small- and medium-sized enterprises

Deliver operational excellence:Enhance exception management and complaint handling through one-touch initiative

Continuous sector development:Maintain strength in Hi-Tech and further expand into Fashion & Luxury, Automotive, Life Sciences, Energy, Retail and Engineering & Manufacturing

• First foreign logistics company to enter China domestic airfreight market

• >35,000 customers• Around 3,000 employees• Appr. 400,000 sqm of warehouse

space


DHL Supply Chain in China: Integrated logistics solutions for key industries


Focus on operational excellence and qualityContinuous investment in IT applications and warehouse footprint

Talent & people developmentConsultative selling and key account management

Sector-focused business developmentLeverage on global solutions with adaptation to local requirements• >25 years experience with domestic

transportation and distribution in China

• >4,000 employees• Around 200 customers • >600,000 sqm of warehouse and

cross docking space 1)

1) including Hong Kong and Taiwan


Recent investment: New North Asia Hub in Shanghai

• First-class Express hub

• Part of multi-hub strategy in Asia Pacific

• Investment of US$ 175m

• New capacity, greater flexibility and reliability for guaranteed time-definite delivery

HubsRegional HubsCommercial Air Hubs

BangkokBangaloreSingapore

Delhi

Beijing Seoul

TaipeiManila

SydneyAuckland

North Asia Hub Shanghai

Central Asia Hub Hongkong

Regional Express Hubs in Asia Pacific

North Asia Hub Shanghai at Pudong International (PVG)

Opening ceremony: 12 July 2012


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3

4

5

Outlook for Logistics Service Providers in China

There is enormous potential for logistics services in China. But some key challenges remain:

Economy still growing faster than China’s logistics infrastructure

Reliable policy framework for logistics

Market fragmentation

Stringent regulations for licensing, transport, customs

Strong demand for talent


Our DHL strategy in a nutshell: Continuously increasing our strength in China and beyond

The new North Asia Hub in Express is an important milestone, strengthening our leading position in the region substantially.

We continue expanding our presence in China by investing in infrastructure, service excellence and sector management.

DHL is a pioneer in China and leading logistics provider in the market (e.g. 40% market share in international express).

The importance of China and its growth potential is huge (>25% of global GDP growth between 2010 and 2015).

DHL Asia Pacific and China Strategy

Frank Appel Shanghai, 11 July 2012

Documents

1 Grow Asia China Strategy Frank Appel 11072012