Two employees in Sweden have received the first European Innovation Award from DB Schenker Logistics for a game they developed aimed at combating everyday discrimination. Second place was awarded to a marketing toolbox, and a special electronic document management system for freight forwarding came in third. A panel of judges composed of managers from DB Schenker selected the winners by secret ballot out of the final top ten award-worthy entries. Employees from over 30 European national companies took part in the competition, which was launched by the Land Transport division. Twenty-eight innovations were nominated, some by customers, and the top ten were selected for the final round.

"As part of our innovation management activities, we were looking for ideas that further strengthen our network and can be applied to other areas as well," explained Karl Nutzinger, Member of the Board of Management of Schenker AG responsible for Land Transport, in his speech at the award ceremony at the Zeche Zollverein in Essen. "Many of the ideas developed at DB Schenker are now the industry standard. We target innovations which allow us to stand out from the competition and also benefit our customers. At the same time, we want to show that sensible changes to our network processes are an important part of our corporate culture."

The Innovation Award was introduced last year by the European management team as a new element of innovation management. Ulla Ahrlin and Yvonne Prokopek came up with the idea of playfully drawing attention to everyday discrimination at work. Their idea, for which they were awarded EUR 15,000, has already been implemented at DB Schenker Logistics’ Swedish national company. Thorsten Meffert was awarded EUR 10,000 for his marketing toolbox, which is already being used as a sales tool at the German organization. Radim Chval received an award of EUR 5,000 for the document management system he developed, which has been successfully utilized at the Austrian national company.

Executives from all over Europe took part in the presentation of the ten best innovative ideas to evaluate how solutions that had proven themselves in other countries could be applied across Europe. The proposals submitted included telematics solutions for temperature-controlled transports and for monitoring swap bodies, as well as payment solutions for online purchases, the Raubox, which has already been given the European Packing Award, and a new trainee selection procedure.

“Although most of our businesses deliver good results and the Group’s net result is on a par with last year, we are not satisfied with the Group's operational performance for the first quarter. Earnings in shipping were weak due to the continued loss-making rates in the container and tanker markets. However, our efforts to increase container rates are paying off and we will continue our initiatives to improve rates throughout the year. We will also maintain a high level of costs for oil exploration and development of discoveries for production. We are confident that these investments will enable us to stop the decline in our oil production and then return to growth towards our target of 400,000 barrels per day,” says Group CEO Nils S. Andersen.

The Group delivered a profit of USD 1.2bn (USD 1.2bn) and a return on invested capital (ROIC) of 10.0% (11.7%) for Q1. Excluding divestment gains and one-off tax income from the settlement of an Algerian tax dispute, the Group recorded a zero profit (profit of USD 1.1bn) and a ROIC of 1.1% (11.2%). Cash flow from operating activities was USD 1.2bn (USD 2.3bn) and cash flow used for capital expenditure was negative by USD 0.9bn (negative by USD 1.2bn). The Group’s free cash flow was USD 0.3bn (USD 1.0bn) and net interest-bearing debt was USD 15.5bn (USD 15.3bn at 31 December 2011).
Total equity was USD 37.6bn (USD 36.2bn at 31 December 2011), positively affected by the profit for the period of USD 1.2bn.

Maersk Line lost USD 599m (profit of USD 424m) and ROIC was negative by 12.7% (positive by 10.0%) in Q1. Maersk Line’s volume increased by 18% and the average freight rate declined by 9% versus Q1 last year. Maersk Line announced a general rate increase on the Asia – Europe trades effective from March 2012, that was almost fully accepted, supported by a 9% reduction in capacity. Most of the capacity withdrawal came from a reduction of the average speed. Maersk Line’s introduction of the Daily Maersk has changed the industry standard, leading other liners to consolidate their services in three alliances. 85% of the volume on the Asia – North Europe trades is now handled by Maersk Line or the three alliances.

Maersk Oil’s profit for the period was USD 1.3bn (USD 0.5bn) and ROIC reached 76.5% (46.3%). A one-off tax income of USD 0.9bn from the settlement of an Algerian tax dispute and a gain from a partial divestment of interests in Brazil also had a positive effect on the result. The result was also positively affected by a higher average oil price of USD 119 per barrel (USD 105 per barrel) and negatively affected by a 24% decline in share of production to 254,000 barrels of oil equivalent per day (boepd) compared to 335,000 boepd in Q1 2011. Maersk Oil completed (three) exploration or appraisal wells in Q1 and exploration costs reached USD 299m (USD 141m).

APM Terminals' profit for the period was USD 235m (USD 141m) supported by after tax divestment gains of USD 73m from portfolio optimisation. ROIC increased to 18.1% (11.8%). Despite declining volumes in Europe, overall throughput increased by 10% driven by growth markets and new terminals. EBITDA margin declined to 22.7% (23.3%). APM Terminals took control of the operations in the Skandia Container Terminal in Gothenburg, Sweden, effective January 2012.

Maersk Drilling realised a profit of USD 125m (USD 122m) and a ROIC of 12.2% (12.9%). Several contracts were signed during the quarter, giving good earnings visibility for 2012 and 2013. Rig uptime remained high. Maersk Supply Service reported a profit of USD 42m (USD 43m) and a ROIC of 7.7% (7.7%), with spot market rates at the same level as in Q1 2011. Four long term contracts were signed for the Brazilian and African deepwater markets.

Outlook for 2012
The A.P. Moller - Maersk Group expects a result for 2012 slightly lower than the level reported in 2011 (USD 3.4bn). Cash flow used for capital expenditure is expected to be around the same level as in 2011 while cash flow from operating activities is expected to develop in line with the result.

Maersk Line expects a negative up to neutral result in 2012, based on the assumption that the rate restoration that has taken place since March 2012 will continue. The outlook is very sensitive towards changes in the market balance. Global demand for seaborne containers is expected to increase by 4-6% in 2012, with lower increases on the Asia – Europe trades but higher increases on the North – South trades.

Maersk Oil expects a result for 2012 at the same level as the result for 2011 (USD 2.1bn), impacted by compensation of USD 0.9bn from the settlement of a tax dispute in Algeria. The expected result is based on a share of production of 265,000 boepd at an average oil price of USD 110 per barrel. Exploration costs are expected to be above USD 1bn.

APM Terminals expects a result above 2011 and above market growth in volumes supported by portfolio expansion.

Maersk Drilling and Maersk Supply Service expect results in line with the 2011 results. The total result from all other activities is expected to be at the same level as in 2011 excluding divestment gains and impairments.

The outlook for 2012 is subject to considerable uncertainty, not least due to developments in the global economy. The Group’s expected result depends on a number of factors. Based on the expected earnings level and all other things equal, the sensitivities for four key value drivers are shown in the table below.

Schenker Khimji’s LLC, the joint venture that DB Schenker Logistics has established with long-time partner Khimji Ramdas Group in the Sultanate of Oman, has started operations with the beginning of May. The new company provides comprehensive solutions in the fields of air and ocean freight, land transport, contract logistics, supply chain management as well as event logistics.

Schenker Khimji’s L.L.C. offer customers a single point of contact within Oman for the global DB Schenker network for their logistics requirements and will connect their suppliers and customers around the world. Martin Hackl, so far the DB Schenker Logistics delegate in the country, took over the responsibility as Managing Director of the new company.

Peter Glatz, CEO of DB Schenker Region Near Middle East and Africa commented, “We see a big potential in Oman to become another hub in the Middle East. This market is growing steadily, with new ports and airports being established. This joint venture will enhance our strong position in the GCC region (Gulf Cooperation Council).”

The Chiba Prefecture Government has granted Kuehne + Nagel Japan the medical device manufacturing license (packaging, labeling and storage) for its logistics facility in Ichikawa. The new designation marks an important step in the company’s further development of industry specific solutions tailored to the needs of the pharmaceutical and healthcare industry in Japan.

The newly obtained license allows Kuehne + Nagel to perform activities within the manufacturing processes of medical devices prior to their distribution to the market. Specifically, Kuehne + Nagel can provide three main areas of services, namely the packaging, labeling and storing of medical devices. As part of the licensing requirements, Kuehne + Nagel has also appointed a dedicated on-site technical specialist for medical device manufacturing at its logistics facility in Ichikawa.

With the processes managed by Kuehne + Nagel, customers can take advantage of streamlined supply chain operations resulting from the centralisation of logistics processes in Kuehne + Nagel’s facility, in full compliance with the latest quality management standards.

“The license is a huge step forward for Kuehne + Nagel to expand its position as a leading logistics provider to the pharmaceutical and healthcare industry,” commented Tadhg Meaney, President of Kuehne + Nagel Japan. “Kuehne + Nagel takes pro-active measures in meeting the ever-changing requirements of this industry, and the latest achievement demonstrates our dedication to support our customers to optimise their supply chains.”

DHL Global Forwarding bundles air freight activities under one roof at Brucargo West with a total ground territory of 54,000 m².

DHL Global Forwarding, the air and ocean freight specialist within Deutsche Post-DHL Group starts building a new logistics center at Brucargo. With a total ground territory of 54,000 m² with 23,000 m² warehouse space, this facility unites DHL Global Forwarding Belgium's air freight activities under one roof at Brucargo West. DHL Global Forwarding has been based in Brucargo since the cargo area was developed in 1980. This 27 million euro investment shows the decision to settle in the Brussels Airport freight area was the right one.

"DHL Global Forwarding's choice for Brucargo strengthens the status of the cargo area and Brussels Airport as a key employment platform in Belgium. Brussels Airport is our country's second economic driver, providing 20,000 direct and 40,000 indirect jobs. Through this 27 million euro investment in this new logistics platform, DHL Global Forwarding is reinforcing our strategy to focus on the specific logistics needs of our various key industry sectors", says Jean-Claude Delen, CEO DHL Global Forwarding BeNeLux & France.

Unique geographic location
Meeting the most stringent air freight safety requirements and complying with the TAPA standards, the new 'state-of-the-art' logistics center will be ideally situated in this strategically important region, providing the best infrastructure for DHL Global Forwarding's air freight activities. The new building provides dedicated areas such as a 1,750m² temperature-controlled area with the highest GDP standards to meet the needs of our life science customers and customers with other particular requirements. In respect to Deutsche Post DHL's GoGreen environmental protection program, this investment represents a green investment for DHL Global Forwarding, involving the deployment of environmental technologies including solar panels installations and water recovery systems.

Arnaud Feist, CEO Brussels Airport says: "We are very pleased that a key partner such as DHL Global Forwarding did choose again for Brucargo and Brussels Airport. The extensive freight capacity available on our many long-haul passenger and freight flights with Brucargo's unique geographic location are definitely key assets. Today Brucargo houses many important players in the air freight chain including forwarders, road transport companies, handling firms and airlines alongside central and operational services, such as the customs authorities and the Federal Agency for the Safety of the Food Chain. The new direct connection between the E19 high way and Brucargo with its own access and exit system, is crucial for stakeholders such as DHL Global Forwarding seen the intensity of the traffic flows. DHL Global Forwarding's continued presence brings a significant added value."