Panalpina Annual Report 2006

12 Panalpina Annual Report 2006
Report of the Executive Board
Business year 2006: Further significant
increase of results
The Company increased its gross revenue by 12.3% and its net
forwarding revenue by 11.3% to CHF 7,735 million, achieved by pure
organic growth and reflecting the positive economic trend for the
forwarding and logistics industry. Net earnings improved by 52.5%
to CHF 183.5 million.
Overview of the Group
and its business
Panalpina is one of the world’s leading providers
of forwarding and related logistics services, specializing
in intercontinental air freight and ocean
freight and associated supply chain management
solutions. Panalpina believes that it is the market
leader in the provision of freight forwarding services
for the oil and gas industry globally and that it also
maintains leading expertise and capabilities in
the forwarding markets for the automotive, hi­tech,
retail and fashion, and healthcare sectors.
Through some 500 offices in 90 countries (representing
over 90% of the global GDP), and additional
representation in 60 countries with partner companies,
the Group operates one of the largest
networks in air and ocean freight forwarding globally.
As a Group, Panalpina utilizes its global network,
best­in­class technology systems, well­tried
relationships with transportation providers and
complementary logistics services to assist over
100,000 customers with the management of their
global supply chains. The Group serves a large
and diverse base of global and SME (small and
mid­sized enterprises) customers, many of which
operate in industries that the Group believes will
experience above­average growth.
The Group is primarily organized by regions, and
the secondary segmentation is based on its core
activities. The risks and returns of the Group’s operations
are primarily determined by the geographical
location of the Group’s operations. This is
reflected by the Group’s management and organizational
structure.
In 2006, the Group generated 57.1% of its net
forwarding revenues in Europe /Africa / Middle
East / CIS, 22.0% in North America, 12.2% in Asia /
Pacific and 8.7% in Central and South America.
The Group has a particularly strong presence
in the major Asia – Europe – Asia and transatlantic
trade lanes.
The Group’s principal sources of revenue are from
air and ocean freight forwarding and supply chain
management services. In 2006 the Group derived
48.0% of its revenues from air freight forwarding,
36.5% from ocean freight forwarding, and 15.5%
from associated supply chain management services.
Strategic business priorities
Based on its primary strategic focus as a pure­play
global air and ocean freight forwarder, the Group is:
Leveraging continuing growth in Asian trade flows
The Asia – Europe – Asia trade lane represents
the Group’s most important market, and its share
of the volumes transported on this lane is significantly
higher in both air and ocean freight than its
respective average global market shares. The Group
intends to capitalize on its strong presence in Asia,
where demand for transportation is expected
to grow faster than in other regions of the world.
The liberalization of trade services in China paved
the way for the Group to obtain the license for
a wholly owned enterprise in Shanghai in 2004.
All preparations are finalized for the establishment
of further fully owned branches which are due
to replace the current sales representations.
Further strengthening specialist capabilities
in selected target industries
The Group will further strengthen the industryspecific
competence centers it has established in
order to provide tailor­made services to the oil
and gas, automotive, hi­tech, retail and fashion, and
healthcare industries and to create new competence
centers. These industry verticals are offering
promising growth and require industry­specific
transportation services.