Rotterdam, 13 Jun 2018Andreas Mrozek,

Operational Value Creation - a Carrier's View

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Agenda

Hamburg Süd - Latest Developments

Value Creation - Challenges

Value Creation - Proposals

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*Combining the best of both worlds in operations to deliver the best of both worlds

Best of both worlds for your supply chain

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Commercial

Operational*

Commercial independence for both brands to guarantee the best choice for you

Synergies are expected over time in following operational areas:� Network� Procurement� Equipment� Terminals

Customer

Customer

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The Hamburg Süd customer process remains red

Unchanged local Hamburg Süd process Integrated approach with Hamburg Süd Input Change of current process

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Europe / Mediterranean – South America / Central America / North America

Europe – Mediterranean / Inner Med / Middle East / Pakistan / India

Mediterranean – North America / Central America

Europe – Central America / New Zealand / Australia

North America / Central America / Caribbean – South America

Intra South America

North America – New Zealand / Australia / Pacific Islands

East West Services

Asia – South Africa / South America

Intra Asia

Asia – Central America / North America / South America

Asia – India / Pakistan / Middle East

Asia – Australia / New Zealand

Liner shipping - a global service structure

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Development of Hamburg Süd Carryings 2000-2017(in kTEU)

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+11%

2017

4.686

2016

4.395

2015

4.101

2014

3.375

2013

3.299

2012

3.265

2011

3.125

2010

2.871

2009

2.330

2008

2.669

2007

2.143

2006

1.839

2005

1.525

2004

1.386

2003

1.115

2002

774

2001

752

2000

760

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Agenda

Hamburg Süd - Latest Developments

Value Creation - Challenges

Value Creation - Proposals

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Value creation in container transport – carrier view

What do we all want? A smooth and reliable global c ontainer transport chain. Are we there? Not really….Why is it so hard to make it work?

1. Bottlenecks, bottlenecks, bottlenecks

2. Matching expectation with reality

3. Limited coordination and cooperation (also data- & IT- related)

4. Yes, the weather (and other not reliably predictable impacts on operation)

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� In many network- critical terminals productivity improvement falls short of growth

� As a result: Congestion

� Terminals lacking capability to ‘boost’ productivity, if required in peaks

� Disparency of the optimum productivity from Carrier‘s point of viewVersus Terminal‘s point of view and adequate means to find an overall‚right‘ solution with fair pricing

� Adherence to berthing windows vs. first come, first served

Bottleneck: Terminal productivity development

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1

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Crane productivity development 2015-2017 (indexed)

Bottleneck: Productivity development

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1

HSD total

Europe

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� HSD terminals with general good utilization.

� Not easy to move or get new berthing windows

� High terminal utilization = low vessel productivity?

75%?

Bottleneck: Terminal utilization

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0% Yard utilization 100%

Pro

duct

ivity

Tipping point

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� Significant congestion in globally vital ports: Shanghai, Moin, etc, plus several transhipment hubs

� Knock- on effects on many subsequent transhipment hubs and key ports

� Networks improved to become more efficient, offer better end-to-end products, are built with better buffer times and more realistic sailing speeds, but are also more vulnerable as they are more and more interconnected and massively impac-ted by a few ports with heavy congestion.

Bottleneck: Port congestion

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1

Ships at anchor of California in 2015Source: The Loadstar

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� Sometimes (over-) ambitious planning in conjunction with growth aspirations in the marketabsorbs capacity (too short berthing windows, too much volume, too many VSA partners, empty container movements are not factored in …. ‚it will find its way‘….)

� Commoditization of transport – often low value perceived by customers (low price/costrequires high utilization, less and less money in the system, hope that a web-basedplatform provider will fix it)

Matching expectation with reality

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2

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� Ocean carriers use the same limited short side infrastructure (mainly ports & marine terminals) and congest themselves

� But, every Carrier ‚optimizes‘ his own network, at best jointly with his VSA partners oralliance partners. Improvements are done by little adjustments to reduce the pain, but not by overall optimization of the global network

� Each transport company/shipping line has a myriad of data interchanges to thousands ofcustomers, hundreds of ,marine terminals, inland terminals, transporting companies, VSA partners in more than a hundred countries

� Due to the complexity of international trade, the high number of partners, vendors andcustomers as well as the rapid dynamics of change, IT departments are consistentlyoverloaded

Limited coordination/ cooperation (also data/IT- related)

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3

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Weather impact and unpredictability

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4

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Agenda

Hamburg Süd - Latest Developments

Value Creation - Challenges

Value Creation - Proposals

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Productivity and efficiency enhancements

Improvement potential

� Better mutual understanding about improvement chances and limits

� Better and earlier information about expected move count (full/empty)

� Better understanding of network pressures

� No re-keying of existing information, but use of platforms and data interfaces

=> Work as one team together, not as two teams against each other

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Automation and increase of capacity

� Automation delivering constant/reliable productivity – is it also higher?

� High investment, possibly capacity decrease during transition period

� Not addressing some of the possible bottlenecks (# of equipment, management, systemsettings, external regulations,…)

� Next steps forward, AI automation?

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Source: Siemens AG

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Productivity and efficiency enhancements

Information Exchange via EDI

� No basic technological enhancement for 20 years

� Outdated in light of more modern technology

� But still requires rapid expansion to replace e-mail/pdf- lists/etc.

� Higher Frequency of information exchange

� Platforms (e.g. Xvela)?

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Opportunities

Trend: Digitilization and platforms

� Who is the platform and who is being ‘platformed’?

� Operating company?

� Owner of the data?

� Business model?

� Sufficient number of participants?

� Network of portals (ports, providers, Xvela, start-ups, carriers, forwarders, etc.)

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Value creation – the relevant details

� A reliable transport chain has to overcome increasing bottlenecks by closer cooperation, data science, predictive analytics and a role change of the supply chain partners

� Solutions for bottlenecks to be found

� Better transparency in the supply chain (existing data versus AIS). Focus: forward-looking, higher perceived value

� Share data, but first define future business model of supply chain partners

� Re-introduce (global) standardization (also related to codes and IT)

� Discuss an adquate funding of the value chain

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Integration of operations

� Global Integrator of logistics andtransport

� Services along the supply chain in onehand

� One set of data and systems with lesshandover points

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Source: Maersk Line

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