Panalpina Annual Report 2015

Transcription

Annual Report
2015
CONTENTS
Introduction
03
The year in brief
04
Panalpina at a glance
05
Letter to the shareholders
09
Facts and figures
13
Information for investors
15
Group report
17
Case study – Charter Network
18
Value creation and business model
20
Performance by product
22
Performance by region
30
Case study – Perishables
38
Industry know-how
40
Innovation
46
Information technology
47
Our people
48
Quality, health and
safety performance
50
Environmental performance
54
Group financial performance
58
Investments
63
Corporate governance
64
Compensation report
74
49° 29’ N, 0° 6’ E / 13:00 CET
Le Havre, France: Containers being unloaded from Singapore
panalpina.com
3
INTRODUCTION
End-to-end
solutions
The Panalpina Group is one of the world’s leading providers
of supply chain solutions. We combine our core products of
Air Freight, Ocean Freight, Logistics and Energy Solutions to
deliver globally integrated, tailor-made solutions to our customers.
Drawing on in-depth industry know-how and customized
IT systems, we manage the needs of our customers’ supply
chains, no matter how demanding they might be.
Panalpina has a truly global footprint that offers one of the
broadest networks in the industry. With over 15,000 professionals
in more than 75 countries, we provide end-to-end solutions
to a wide range of industries.
FINANCIAL HIGHLIGHTS
OPERATIONAL HIGHLIGHTS
Profit
Million CHF
Charter Network
celebrates 25 years
EBIT
Million CHF
Read more on page 18
2015
88
2015
117
2014
87
2014
117
2013 12
-72
2012
-40
2011
-120
-80
-40
0
New Logistics Manufacturing
Services center goes live
in Panama
2013 48
2012
127
40
80
120
EBIDTA
Million CHF
2011
-80
-40
0
174
40
80
120
160
Panalpina agrees
to acquire Airflo
Net forwarding revenue
Million CHF
2015
168
2014
2015
174
2013
120
2012 34
2011
0
212
40
80
120
160
200
240
5,855
2014
6,707
2013
6,758
2012
6,617
2011
6,500
0
1,250 2,500 3,750 5,000 6,250 7,500
New offices open in Africa
Read more on pages 36 and 63
The year
in brief
panalpina.com
4
CONTENTS
Panalpina at a glance
05
Letter to the shareholders
09
Facts and figures
13
Information for investors
15
panalpina.com
PANALPINA AT A GLANCE
A balanced and
diversified business
OUR PRODUCTS AND SERVICES
Air Freight
From paperless flights to temperaturecontrolled shipments, our experts deliver
tailored transport services, worldwide
and end-to-end.
Ocean Freight
Panalpina is one of the world's largest
providers of ocean freight services and
is present in all major cities and ports.
836
thousand tons of air freight forwarded
1,594
thousand TEUs of ocean freight forwarded
Energy Solutions
Logistics
We create more value for our customers’
supply chains through our integrated planning
tools and Logistics Manufacturing Services.
We offer integrated turnkey project logistics
and forwarding management services to
oil and gas customers and various other
industries on a global scale.
300+
90
by product Million CHF
Gross profit by product
Million CHF
lean certifications from Cardiff University
3
locations focused on Energy Solutions
1
1
3
2
1. Air Freight 2,646
2. Ocean Freight 2,587
3. Logistics 623
2
1. Air Freight 584
2. Ocean Freight 480
3. Logistics 409
5
panalpina.com
6
PANALPINA AT A GLANCE CONTINUED
We focus on
ten core industries
OUR INDUSTRIES
Automotive
The automotive industry’s
complex supply systems
pose a particular challenge
and require expertise in
information design, process
planning and operations
efficiency. Delivery of
components from numerous
companies in different
countries must be carefully
coordinated to ensure
a smooth manufacturing
and assembly process.
Chemicals
In today’s competitive
business environment, the
chemical goods supply chain
has become more complex,
leading to increased logistics
and transport spending
due to rising labor costs,
tightening security controls
and environmental aspects.
Consumer
and Retail
Today the supply
chain environment and
consequently the consumer
and retail industry are facing
different challenges than
in the past. Sourcing has
become global, distances
longer and the economy
more fragile. Furthermore,
the industry is characterized
by increasingly demanding
and informed consumers.
Energy
We offer integrated
turnkey project logistics
and forwarding management
services to Oil and Gas
customers and various other
industries on a global scale.
We develop transportation
solutions that are tailor-made
for each project and allow
fast and secure shipment.
Fashion
Healthcare
Hi-Tech
The fashion industry has
sophisticated and demanding
consumers who require
multi-channel offering, brand
experience, personalization
and increased product
differentiation. This leads
to shorter product life and
increased need for innovation,
flexibility and improvements
in order fulfillment.
We offer end-to-end visibility
and pro-active temperature
monitoring and control to
support the pharmaceutical
industry including temperature
controlled packaging
solution, GDP validated
processes with reliable
transportation within our
Charter Network and Supply
Chain Optimization (SCO).
The hi-tech industry requires
fast and reliable logistics
chains that link the industry’s
key production sites with
distribution channels
throughout the world. We
provide services to the
semi-conductor, computer
and electronics industries,
alongside electronic
manufacturing services.
Perishables
In an industry with demanding
consumers who require a
full range of products all
year round, success relies
on a logistics provider
that can ensure optimized
management of products
all along the cool chain.
Telecom
The growing importance
of mobile high-bandwidth
services – being connected
anytime and anywhere,
video communication, as
well as media-driven entertainment – has stimulated
and will continue to drive
significant investments in
wireless telecommunications
infrastructures.
Manufacturing
In today’s constantly evolving
manufacturing landscape,
enhanced demand variability
challenges manufacturers
to increasingly streamline
their processes in order
to remain competitive and
drive business growth.
We keep the customer
at center stage through
regular strategic engagement,
round-table discussions
and workshops, enabling
us to develop industryspecific solutions.
panalpina.com
A connected
global presence
We operate a global network with some
500 offices in more than 75 countries,
and work with partner companies in a
further 90 countries. Panalpina employs
15,000 people worldwide who deliver
a comprehensive service to the highest
quality standards – wherever and whenever.
HIGHLIGHTS OF THE YEAR
Expanded Charter Network
New service is added between Huntsville,
US and São Paulo, Brazil; service
is expanded between Luxembourg
and Shanghai.
New chemical
competency center
New centers for Logistics
Manufacturing Services (LMS)
A specialized center in Houston,
US offers expertise in supply chain
management and hazardous materials
handling for the US market.
New LMS centers in Panama and Dubai
handle assembly, testing, repair and
return of telecommunications equipment.
Acquisition of Airflo
UNICEF relief flight to Burundi
Afifi acquisition
Panalpina agrees to acquire a majority
share in Airflo, a freight forwarder for
flowers and vegetables with offices in
Kenya and the Netherlands.
Panalpina charters and donates a
flight to UNICEF with medical care
goods and hospital equipment for
Bujumbura, Burundi.
Panalpina acquires Afifi, its 20-year
Egyptian partner with offices in Cairo,
Alexandria and Suez.
Read more at newsroom.panalpina.com
7
panalpina.com
Gross profit by region
2015
4
8
1
3
2
75+ 500 15,000
countries
offices worldwide
people worldwide
1. Europe 37%
2. Americas 30%
3. APAC 24%
4. MEAC 9%
Head office: Basel, Switzerland
417 employees
EUROPE
2,339m NFR
4,779
AMERICAS
MEAC
ASIA PACIFIC
1,922m NFR
4,763
395m NFR
1,604
1,199m NFR
3,777
NFR : Net forwarding revenue (CHF)
: Full-time equivalent employees
Partnership with Spread Logistics
Panalpina partners with Hong Kong
company Spread Logistics to
manage failure analysis and return
of consumer electronics.
New offices in Myanmar,
Kenya and Morocco
New offices in Myanmar, Kenya and
Morocco offer air and ocean freight
services in these expanding economies.
Research partnership
Panalpina partners with Cardiff University
to explore 3D printing solutions.
panalpina.com
9
CHAIRMAN’S LETTER TO OUR SHAREHOLDERS
A robust and
focused company
Dear Shareholders,
Since Panalpina became an independently
listed company on the Swiss stock market
in 2005, it has changed significantly
and is now a sturdier company: it has
become more focused on developing a
differentiated portfolio of services and the
vital competencies that are crucial for future
growth. I have enjoyed being part of the
leadership team that has contributed to
Panalpina being the robust and stable
company it is today.
The company’s financial
position remains strong and
the Board is confident that
Panalpina is well positioned
to successfully execute
on its strategy and deliver
long-term value.
Rudolf W. Hug
Chairman of the Board of Directors
3.5
3.1%
CHF
dividend payment per share
dividend yield
(based on 2015 year-end share price)
At the 2016 General Assembly and after
eleven years on the Board, including nine
years as Chairman, I will not stand for
re-election in accordance with the age
limitation in the company’s bylaws. It has
been a great privilege to lead Panalpina
since 2007 and to help steer the company
through the challenges of a more complex
business environment, intensified regulatory
legislation and an increasingly volatile
macroeconomic environment.
Panalpina has weathered many storms in
its long history and the economic situation
during 2015 was no exception. The
company’s financial position remains strong
and the Board is confident that Panalpina
is well positioned to successfully execute
on its strategy and deliver long-term value.
Dividend payment
welcomed two new Board members:
Thomas E. Kern, a Swiss national,
and Pamela Knapp, a German citizen.
Together they bring decades of experience
in managing international businesses.
This year saw a number of changes to
the Executive Board: we welcomed Andy
Weber to the position of Chief Operating
Officer and Ralf Morawietz to the position
of Chief Information Officer. Andy and Ralf
bring a wealth of industry experience and
expertise that will provide fresh perspectives
to the leadership team.
Looking to the future
I am delighted that Peter Ulber has been
proposed as Panalpina’s new Chairman.
His extensive knowledge of the industry
makes him a excellent choice and reflects
the company’s commitment to long-term
succession planning. I wish him every
success in this role.
It has been a pleasure and an honor to
serve as Panalpina’s Chairman, and I
would like to thank you for the trust you
have placed in me. I leave the company
with tremendous optimism for the future,
knowing that Panalpina will be in good
hands under the leadership of our
proposed new Chairman, Peter Ulber,
and our CEO designate, Stefan Karlen, to
deliver sustained value for all stakeholders.
Based on the results of fiscal year 2015,
the Board of Directors is going to propose
a dividend payment of 3.5 CHF per share
to the Annual General Meeting on May 10,
2016. This is equivalent to a dividend yield
of 3.1 percent (based on the 2015 year-end
share price).
Once more, I would like to thank our
employees for the outstanding work they
do every day, my fellow board members
for their commitment, our customers
and suppliers for their loyalty, and our
shareholders for their continued
confidence and trust.
Changes to the management
I look forward to seeing you at the
Annual General Meeting.
We announced a number of changes to
the Board in 2015. We said good-bye to
Hans-Peter Strodel, who after five years
as Board member took his retirement.
On behalf of the Board, I would like to
thank him for his significant contributions
and wish him well for the future. We also
Basel, Switzerland, March 2016
Rudolf W. Hug
Chairman of the Board of Directors
panalpina.com
10
CHIEF EXECUTIVE OFFICER’S LETTER TO OUR SHAREHOLDERS
Demonstrating
resilience and stability
Our strategy and priorities for 2016 are
clear: to focus on opportunities that will drive
growth organically, by way of acquisitions
and through innovation, and to continue to
improve productivity and optimize costs
across all businesses and geographies.
Peter Ulber
Chief Executive Officer
88.2
M CHF
Consolidated profit improved by 1%
Currency adjusted: improved by 16.3%
117.2M CHF
EBIT improved by 1%
Currency adjusted: improved by 15.0%
Dear Shareholders,
Panalpina delivered stable profits
throughout 2015 despite a difficult market
environment and significant incremental
investments in IT. Consolidated profit
and EBIT improved slightly. Adjusting for
currency, this represents an increase of
16.3 percent and 15.0 percent respectively
over 2014. However, Air Freight volumes
contracted by 2.5 percent, while Ocean
Freight volumes contracted by 0.8 percent.
Logistics recorded its fourth positive
consecutive quarter in 2015.
These stable results demonstrate our
resilience and ability to execute Panalpina’s
strategy centered on providing end-to-end,
value-added services tailored to the specific
needs of its customers. During the year
the company expanded its Air and Ocean
Freight services, opened new centers for
Logistics Manufacturing Services (LMS)
and expanded into new countries and
markets. In addition, our disciplined
approach to working capital and
productivity improvements allowed us
to optimize costs and to generate solid
free cash flow.
Macroeconomic environment
As expected, the macroeconomic
environment in 2015 was marked by
several key factors that put significant
pressure on our margins. The Swiss
National Bank’s decision in January led
to an immediate strengthening of the
Swiss franc and significantly impacted
our profits. Likewise, the headwind
from countries with slowing economies
continued to have an effect throughout
the year.
The record-low oil and gas prices heavily
impacted the energy sector. Neither
Panalpina nor its customers were spared
the effects, which lead to fewer investments
and projects being either postponed
or cancelled. The extremely soft market
in both ocean freight and air freight,
combined with increased rate volatility,
led to intensified speculation in the market
and further exacerbated the situation.
In addition, this year was marked with
a consolidation of the industry by both
competition and carriers, while new
competitors continued to enter the market.
panalpina.com
CHIEF EXECUTIVE OFFICER’S LETTER TO OUR SHAREHOLDERS CONTINUED
Highlights of 2015
During the year we continued to extend
our footprint in emerging markets with
the acquisition of our long-term agent in
Egypt and the opening of a new office in
Myanmar. The opening of new offices in
Kenya and Morocco, announced in 2014,
was completed in 2015.
We saw an important expansion of
our value-added logistics services with
several large and important contracts for
Logistics Manufacturing Services (LMS),
reverse logistics and advanced inventory
forecasting in locations such as Panama,
Dubai and Hong Kong.
We strengthened our focus on the
perishables industry with the acquisition
of Airflo, a specialized forwarder of freshly
cut flowers and plants with offices in Kenya
and the Netherlands. New competency
centers were created in Norway, the UK
and the Netherlands to complement our
existing expertise in Chile, Columbia,
Ecuador, Mexico and Peru. Perishables is a
fast-growing sector with excellent potential
for both Air and Ocean Freight and we plan
to expand further in this industry over the
coming years.
A special event in 2015 was the celebration
of 25 years of our unique Charter Network.
This service began in 1990 with the first
scheduled cargo-only flight between
Europe and the US and now represents
one of the world’s key air cargo routes.
We added a new service to Brazil and
expanded our service to Shanghai in
2015, and today Panalpina operates over
1,000 scheduled and ad hoc charters
a year all over the world.
None of these accomplishments would
have been possible without our people
all over the world who are absolutely
committed to serving our customers and
are often the difference between Panalpina
and our competitors. Our customers have
increasingly relied on us to solve their most
difficult supply chain challenges and the
following pages of the annual report provide
a glimpse of several such examples.
The services we have developed
and the productivity improvements
we have implemented position us
well for future growth, and I see great
opportunities ahead to build continued
success for our business.
Peter Ulber
11
panalpina.com
12
CHIEF EXECUTIVE OFFICER’S LETTER TO OUR SHAREHOLDERS CONTINUED
Operations Transformation Program
In 2015, we reached an important
milestone in the implementation of our
ambitious global Operations Transformation
Program (OTP). In December, Singapore
and Switzerland were the first two countries
to go live with the latest version of SAP TM.
Although this was later than originally
planned, we first wanted to ensure that we
based the new system on top of efficient
structures and processes. This meant
undertaking several additional months
of testing, system set-up and training to
properly prepare for the SAP TM go-live.
More countries are planned for the
second half of 2016. We know this will
be a complex undertaking, and we are
confident that this new platform is the
foundation for future sustainable growth.
Modern IT systems are crucial to gaining
cost leadership, and by simplifying and
strengthening our systems we will build
the resilience needed to better respond
to the new developments as they arise.
Priorities for 2016
Amid continued market uncertainty, our
strategy and priorities for 2016 are clear:
to focus on opportunities that will drive
growth organically, by way of acquisitions
and through innovation, and to continue
to improve productivity and optimize costs
across all businesses and geographies.
OTP will remain a major component of
this strategy.
In order to drive growth, we recently set up
an Innovation Board to explore new ways of
doing business and look for opportunities
to add value for our customers in the future
by gathering and recognizing ideas from
within Panalpina; and by collaborating with
universities, customers and partners. By
acting as an enabler we can offer new,
innovative services such as Demand Driven
Inventory Dispositioning (D2ID), and further
develop services such as LMS that will
bring us even closer to our customer’s
supply chains.
Likewise we plan to continue the expansion
of our Charter Network, offer additional
Managed Solutions in Ocean Freight, and
increase our presence in industries such
as chemicals, healthcare and perishables.
We operate in a global environment that
will continue to undergo significant change.
The services we have developed and
the productivity improvements we have
implemented position us well for future
growth, and I see great opportunities ahead
to build long-term success for our business.
This year will be a year of management
transition: Dr Rudolf W. Hug will step
down as Chairman of the Board after more
than a decade of service to our company.
Dr Hug has been instrumental to the
growth and success of Panalpina, and
I wish to express my appreciation for
his vision and expertise in shaping our
company into the most customer-focused
and innovative global provider of freight
forwarding and logistics solutions.
I am honored to have been proposed to
succeed him as Chairman. I am also
delighted to hand over the operational
leadership of the company to the CEO
designate, Stefan Karlen, whose proven
track record will ensure the future
success of our company.
Basel, Switzerland, March 2016
Peter Ulber
In December, Singapore and
Switzerland were the first two
countries to go live with the
latest version of SAP TM.
panalpina.com
13
FACTS AND FIGURES
Key figures
5,855
1,474
117M CHF
88M CHF
M CHF
EBIT
2015
4
M CHF
Gross profit
Profit
Forwarding volumes in
Air Freight Thousand tons
1
2015
836
2014
858
2013
3
825
2012
2
1. Europe 37%
2. Americas 30%
3. APAC 24%
4. MEAC 9%
2015
801
2011
0
848
150
0
150
0
150
150
Forwarding volumes in
Ocean Freight Thousand TEU
1
2015
1,594
2014
3
1,607
2013
1,495
2012
2
1. Air Freight 39%
2. Ocean Freight 33%
3. Logistics 28%
1,388
2011
0
1,310
300
600
900
1,200 1,500 1,800
panalpina.com
14
FACTS AND FIGURES CONTINUED
Five-year
development
Million CHF
Gross profit
Million CHF
2015
5,855
2015
2014
6,707
2014
2013
6,758
2013
2012
6,617
2012
2011
6,500
2011
0
1,250 2,500 3,750 5,000 6,250 7,500
EBIDTA
Million CHF
1,465
1,477
1,000 1,150 1,300 1,450 1,600 1,750 1,900
168
2014
174
2013
120
-40
2011
80
120
117
160
200
2011
240
Profit
Million CHF
-80
-40
0
174
40
80
120
160
Total equity
Million CHF
-72
2015
88
2015
2014
87
2014
2013 12
2013
2012
2012
2011
-80
117
2014
2012
212
40
2015
2013 48
2012 34
-120
1,586
1,561
EBIT
Million CHF
2015
0
1,474
-40
0
127
40
80
120
653
733
709
743
2011
0
928
150
300
450
600
750
900
panalpina.com
15
INFORMATION FOR INVESTORS
Share price development
Panalpina’s business year and the performance of the share were shaped by the uncertainties
in the global economy. The price quoted decreased by 15.73 percent, from CHF 133.50 at the
last day of trading 2014 to CHF 112.50 on the last day of trading in the business year. The Swiss
Performance Index (SPI), which includes more than 200 companies, rose by 2.68 percent in the
same period, so Panalpina underperformed the index as a whole. The market capitalization at
the end of the year amounted to CHF 2,672 million.
Share price development in comparison to SPI
Mar 4
Full-year results
Apr 22
First-quarter results
Jul 23
Second-quarter results
Oct 20
Third-quarter results
115%
110%
105%
100%
95%
90%
85%
80%
75%
Dec 31
2014
Mar 1
May 1
Jul 1
Panalpina World Transport
Swiss Performance Index (SPI)
Share information
Share Symbol
PWTN
Reuters
PWTN.S
Bloomberg
PWTN SW
Trading exchange
SIX Swiss Exchange
Fiscal year ends
December 31
Securities number
000216808
ISIN
CH0002168083
Share register
SIS Aktienregister AG, Olten, Switzerland
Number of registered shares
23,750,000
Sep 1
Nov 1
Dec 31
2015
panalpina.com
16
INFORMATION FOR INVESTORS CONTINUED
Share price development*
2011
2012
2013
2014
2015
Last day of trading previous year
CHF
118.06
94.25
92.85
149.50
133.5
High
CHF
128.94
107.28
151.80
154.20
146.9
Low
CHF
71.87
77.30
82.40
134.90
106.1
Last day of trading current year
CHF
94.25
92.85
149.50
133.50
112.5
Average trading volume
CHF
51,764
40,917
33,306
19,807
18,301
Total shareholder return
%
–20.2
2.7
63.2
–9.2
–13.7
million CHF
2,356
2, 205
3,551
3,171
2,672
CHF
5.34
-3.05
0.5
3.68
3.69
Market capitalization as per Dec 31
Earnings per share
* Restated due to the return of capital (CHF 1.90 per share) in 2012.
Ordinary gross dividend payments
2011
2012
2013
2014
2015
million CHF
47.0
47.3
52.2
65.3
83.1
Per share
CHF
2.00
2.00
2.20
2.75
3.5**
Return of capital per share
CHF
23,750,000
23,750,000
23,750,000
Amount
Outstanding shares as per Dec 31
1.9
25,000,000
** Proposal to the Annual General Meeting.
Financial calendar 2016
April 21
First-quarter results
May 10
Annual General Meeting
May 12
Dividend ex-date
May 17
Dividend payment day
July 20
Second-quarter results
October 25
Third-quarter results
23,750,000
Group report
panalpina.com
17
CONTENTS
Case study – Charter Network
18
Value creation and business model
20
Performance by product
22
Performance by region
30
Case study – Perishables
38
Industry know-how
40
Innovation
46
Information technology
47
Our people
48
Quality, health and
safety performance
50
Environmental performance
54
Group financial performance
58
Investments
63
panalpina.com
A controlled environment
from door to door
In 2015, Panalpina celebrated
the 25th anniversary of its
Charter Network. To this
day, Panalpina remains the
only major freight forwarder
to operate its own fully
integrated air freight service.
The network provides the flexibility, visibility and security
essential for delivering complex, special, critical and valuable
goods efficiently, on time and intact. Meanwhile, Panalpina’s
integrated control center manages the movement of
temperature-sensitive shipments end-to-end.
The Charter Network serves customers in a huge variety of
sectors, from oil and gas to pharmaceuticals and perishables,
and the annual number of charter flights now tops 1,000.
18
panalpina.com
CASE STUDY: Dependable delivery across the globe
A client needed to send 27 radiant outlet manifolds from
Britain to Canada – fast. The Canadian purchaser was doing
its routine, triennial factory shutdown, and if the cargo was late
the factory would have to wait three years for another chance
to install the manifolds. But the purchaser had also made
last-minute changes in the manufacturing process that delayed
production beyond the deadline for ocean container shipment.
With commercial flights into Canada few and far between, the
obvious but costly solution was to charter an Antonov An-124.
Instead, Panalpina proposed transporting the 90-ton shipment
in six separate flights utilizing the Group’s Charter Network.
The cargo was trucked from the UK to Luxembourg, flown to
Huntsville, then trucked to Saskatchewan, Canada – arriving
on time and under budget.
49° 37’ N, 6° 12’ E / 18:00 CET
Luxembourg: Cargo is loaded onto the Spirit of Panalpina
19
panalpina.com
VALUE CREATION AND BUSINESS MODEL
Centered on
the customer
We leverage our people, products and
expertise to develop innovative solutions
for our customers.
OUR ASSETS
OUR CUSTOMER VALUE
OUR SUSTAINABLE APPROACH
Our people
We provide end-to-end transportation
and logistics services to ensure goods
arrive at the right time and in the right place.
We take a long-term approach,
building the products and services
that will meet our customers' needs
both now and in the future.
The talent, dedication and insight of
our professionals enable us to meet
the needs of our customers every day.
Our global network
Our network of air, ocean and land-based
freight services spans the globe and we
serve our customers from 500 strategic
offices in over 75 countries.
Our industry expertise
We optimize supply chains for
our customers to increase speed and
efficiency, reduce inventory, and reduce
the environmental impact.
We provide sophisticated
supply chain analytics to enable
continuous improvement.
We specialize in multiple industry verticals
and understand their specific supply
chain issues.
We help our customers respond quickly
to market demand through last-minute
assembly of semi-knocked down goods.
Our IT systems
We enable a circular economy by
managing repairs, diagnostics and
return of goods.
We provide sophisticated IT platforms
that support our core business
processes and integrate with our
customers’ systems.
Our financial base
We rely on a solid financial foundation
and invest in products and services
that will grow the company.
We safeguard customer assets
during transportation to reduce the
risk of compromised shipments and
stolen goods.
We ensure visibility of cargoes
throughout their journey through
track and trace services.
We adapt our footprint to leverage
opportunities in growing economies
and industries.
Through innovation, we aim to
generate new products, business
models and processes that will
differentiate us from the competition,
increase our productivity and scale,
and boost both revenues and margins.
20
panalpina.com
21
VALUE CREATION AND BUSINESS MODEL CONTINUED
What we do
CO2 optimization
Supply chain
network design
Advanced analytics
Warranty
management
Inventory forecasting
and optimization
ENAB LE
Diagnostics
and repairs
Managed Solutions
Disposal
Supply chain
performance
management
Supply chain
network design
Local
sourcing and
procurement
Logistics
Manufacturing
Services (LMS)
Panalpina Charter Network
3D printing
Our customers
e-commerce
Distribution
Feeder service
Temperature
control services
FCL / LCL
Out-of-gauge and
capital projects
Semi- knocked
down assembly
Transport engineering
Transport planning
optimization
and optimi
Offshore
engineering
International air and
ocean transportation
By designing
tailored, end-to-end
solutions for our customers...
…we deliver sustainable
returns for our shareholders
panalpina.com
22
PERFORMANCE BY PRODUCT
Air Freight
Panalpina takes the lead
in e-freight
In October 2015, Panalpina
became the first global air
freight forwarder to handle
over half of its transactions
using electronic air waybills
(e-AWB). The International
Air Transport Association
has set ambitious goals for
the use of e-AWB and tracks
their usage throughout the
airline industry. Panalpina
works closely with business
partners and stations to
increase coverage and extend
the range of eligible flights
for paperless processing.
Market environment
Customer focus
For the air freight sector, 2015 was a
challenging year. The market contracted
by an estimated 1 percent while carrier
capacity continued to rise. The energy
sector remained depressed and low fuel
prices curtailed investment. In Brazil, the
economic situation decreased trade further,
with the automotive sector being especially
hard hit.
Panalpina celebrated the 25th anniversary
of its Charter Network with events in
Huntsville (US), Luxembourg, Mexico City
and Guadalajara (Mexico), and Stansted
(UK). As well as recognizing this unique
service, the events helped to reinforce
the relationships with over 140 customers
across many sectors, in particular
automotive, healthcare and perishables.
Asian markets remained broadly healthy,
however, and Vietnam in particular continued
to enjoy rapid growth. An artificial level of
volume was created both by the port strike
on the US West Coast, which led to a
conversion from ocean to air freight, and
by an automotive recall, which resulted in
contracts to fly airbags from Japan to the US.
During the year, Air Freight operations
received a series of awards recognizing the
quality of its services, including six awards
for Brazil Wings, the Lloyds Loading List
award for Airfreight Solutions Provider
of the Year, the Air Cargo News Global
Freight Forwarder of the Year 2015,
and “Best Partner” awards from two
telecommunications companies.
Highlights
The company continued to expand and
optimize its Charter Network, a distinctive
service with a comprehensive network of
gateways and preferred partners that
delivers end-to-end solutions. Under a
new long-term agreement with Atlas Air,
Panalpina switched one of its wet-leased
aircraft to more than 200 scheduled charters
per year. As part of this agreement, Panalpina
launched Brazil Wings, a full-freighter service
from Huntsville to São Paulo. This service
extends Dragon Wings and achieves a
record transit time from Hong Kong to
São Paulo of under 40 hours.
Panalpina increased the frequency of its
charter flights between Luxembourg and
Shanghai. Operated by Silk Way West
Airlines, the services are known as Panda
Star (between Luxembourg and Shanghai)
and Caspian Star (stop-over in Baku). The
Silk Way freighters are particularly well
suited to transport outsized oil and gas
equipment and temperature-sensitive
pharmaceuticals.
Looking forward
The market is likely to remain challenging
in 2016, with no significant rebound in the
energy sector. Air freight carrier capacity
is set to increase while demand remains
flat. However, Panalpina aims to boost
its market share by optimizing its Charter
Network still further and building volumes in
the perishables sector, which should lessen
the dependence on cyclical business. The
acquisition of Airflo, Kenya’s second largest
air freight forwarder specializing in the
export of flowers and vegetables, should
not only increase Panalpina’s perishables
tonnage but also ensure substantial
volumes on routes from Africa northbound.
panalpina.com
PERFORMANCE BY PRODUCT CONTINUED
Air Freight
Launch of Brazil Wings service
Panalpina continued to expand and
optimize its Charter Network. Under a
new long-term agreement with Atlas Air,
Panalpina launched Brazil Wings, a
full-freighter service from Huntsville to
São Paulo. This service extends Dragon
Wings and achieves a record transit time
from Hong Kong to São Paulo of under
40 hours.
23° 00’S / 47° 13’W
São Paulo, Brazil: Destination Viracopos airport
23
panalpina.com
Ocean Freight
Market environment
Customer focus
In 2015, the ocean freight market grew by an
estimated 1 percent, about half of what had
been expected. The increase in the number
and size of vessels meant that supply
outstripped demand, forcing down rates and
putting acute pressure on carriers’ margins
during the second half of the year. Carriers
struggled to maintain their market share,
and the increased rates resulted in severe
rate volatility.
Managed Solutions is a separate service
within Panalpina that works in close
partnership with customers to establish,
operate and optimize order and freight
management solutions.
Highlights
Despite these difficult conditions, Panalpina’s
skilled team of specialists with extensive
market knowledge and clearly defined
processes enabled the company to respond
to rate changes and to manage volatility
successfully. At the end of 2014, correctly
anticipating the turbulence that lay ahead,
Ocean Freight aligned its organization,
operations and pricing towards two
of its major trade lanes: westbound
(Asia to Europe) and eastbound (Asia to
the US). This enabled the company to
retain market share, avoid negative volume
growth, and significantly increase profitability
per unit in 2015.
During the year, the Ocean Freight
product offering further increased its
focus on perishables, achieving a boost
in volume that helped compensate for the
drop in volume across other trade lanes.
Currently the main perishables trade
lanes are from Latin America to the UK and
the Netherlands. The successful acquisition
of new customers in 2015, including market
leaders in the consumer and automotive
sectors, further strengthened Panalpina’s
standing in the market.
Managed Solutions continued its evolution
in 2015, transitioning from a focus on pure
volume development to a more strategic
approach in targeting customers where
Panalpina can deliver value to their
organization and enable higher gross
profit. With a focus on profitable growth,
the team re-evaluated its existing business
portfolio, turning its attention to up-selling
existing customers and streamlining the
customer base.
Panalpina offers close to 500 less than
container load (LCL) services throughout
its network and launched 20 additional
services in 2015, following the ongoing
expansion and optimization of services both
in terms of coverage and yield management.
The new services focus on key markets and
trade lanes, especially Asia outbound.
Looking forward
In this hostile environment the market is
likely to consolidate and the number of
carriers will probably decline sharply over
the next few years. The key challenge for
Panalpina will be maintaining growth
without compromising profitability. In 2016,
Ocean Freight will increase its emphasis on
customer segmentation and its preferred
carriers, and will continue to upgrade and
strengthen its structure.
In 2016, Managed Solutions will continue
to focus on opportunities that allow for
cross-selling to Panalpina’s core products
and leveraging its good standing with
global key accounts to drive value into
their organizations.
LCL services are expanded
Several of the additional
services launched in 2015
focus on trade from Asia
outbound to Asia, the US,
Latin America and Europe:
• Singapore to Adelaide, Australia
• Shenzhen, China to
Budapest, Hungary
• Shenzhen, China to
Buenaventura, Colombia
• Ningbo, China to Basel, Switzerland
• Shanghai, China to New York, US
24
panalpina.com
Ocean Freight
Optimizing the LCL network
Panalpina offers close to 500 less than
container load (LCL) services throughout its
network and launched 20 additional services
in 2015, following the ongoing expansion and
optimization of services both in terms of
coverage and yield management. The new
services focus on key markets and trade
lanes, especially Asia outbound.
31° 14’ N, 121° 29’ E
Shanghai, China: Port of Shanghai
25
panalpina.com
26
Logistics
Mass personalization
We live in an age of mass
personalization, where
consumers demand products
and services tailored to their
individual needs. Advances
in technology, instantaneous
data interpretation and
modularization are enabling
consumers to have a greater
choice. This puts extra
pressure on manufacturers
to ensure they have the most
up-to-date versions of the
relevant products or services
that are fully configurable to
individual demands.
Market environment
Customer focus
For traditional contract logistics providers,
2015 was a tough year, characterized
by ever more commoditization and ever
tighter margins. However, Panalpina
improved its overall margins in logistics
thanks to new services that respond to
the market trends for nearshoring and
mass personalization.
The Logistics strategy has always
emphasized asset velocity – to keep a
product moving – as storage is seen as
a non-value added activity to Panalpina
and its customers. In 2015, after two
years of intensive research, in collaboration
with Cardiff University, Panalpina launched
a sophisticated inventory optimization tool
known as Demand Driven Inventory
Dispositioning (D2ID) to help predict the
optimum inventory holding level to satisfy
product demand. The tool was trialed
during the second half of the year with
outstanding results.
Speed and proximity to market are
now becoming the deciding factors
for customers, who need to be able to
customize products with the latest version
and deliver them immediately. To do this
effectively, manufacturing needs to be as
close to the end user as possible, which
can be accomplished through distributed
manufacturing and nearshoring. This
trend is being further compounded by
technological advances in areas such
as robotics and additive manufacturing.
Highlights
Overall, 2015 saw a transformation of
Panalpina’s logistics business. In response
to the need for speed, Panalpina continued
to shift the emphasis of its logistics business
away from warehousing towards distribution
and manufacturing. This involved developing
tools and services that enable a rapid
throughput of products and a minimal
time in storage.
As a leader in Logistics Manufacturing
Services (LMS), Panalpina has the
ability to select components, manufacture
finished products, and ship them in
short lead times. The configure-to-order
process customizes the product as late
as possible in the supply chain, allowing
materials to be allocated against orders
only when required. This considerably
reduces customers’ working capital
requirements as well as their order
fulfillment lead times. New LMS centers
were opened in 2015 in Panama and
Dubai, adding to the center in Brazil.
Panalpina also continued to roll out
its standard Warehouse Management
System (WMS) platform and by the
end of 2015, 35 logistics facilities
were running the JDA WMS system.
This allows Panalpina to offer a leadingedge WMS platform but still maintain
enough flexibility to provide a solution
tailored to customer requirements.
Looking forward
The already established trends of
distributed manufacturing and mass
personalization will continue to gather
momentum and be fueled by the need
to have customized products delivered
to the user with ever decreasing lead
times. The growth in e-commerce and
the ability to use new technologies such
as 3D printing will further enable this
to happen quicker. In this context new
solutions have to be developed to meet
these challenges, opening the door for
more innovative opportunities.
panalpina.com
27
PERFORMANCE BY REGION CONTINUED
Logistics
Solutions for inventory handling
In 2015, in collaboration with Cardiff
University, Panalpina launched a
sophisticated inventory optimization
tool known as Demand Driven Inventory
and Dispositioning (D2ID) to help predict
the optimum inventory holding level to
satisfy product demand.
25° 12’ N, 55° 16’ E
Dubai warehouse: Managing asset velocity
panalpina.com
28
Energy Solutions
Market environment
Customer focus
2015 was a turbulent year for the energy
market. Drastic falls in the price of oil led to
a major downturn in the revenues of the oil
companies, which in turn forced them to
cut back substantially on capital projects.
It further resulted in several mergers
between oil and gas producers as well as
between the sector’s service companies.
The creation of the Energy Solutions
service put Panalpina in a stronger position
to help customers mitigate the impact
of the current low oil prices by assisting
them to lower costs, reduce inventory
and optimize their supply chains. During
the year, the Energy Solutions team
met with customers to listen to their
concerns and respond to their needs.
Customers were particularly interested
in Panalpina’s footprint, experienced
teams, and specialized customs
and compliance knowledge.
Meanwhile, the Middle East, Africa
and Commonwealth of Independent
States (MEAC) region was hit by a series
of political conflicts, economic sanctions,
and currency devaluations which further
depressed the performance of the industry.
As most of the work Panalpina does with
engineering companies comes traditionally
from the oil and gas sector, the impact
of these developments on the Energy
Solutions business was considerable.
Panalpina succeeded in winning “Project
Heavy Lift Forwarder of the Year” at the
Global Freight Awards for the second year
running. The award went to Panalpina’s
Energy Solutions team for the move of two
very large machines from the manufacturer
in the US to their installation in the UK.
Highlights
Looking forward
Despite the difficult market environment,
Panalpina was able to complete the merger
of its Panprojects and Oil and Gas activities
to form its specialized Energy Solutions
service. By the end of the first quarter of
2015 the amalgamation was complete,
and is delivering synergies and efficiencies
to the benefit of both the company and its
customers. In addition, by cutting costs and
negotiating new agreements with many of
its subcontractors, Energy Solutions was
able to compensate substantially for the
drop in business volume and revenue.
Oil prices are expected to remain low for
the foreseeable future. The slowdown in
capital investment by the oil companies
will probably continue, while little change
is anticipated in the geopolitical situation.
In 2016, Panalpina will continue to focus
on the energy sector and capital project
solutions. The foundations for growth have
been well laid, and Energy Solutions is now
poised to win new customers and penetrate
new markets – whether in North Africa,
China, Latin America or elsewhere. To
this end, it will leverage its IT platform,
the exceptional level of expertise and
experience offered by its global network,
and such attractive value-added services
as its ability to handle customs clearance
in-house.
Transport of large
but delicate cargo
Panalpina managed the
transport of 18 air cooled
condensers (ACCs) from
the factory in Vietnam to
an LNG project near Darwin,
Australia. Although the units
measured up to 27 meters
long, 14 meters wide, and
18 meters high and weighed
about 210 tons each, they
were extremely delicate and
could have been damaged
by excessive twisting or
jolting. Panalpina’s in-house
engineering teams planned
for months in advance to
ensure that the ACCs were
handled safely from lifting
to transport to lowering
into place.
panalpina.com
Energy Solutions
Tailored Energy Solutions
Panalpina completed the merger of its
Panprojects and Oil and Gas activities
to form the specialized Energy Solutions
service. This service put Panalpina in a
stronger position to help customers
mitigate the impact of the current low oil
prices by assisting them to lower costs,
reduce inventory and optimize their
supply chains.
38° 55’ N, 28° 17’ E
Gördes, Turkey: Autoclave transport
29
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30
PERFORMANCE BY REGION
Americas
Market environment
In 2015, the drastic decline in oil prices
undermined opportunities for growth.
In Canada, nearly all of the company’s
energy projects were put on hold or
cancelled. Meanwhile, in Brazil the
collapse of the Real drove up the cost
of imports, causing a sharp fall in the
volumes arriving from North America,
Europe and Asia.
LMS center in Panama
A new facility in Panama serves
as both a manufacturing and
distribution center for a
leading telecommunications
customer. Under Panalpina’s
Logistics Manufacturing
Services (LMS) concept,
goods are shipped to
Panama in a semi knockeddown stage and assembled
only after an order is received
from the customer, allowing
faster response time and
greater personalization.
In addition, the center
manages returns, rework
and repair of products.
Nevertheless, the relative strength of
the US economy stimulated development
in Mexico. The growth of near-shoring
led to considerable foreign investment,
which in turn generated significant new
business for Panalpina. The company
further prospered in the smaller Latin
American markets – Argentina, Chile,
Colombia and Peru.
Highlights
In February, Panalpina launched the
Brazil Wings service between its US hub
in Huntsville and São Paulo. The service,
which is aimed at manufacturers of heavy
machinery and equipment for agriculture
and mining, enables the company to offer
new solutions that do not depend on
passing through Miami. In addition, Brazil
Wings was integrated with the inbound
Dragon Wings charter flights from Hong
Kong, achieving a transit time from Hong
Kong to São Paulo of under 40 hours.
The Charter Network opened additional
revenue streams in the perishables
business, including importing berries
and asparagus from Mexico into the UK.
On the ocean freight side, volume
increased as the company benefited
from its Managed Solutions and customerfocused applications. The Pantainer
Express Line is firmly established in the
region, offering comprehensive services for
less than container local (LCL) shipments.
In Panama, Panalpina opened its second
logistics manufacturing services (LMS)
center in the region, adding to the LMS
center in operation in Brazil since 2012.
In Brazil, Panalpina received six awards
from the Airports Brazil Consortium in
recognition of logistics efficiency.
The categories included best freight
forwarder, best customs broker, and
best performance in specialized
customs procedures.
Customer focus
In line with Panalpina’s aim to be the world’s
most customer-oriented logistics provider,
the region centralized and standardized its
account management structure, improving
the quality of performance analytics and
increasing its ability to deliver customized
solutions. Regional teams contributed
professional services for customs and
compliance, trade regulations, classification
and other regulatory procedures. Panalpina
held its first Luxury Fashion and Beauty
Products trade seminar in New York to
promote exchange among key government
officials, premium importers, and experts
from trade compliance, operations and
supply chain.
To meet the needs of an established
automotive customer, Panalpina reengineered a complex process involving
multiple locations, factories and shipping
routes. Panalpina further drew on its IT
expertise to increase the efficiency and
visibility of its solutions and to integrate
its processes with those of the customer.
Looking forward
The US economy looks solid and in
Latin America the company has a leading
position in both air and ocean freight
across most markets. The Panalpina
Charter Network will help the company to
take advantage of air freight opportunities,
while Ocean Freight aims to grow further,
with a focus on trans-Pacific trade.
The new chemical competency center in
Houston, Texas will support Panalpina’s
goal to increase its global presence
in the chemicals sector. In response
to the ever-increasing demand by the
pharmaceutical industry for cold chain
solutions, the company plans to expand
its PanCool service for air freight and its
reefer service for LCL shipments. Further
opportunities for growth exist in the
perishables sector.
panalpina.com
31
Americas
Panalpina sponsors trade seminar
Panalpina held its first Luxury Fashion and
Beauty Products seminar in New York to
promote exchange among key government
officials, premiere importers, and experts
from trade compliance, operations and
supply chain.
45° 27’N , 9° 11’W
Milan, Italy: Fashion goods destined for New York
panalpina.com
32
Asia Pacific
Market environment
Across the Asia Pacific (APAC) region, the
market was hit by the economic downturn
in China, negative tonnage growth in the
Asian export market, and overcapacity
on all major lanes. While the air freight
sector benefitted from lower spot market
rates, it was simultaneously faced with
unpredictable rate volatilities. In the ocean
freight sector, too, capacity outstripped
demand, causing increased volatility in
rates. The energy market was hit heavily
by low commodity prices not only in oil but
also in coal, iron ore and metals. Resource
owners cut back on infrastructure
investment, which brought a decline in
orders for the construction sector and
the production supply chain.
The demand for high-end logistics and
supply chain solutions increased, as
customers sought to concentrate their
resources on their business and rely
more on third-party providers for their
logistics needs.
Highlights
Panalpina’s Air Freight margins improved
following procurement optimization
initiatives, and the company successfully
won new accounts and expanded on
accounts, mainly in the technology and
automotive industries. The Panda Star
charter flights between Luxembourg and
Shanghai increased to two frequencies a
week, while the Dragon Wings service from
Hong Kong to Huntsville linked up with the
new Brazil Wings service into São Paulo.
In Ocean Freight, the Allocation and Trade
Lane Management team exhibited great
skill in maneuvering the company through
turbulent economic weather. Panalpina
succeeded in establishing a base with its
reefer service. Additionally the marble trade
between Italy, Turkey and China has helped
to produce new revenue streams.
With its successful financial turnaround,
Panalpina’s APAC Logistics business
achieved positive EBIT in 2015. It
strengthened its local capabilities and
expanded the LogEx concept, Panalpina’s
continuous improvement methodology. The
Malaysia site achieved Bronze certification
in LogEx and generated a positive return.
In Singapore, Panalpina received approval
from the Economic Board for a built-to-suit
warehouse and increased its portfolio in
added-value service offerings.
In line with its policy of investing in emerging
economies, Panalpina set up an office in
Yangon, Myanmar. Following the establishment
of a civilian government in 2011, the
country is starting to invest in infrastructure
and imports are rapidly increasing.
Customer focus
A series of roundtable discussions and
workshops enabled Ocean and Air Freight
teams to enhance rapport with customers,
obtain feedback, and engage customers
proactively to meet their expectations.
These engagements increased customer
understanding and allowed the company
to tailor its service offerings more specifically.
In 2015, the company needed to adjust
its Energy Solutions business and align
it more closely with customer needs.
With the slowdown in investment in energy,
the team is now focusing on government
infrastructure expenditure.
Looking forward
Air freight volumes are expected to
remain soft for the first half of 2016,
and overcapacity on major export trade
lanes will continue. Panalpina will continue
to develop its Dragon and Panda Star
flights, part of the Charter Network,
to increase profitability. The focus for
the Ocean Freight operation will be on
expanding reefer and marble business, as
well as building fresh revenue streams from
forestry goods. There will be an increased
emphasis on customs brokerage and
consultancy, and further development
of Managed Solutions.
The Logistics team will take advantage
of the opportunities offered by the growth
of e-commerce and nearshoring, while
Energy Solutions will capitalize on
government infrastructure spending,
especially in emerging markets.
Decathalon’s distribution
hub in Singapore
Panalpina manages a
26,150-square meter
distribution center in
Singapore with the leading
French sporting goods
company Decathalon. The
facility services stores in
over 20 countries, primarily
China, Taiwan, Russia, India,
Brazil and Turkey, as well
as e-commerce customers
across Southeast Asia.
Panalpina manages the full
suite of services, including
inbound flows, customs
brokerage, haulage, inbound
checking, scanning, inventory
management, pick-and-pack
and repair.
Asia Pacific
Expanding in growing economies
In line with its policy of investing in
emerging economies, Panalpina set up
an office in Yangon, Myanmar. Following
the establishment of a civilian government
in 2011, the country is starting to
invest in infrastructure and imports
are rapidly increasing.
16° 51’N , 96° 11’E
Yangon: Capital city of Myanmar
panalpina.com
33
panalpina.com
34
Europe
Market environment
Customer focus
For both air and ocean freight, the
European market remained flat in 2015.
There was a consolidation of the logistics
industry worldwide and a number of
acquisitions were completed, leading to
increasing competition between companies.
Panalpina held two highly successful
workshops in Luxembourg to demonstrate
how it manages the cool chain and discuss
the customers’ needs.
Highlights
Panalpina celebrates 25 years
of the Charter Network
Luxembourg was the
first stage in a world-wide
celebration of Panalpina’s
unique Charter Network.
Key customers and
partners, senior Panalpina
management, local officials
and airport authorities visited
the Luxembourg hub and
had the chance to climb on
board the wet-leased 7478F, The Spirit of Panalpina.
Additional celebrations
were held in Huntsville (US),
Stansted (UK), Mexico City
and Guadalajara (Mexico).
By focusing on its global accounts,
especially in the UK, the Netherlands and
Belgium, Panalpina’s European operation
successfully increased its ocean freight
Far East westbound lane volume. Although
there was a drop in the volume of air
freight business, 2015 saw the successful
expansion of the Panda Star service
between Luxembourg and Shanghai as
part of the Charter Network. This service
has been well received by customers.
The healthcare vertical won several
new customers in Europe in 2015.
The perishables business delivered
outstanding results driven by the growth
of air freight business in the UK and the
Netherlands and a contract to transport
salmon from Norway. Panalpina won a
major contract to ship locomotives and
railcars from France to the Middle East.
Air Freight was affected by a change in
routing from air freight to ocean freight
in the automotive sector. In addition,
a number of customers’ automotive
projects reached the end of their
life cycle.
Panalpina is now starting to offer
Logistics Manufacturing Services in
Europe and won a three-year contract
with a major telecommunications company
for mobile phone distribution, including
the return logistics enabling the repair
of defective phones.
In terms of events, Panalpina had a strong
presence at the Transport Logistic 2015
trade fair in Munich and attended Fruit
Logistica 2015 in Berlin for the first time.
To prepare for stricter customs procedures
in Europe, Panalpina has launched a
European customs project which will
help to enhance its service offering around
customs clearance services and consulting.
Looking forward
Panalpina Europe is optimistic about its
Air Freight and Ocean Freight business,
especially the development of the Charter
Network service between Huntsville
and Luxembourg.
In Logistics, Panalpina is strengthening
customer-dedicated networks overland as
well as focusing on trade corridors between
Europe and China and within Europe.
Particularly strong growth is expected in the
perishables sector following the acquisition
of a majority share in Airflo which has
offices in the Netherlands and Kenya.
panalpina.com
Europe
Growth in the
perishables business
Growth in the
perishables business
The perishables business delivered
outstanding results in 2015 driven by
the growth of air freight business in the
UK and the Netherlands and a contract
to transport salmon from Norway.
60° 41’N , 5° 8’E
Norway: Salmon farm
35
panalpina.com
36
MEAC
Market environment
2015 was a difficult year for the Middle
East, Africa and Commonwealth of
Independent States (MEAC) region,
where a large part of Panalpina’s business
is in the oil and gas sector. The oil price
continued to fall, and there were conflicts
in countries such as Syria, Iraq, Yemen and
Ukraine, while across the Middle East the
security situation remained uncertain. The
region was further affected by currency
devaluations in Russia, Turkey and Angola.
Highlights
Panalpina was particularly active in Africa.
In January, offices were opened in Kenya
and Morocco whose growth economies
offer strong prospects, especially in the
energy and infrastructure sectors. In
May, Panalpina acquired its Egyptian agent,
Afifi, which specializes in freight forwarding,
customs clearance and logistics and
benefits from a solid local customer base.
By uniting with Afifi, the company has
increased its foothold in a market that
offers considerable opportunities for
growth. In November, the company
agreed to purchase a majority share in
Airflo, Kenya’s second largest air freight
forwarder, which specializes in the
worldwide export of fresh-cut flowers,
plant cuttings and vegetables.
In December, Dubai became the latest
location where Panalpina offers customers
Logistics Manufacturing Services (LMS).
Rather than holding stock to cover every
possible outcome, Panalpina assembles
products from semi-knocked down units
to specific customer requirements at the
last possible stage before shipping them
to the end customer.
Panalpina exited from Algeria due to the
difficult economic environment and the
restrictive monetary policy in the country.
Shipments will now be handled through
an agent in Algeria.
Customer focus
During the year, the MEAC team remained
very close to its customers, especially
in the oil and gas industry where its
outstanding level of experience and
know-how enabled Panalpina to respond
effectively to the exceptionally difficult
environment. As a result, though margins
shrank, Panalpina retained all its customers.
Looking forward
The turbulence in the MEAC region is
predicted to continue in 2016, with no
upturn likely in the oil and gas sector.
Panalpina will therefore continue to
focus on new markets and aims to further
grow its perishables operations in Africa, in
line with its global strategy. The company
sees potential for growth in the technology
sector and is making plans to move to
a much larger LMS facility in Dubai.
The expansion of the Suez Canal offers
additional potential for trade in the region.
Panalpina expands Logistics
Manufacturing Services
with Ericsson
The Ericsson Supply Center
located in Panalpina’s Dubai
South facility is Ericsson’s
first distribution center
globally that unites hardware
assembly and software load
under one roof. Panalpina
engineers and technicians
manage assembly of
semi-knocked down
units, configuration, testing,
inspection, packing and
delivery to Ericsson’s end
customers in the region.
panalpina.com
MEAC
Solidifying a foothold in Egypt
Panalpina acquired its long-standing
Egyptian agent, Afifi, which specializes
in freight forwarding, customs clearance
and logistics and benefits from a solid
local customer base. By uniting with Afifi,
the company has increased its foothold
in a market that offers considerable
opportunities for growth.
30° 30’N , 32° 26’E
Egypt: Suez Canal
37
From field
to shelf
The appeal of the perishables
sector is compelling.
The sector is high-volume,
non-cyclical, and fast-growing.
In addition, perishables are shipped in large quantities from
South to North, counterbalancing the flow of dry cargo which
is generally flown the other way, thus generating business
for the Charter Network on back haul routes. To ensure that
shipments arrive in the right place at the right time and in
peak condition, Panalpina provides flexible transportation and
logistics solutions. These include temperature-controlled air
freight, ocean reefer freight and road and courier services, as
well as cool chain management, consignment documentation
and comprehensive forwarding procedures.
panalpina.com
38
panalpina.com
CASE STUDY: Fresh and timely, end-to-end
One of Panalpina’s long-term clients is a Dutch exporter that
supplies bell peppers year round to customers in North America.
Once the Dutch pepper season finishes the Spanish season
kicks in, but delivering Spanish peppers to far-flung destinations
is not always straightforward. Back in December 2015, not
enough air freight space was available to transport a huge
volume of Spanish peppers directly to Canada.
Panalpina’s response was to truck the peppers from Spain
to its cool chain facility at Heathrow, scan, validate and repack
them in smaller containers, and air freight them to Canada.
The consignments arrived in Canada fresh and on time –
managed end-to-end by Panalpina.
51° 28’ N, 0° 27’ W / 10:00 GMT
Spain: Peppers intended for Canada
39
panalpina.com
40
INDUSTRY KNOW-HOW
Automotive
Manufacturing
Market environment
Customer focus
The manufacturing and automotive verticals
had a challenging year in 2015. In Brazil,
where automotive and manufacturing are
traditionally strong, economic growth was
negative for the year. Elsewhere, Panalpina
suffered from the knock-on effect of the
conclusion of non-repeatable automotive
projects in Europe.
Panalpina won a sophisticated supply chain
contract from a major manufacturer in Asia
that demonstrates its multimodal capabilities.
The contract involves transporting finished
vehicles by air, sea and feeder service.
Looking forward
In 2016, both verticals expect to achieve
profitable and sustainable business
Highlights
growth, and the economic environment
Despite these difficulties, the manufacturing is particularly promising in Mexico
and automotive verticals recorded significant and China.
wins in strategic markets, including Asia.
Mexico now looks set to overtake
In May, the automotive vertical established
Brazil in terms of both growth rate and
itself in Mexico with a significant contract
customer investment, with an increasing
that involves a large volume of air freight
number of European original equipment
business and will help to offset the decline
manufacturers opening operations that
in the Brazilian market. Meanwhile,
capitalize on the country’s infrastructure
Panalpina’s Brazil Wings Charter Network
and easy access to the US market.
was instrumental in securing business for
several agricultural machinery manufacturers,
In China, the world’s largest car market, car
offering a service that enhances supply
sales are expected to grow at a respectable
chain efficiency by including customs
rate, stimulated by government incentives
clearance. In addition, the manufacturing
for small and energy-efficient vehicles.
vertical saw significant growth in both air
and ocean freight business from a key
agricultural sector customer, which involved
introducing additional trade lanes between
Europe and India.
These verticals will focus especially on
the top global and SME accounts, and will
leverage value-added services such as the
Charter Network and Managed Solutions.
Charter Network expansion
Panalpina has doubled its
scheduled charters between
Luxembourg and Shanghai
from one to two flights per
week, meeting the need
to transport outsized
equipment—for example,
for the automotive and
energy business—as well
as temperature-sensitive
pharmaceuticals. The
charters are operated by
Silk Way West Airlines and
rely on 747- 8 freighters.
panalpina.com
41
INDUSTRY KNOW-HOW CONTINUED
Chemicals
Market environment
Customer focus
In 2015, capacity increased substantially
across the chemical industry, especially
in the petrochemical sector. The chemical
supply chain continued to grow in
complexity and there were major shifts
in distribution patterns. There was greater
regulation to deal with, particularly for
hazardous products, leading to higher
logistics and transportation costs. China
accelerated its drive to become selfsufficient and import less, but this was
more than offset by several investments
to increase capacity across the Middle East
and North America – much of it
for export.
The chemical competency center
demonstrated to customers that Panalpina
aims to become a dominant player in
chemical sector logistics. The message
was further reinforced at a number of
industry-focused trade shows such as
LogiChem, a leading chemical supply
chain and logistics event. Meanwhile,
a series of road shows in the Americas,
Europe and Asia informed existing and
potential customers about the large
increase the company is making in
chemicals sector investment.
Chemical competency center
Highlights
The chemical competency
center brings together
expertise in supply chain
work process flows,
know-how in the handling
of hazardous materials,
and people who can be
cross-trained to handle
multiple accounts.
This year saw Panalpina reaffirm its
commitment to the chemicals industry
through a range of initiatives. The
Chemicals vertical invested heavily in
personnel to strengthen its global team
and salesforce, which was well received
by current customers and also resulted
in the on-boarding of new customers.
A chemical competency center was
launched in Houston, Texas to service
the US market. Three more centers
are currently being set up in São Paulo,
Brazil, Antwerp, Belgium and Singapore
to cater to Latin America, Europe and Asia.
Multinational customers are looking for both
efficient freight management and greater
transparency in the supply chain, and the
centers will boost Panalpina’s ability to
offer assistance with both work process
documentation and transportation.
Looking forward
By the end of 2015 the vertical’s growth
plan was already gaining traction, and
includes ambitious growth targets for
2016. Some customers operating on a
regional basis are preparing to expand
worldwide; the chemicals vertical will
work to ensure that customers extend
their relationship with Panalpina to
achieve supply chain transparency.
panalpina.com
42
Consumer and Retail
Fashion
Market environment
Across the consumer and retail, and fashion
markets, an erratic and fast-moving global
environment, combined with the rise of
e-commerce, resulted in shorter cycles
and a decrease in consumer loyalty.
The fashion sector in particular remained
highly volatile. This put pressure on supply
chain solution providers to become ever
more agile, efficient and innovative in the
services they offer.
Highlights
During the year Panalpina focused on
delivering tailor-made, value-added
solutions to its customers. The biggest
successes involved global order and freight
management for major companies in the
consumer market, where Panalpina is
moving from a third-party logistics
provider to a lead logistics provider role.
This was a good year for the consumer and
retail, and fashion verticals, Ocean Freight
operations, with strong growth in the Far
East westbound trade. There was significant
growth in volume and gross profit with both
its global accounts and SME accounts.
Panalpina implemented combined orderand freight-management solutions with key
customers in the entire segment, leading
to increased visibility for customers. In
parallel, the company focused on tailored
consolidation of buyers to optimize cargo
flow for customers.
Air Freight business has been very
successful for these vertical’s in recent
years. Panalpina won some major contracts,
including 100 percent of the global air
freight business from one major consumer
company. Panalpina developed a solution
to optimize air freight, adopting the most
cost-efficient transport mode in accordance
with the lead time. For the fashion industry,
a high volume of luxury and high-fashion
goods were delivered to the world’s key
consumption areas in Asia, Europe and
the Americas, mainly from Italy, France
and Switzerland.
In 2015, Panalpina continued its focus
on serving high-fashion and luxury
customers with smart logistics solutions.
Panalpina’s fashion hubs in Milan,
Lugano, New York, Eindhoven, London
and Hong Kong successfully provided
major fashion houses with high visibility,
end-to-end solutions such as radio
frequency identification (RFID), order
management solutions and other valueadded services. The company started
looking into e-commerce solutions,
not only to fulfill orders but also to
manage clients’ e-commerce sites.
Customer focus
As well as delivering key note speeches
at a range of conferences and exhibitions,
Panalpina ran a number of round-table
discussions to explore trends including
the impact and potential of technological
developments such as RFID, 3D printing
and e-commerce. Some of the most fruitful
discussions looked at pragmatic issues
such as local challenges and customs
rules and regulations in emerging markets.
Looking forward
In 2016, the consumer and retail, and
fashion verticals will continue to focus on
optimizing the supply chain for its global
accounts. It will combine order management
solutions with buyers’ consolidation, both
for its global accounts and for SME retailers
and fashion companies. For the fashion
industry, it will continue to develop its hub
structures and end-to-end logistics solutions.
Radio frequency
identification (RFID)
Radio frequency identification
(RFID) tracking technology
allows goods to be tracked
at all stages of transport,
from warehouse to
distribution center to
consumer and the reverse.
Panalpina has implemented
RFID tunnels in its fashion
warehouses to reduce
inbound handling time and
improve inventory accuracy.
panalpina.com
43
Healthcare
Market environment
The global healthcare market expanded
slightly in 2015, driven mainly by growth
in trans-Pacific and Asian trade. The year
witnessed a major consolidation of the
healthcare sector with the conclusion of
a series of high profile mergers and joint
ventures, some of them involving Panalpina
customers. For the healthcare vertical this
is both an opportunity and a threat, offering
the chance to increase its penetration of key
players but also the risk of being cut out.
Highlights
Recognition by customers
Panalpina won the Customer
Choice Award for Service,
a new addition to the Cool
Chain Excellence Awards
held in January 2015. Held in
association with Cold Chain
IQ, the awards highlight
best practices within the
temperature control life
science industry. Voters
were asked to nominate
the service partner that
had provided them with the
most exceptional customer
experience in 2014.
To be prepared for the challenges of the
next five years, in 2015 the healthcare
vertical invested in infrastructure and
people and is fast closing the gap with
bigger competitors. It opened competency
centers in Frankfurt and Shanghai and plans
to open more in the US and Asia. Panalpina
renewed its Good Distribution Practice
(GDP) certification in Luxembourg, a major
hub for transport of temperature-sensitive
healthcare products. Simultaneously, it
conducted GDP training for about 1,500
staff in Panalpina worldwide. Crucially, all
these initiatives assure customers that their
products are being transported in a 100
percent compliant GDP environment via
a dedicated global network.
Meanwhile, another innovative and
market-leading move saw the launch
of a regular, temperature-controlled,
fully GDP-compliant less than container
(LCL) service from Antwerp, Belgium
to Panama.
Customer focus
The healthcare vertical ran several wellattended workshops in Luxembourg
and Shanghai on cool chain management.
These workshops involved open
discussions, directly engaging customers
and providing a forum where supply chain
issues can be jointly resolved and input
received on how to further develop and
enhance Panalpina’s service.
Panalpina was awarded with the Customer
Choice Award for Service at the 14th
annual Temperature Controlled Logistics
Europe summit held in Frankfurt, Germany.
The award is a particular achievement for
Panalpina because it was voted for solely
by customers.
Looking forward
The outlook for the healthcare sector is very
positive. The world’s aging population and
growing middle class are likely to increase
the demand for healthcare products.
Traditionally, production was based mainly
in Europe and the US, but many players
are increasingly moving production into the
BRIC nations, especially China and India. In
both countries Panalpina is positioning itself
to handle exports as well as imports, and it
expects its investments to start paying off
soon. Additional workshops on cool chain
management are planned in the US, as well
as follow-up workshops in Europe and Asia.
The healthcare vertical is poised to seize
opportunities to tender for contracts with
major pharmaceutical companies in 2016.
To achieve this, it will leverage on its unique
combination of cool chain management
know-how, its Charter Network and its
hubs in Luxembourg, Shanghai
and Huntsville.
panalpina.com
44
Hi-Tech
Telecom
Market environment
Today, mobile devices are as powerful
as PCs and laptops were a year ago. This
has put pressure on manufacturers to add
special features to their products to entice
high-end buyers. Buyers, though, are not
prepared to wait a long time, compelling
manufacturers to dispatch goods by air
rather than sea. In addition, as technology
becomes more powerful and compact,
products become smaller. Many consumers
are jumping straight into smartphones,
bypassing the intermediate stage of tablets.
Thus, as processing power rises, air freight
tonnage falls.
Nearshoring – long common in the desktop
computing arena – is fast spreading
throughout the entire technology sector.
Though this means final assembly happens
close to market, parts and sub-assemblies
still have to be brought in from abroad, which
involves a large number of consignments,
most of them coming by sea.
Highlights
Throughout the year, the Technology team,
which is made up from the Hi-Tech and
Telecom verticals, continued to come up
with high-performing, competitively priced
products that gave customers the speed
and visibility they wanted, with pick-up and
delivery options at either end. Technology
had the lift and capacity when customers
needed them, and exploited the flexibility of
its network to respond to sudden changes
in supply and demand.
Panalpina’s new Logistics Manufacturing
Services (LMS) centers in Dubai and
Panama, in addition to the center in
Brazil, provide last-minute assembly,
software updates and testing for major
telecommunications companies, allowing
them to meet the fast-changing demands
of consumers. In addition, the centers
manage diagnostics and repairs to
enable reverse logistics.
Customer focus
A major change in Technology’s approach
to customers took place in 2015. It no
longer positions itself just as a transactional
freight forwarder and has begun building
deeper relationships based around its
understanding of the supply chain. This
has improved its account strategies and
boosted the ability of its sales professionals
to deliver value to customers.
Looking forward
An even greater demand for rapid response
times, supply chain visibility and flexibility,
and the ability to switch freight forwarding
modes is expected in 2016. Panalpina’s
expertise with LMS and reverse logistics
will allow customers to be more competitive
and refresh their products faster.
Technology has now developed a much
more diversified and targeted growth
strategy. Regional and country sales teams
will focus on global accounts by following
an integrated approach. This will target
middle-tier and sub-assembly companies
as well as the telcos that are major buyers
at the end of the supply chain.
Enabling reverse logistics
To complement its reverse
logistics offering in the
technology sector, Panalpina
has entered into a strategic
alliance with Hong Kongbased company Spread
Logistics. Working closely
together, the two companies
now pick up faulty consumer
electronics at origin, conduct
failure analyses and – if need
be – return them to the
original manufacturer in
mainland China. The first
consolidation center has
been set up in Dubai.
panalpina.com
45
Perishables
Market environment
Perishables is a fast-growing market,
benefiting from the rise of a middle class
in developing countries around the world
as well as increased expectations to have
seasonal fruits and vegetables the year
round. In addition, people are traveling
further distances and become exposed
to produce in new locations, which
increases the desire to have this
available in their home locations.
Acquisition of Airflo
Panalpina has acquired
a majority stake in Airflo,
a company based in
Kenya and the Netherlands
specializing in the export
of flowers and vegetables.
This acquisition reflects
Panalpina’s continued
expansion in Africa and
its increasing focus on the
fast-growing perishables
business. With a staff of over
160 in Nairobi, Kenya and
Aalsmeer, the Netherlands,
the company organizes up to
1,500 temperature-controlled
shipments per week
from Kenya.
The perishables sector is less susceptible
to global economic patterns, since there is
always a demand for fresh products, and is
therefore more insulated from cyclical
downturns. This presents Panalpina with
tremendous opportunities to develop new
trade lanes and markets.
Highlights
After one year of implementing a global
strategy for perishables, Panalpina is
already managing a huge volume of
transactions and rapidly building critical
mass. It handles fruit, vegetables, meat,
fish, flowers, plants – everything from
fresh and frozen food to luxury perishable
items. It is one of the few players to
have both a global perspective and
a global logistics network.
Going forward, the acquisition of Airflo
will expand the company’s presence in
Africa and make it an important player
in the Kenyan flower market, which has
an expected annual export growth rate
of around 5 percent. In addition, the
substantial air freight volumes Airflo exports
on routes from South to North will nicely
counterbalance the flow of dry cargo,
which is typically flown the other way.
The acquisition further offers Panalpina the
chance to boost its vegetables business.
Another highlight of 2015 was a major
contract to export salmon, awarded by
one of Norway’s largest producers. In 2016,
Panalpina expects to air freight a significant
volume of salmon. In addition, its reefer
footprint for ocean freight is growing.
In the UK, Panalpina is now the number
one in flower distribution and number
two in handling perishables imports,
while its cold storage facility enables it
to undertake onward distribution. It is one
of the top three players in the Netherlands
and expects to be one of the top three
in Norway by the end of 2016.
Customer focus
Panalpina’s approach means going beyond
kilos and boxes and seeking to build an
understanding of both the customer and
the product that sets the company apart
from its competitors.
The aim in 2015 was for Panalpina to raise
its profile in the market and to be recognized
for the excellence of its services, which
include temperature-controlled air freight,
ocean reefer freight, road services, and
value-added cool chain management.
During the year Panalpina took part in a
series of events such as the important Fruit
Logistica trade fair in Berlin, which enabled
the company to showcase its ability to
deliver perishables solutions from field to
shelf on a global scale.
Looking forward
Within the next few years, through a mixture
of acquisitions and organic growth, the
perishables vertical looks set to contribute
a substantial and increasing percentage
of Panalpina’s air freight business and to
strengthen the company’s position in the
air freight market.
To succeed, it is vitally important to keep
abreast of market trends, and especially
the impact of e-commerce on the perishables
sector. Huge growth is expected in virtual
retailing and Panalpina must be innovative
to stay ahead of the curve.
panalpina.com
46
INNOVATION
A driver for
development
Innovation as a driver for development
The freight forwarding industry is highly
commoditized and has low profit margins.
Panalpina, however, is not a traditional
operator and aims to harness the power
of innovation to generate new services,
business models and processes which
will differentiate the company from its
competitors, increase its productivity
and boost both revenues and margins.
Panalpina is already the market leader in
Logistics Manufacturing Services (LMS),
part of its shift away from traditional
warehousing towards manufacturing and
distribution. Panalpina has the ability to
select components, manufacture finished
products, and ship them within a single
day. The configure-to-order process
customizes the product as late as possible
in the supply chain, allowing materials
to be allocated against orders only
when required. This considerably reduces
customers’ working capital requirements
as well as their order fulfillment lead times.
Innovation from within
In 2015, Panalpina set up an Innovation
Board chaired by the CEO, with the aim
of providing an open platform to gather
original ideas from within Panalpina.
Panalpina is working with academic
experts at the University of Cardiff to
develop a new industrial 3D printing
solution for customers. 3D printing will
have an effect on inventory holding and
transportation, as spare parts can be
printed to suit rather than shipped in
quantity and held ready to be called off.
The initial response to this initiative has
been very exciting and several ideas are
being assessed by special project groups.
Panalpina is further looking to partner
with academia and customers, as well
as with start-up companies that have
invented innovative IT platforms and
business models.
panalpina.com
INFORMATION TECHNOLOGY
Improved responsiveness
and transparency
Transformation through IT
In 2015 Panalpina pressed ahead with
its Operations Transformation Program
(OTP), which is designed to improve
productivity via optimized, standardized
and automated core business processes.
For customers, this will result in better
service through improved responsiveness
and transparency. During the year the
OTP focused on design and organizational
changes, process improvements and
extensive testing. The SAP Transportation
Module (TM), a major element of OTP, went
live in December with the first transactions
in Singapore and Switzerland; and further
deployments are planned in 2016 in up
to 50 percent of its network.
Customer-facing systems
During the year, Panalpina linked up more
customers than ever with myPanalpina and
myPanalpina+, customer-facing systems
that actively support high-quality supply
chains and help customers reduce total
logistics costs. Benefits include end-to-end
visibility, system-to-system connectivity,
proactive purchase order and freight
management, and system-based
transport optimization.
IT substantially increased its investments
into research, development and innovation,
leading to improvements in database
acceleration, automation, data exploration
and predictive analytics.
In the four Panalpina regions, IT teams
successfully carried out several projects that
involved linking the customer’s IT systems
with Panalpina’s, increasing speed and
transparency and reducing costs.
Outlook for 2016
In parallel to enabling the implementation
of SAP, the goals for 2016 will be to
increase customer focus and to
develop IT solutions that are aligned
with the products, regions and industry
verticals to improve the company’s
productivity and success.
Panalpina is deploying a single
warehouse management system
(WMS) across all of its logistics facilities
throughout the world, enabling the
company to optimize service levels
and inventory for customers. In 2015,
the JDA WMS was expanded to several
additional sites, bringing the total number
of sites to 35 by the end of the year.
47
panalpina.com
48
OUR PEOPLE
High-performing and
engaged employees
In 2016, Panalpina’s
approach to human
resource management
will focus on fostering a
high performance culture
centered on the principles
of leadership, execution
and discipline.
Most popular e-learning
completed courses
Using the foundations and infrastructure
provided by PanLink, the global Human
Resources Information System, and
PanAcademy, Panalpina’s employee training
and development platform, the company
will further develop management systems
and processes in the areas of talent
management, learning and development,
performance management, compensation
and benefits and operational excellence.
Together with the focus on compliance
and ethics that are already a foundation
of Panalpina’s organizational culture, these
efforts will provide the ingredients required
for a high-performing organization.
1
Mentoring high-potential employees
3
2
1. IT Security Awareness 11,404
2. Code of Conduct 2015 10,610
3. Compliance Refresher 8,274
At Panalpina, we believe
continuous improvement
is for everyone, not just for
continuous improvement
specialists.
Nadine Albeck
Global Head of the Lean
training program
Panalpina has launched a global mentoring
program to bring talented and high potential
employees together with experienced
members of the leadership team, in order
to nurture their continued development as
managers and leaders. This program is
being implemented at the global, regional
and country levels; it involves country level
managers and heads of products, regional
heads of functions and products and the
top-level Executive Committee members
who act as mentors to promising Panalpina
employees. The mentors and participants
meet on a regular basis to discuss career
aspirations, define specific areas for each
person to further develop their skills,
and design a roadmap for their career
development at Panalpina. Participants
are nominated by their line managers, and
the Human Resources team manages the
process. In 2015, the 15 employees who
took part in Panalpina’s talent development
program, Navigating our Future, were
assigned a mentor from the Executive
Board or the Executive Committee.
In the European region, 62 employees
participated in the mentoring program and
27 managers were trained to be mentors.
Training and development
In a highly competitive market such as
Panalpina’s, employees need to have skills
and knowledge in a wide range of functions
and products. Panalpina’s sophisticated
e-learning platform allows employees to
acquire these skills easily and efficiently,
on a global platform that ensures a
common level of understanding throughout
the company. Courses can be taken
anywhere and at any time and the materials
and lessons can be accessed after the
course is complete for future reference.
In 2015, some of the most widely accessed
courses in Panalpina’s e-Learning platform
include IT security, Panalpina’s Code of
Conduct, compliance refresher training,
security, office safety, incident handling and
training on Panalpina’s global environment
program, PanGreen.
“Steering Success,” a long-standing
program, has been re-designed and
re-positioned as the flagship leadership
development program of Panalpina,
targeting all people managers in Panalpina.
With situational leadership as the generic
model, a number of Panalpina relevant
topics such as change management,
working in a matrix, and performance
management have been added. In 2016,
focus will be on deeper penetration of
the program across Panalpina in order
to create a common language.
Performance and talent management
Recognizing top performance is central
to engaging and motivating employees.
Panalpina’s focus is on creating processes
and tools that enable performance
differentiation and allows the company
to recognize and reward top performers.
As an example of the company’s efforts
in this area, Panalpina implemented the
“High-5” program in the Americas to
recognize employees who demonstrate
a commitment to Panalpina’s values and
show passion for service to the company.
Focus on talent management has been
strengthened so that all activities have
been linked to one motto – “right person on
the right job”. For example, the nomination
process of the flagship talent development
program, Navigating our Future, has been
directly linked to the succession planning
for the Top 150 leadership roles
of Panalpina.
panalpina.com
49
OUR PEOPLE CONTINUED
All our activities and processes
are guided by one test: Do they
enable the creation of a truly
high-performing organization?
Karsten Breum
Global Head of Human Resources
Employee engagement
For Panalpina to become a truly highperforming organization, it is very important
to understand how Panalpina employees
view the organization, how this compares
with other companies around the world,
and where Panalpina currently stands in its
journey of establishing a high-performance
business culture. Starting in 2016,
employee engagement surveys (EES)
will be run globally on an annual basis
to measure three main areas: manager
effectiveness, employee engagement,
and organizational effectiveness. Most
importantly, the surveys will tell the
company where its priorities for action
should be and will provide an opportunity
for employees to become involved in
planning and implementing change.
In order to test the approach before the
global survey, an EES was held in late
2015 in six countries, involving almost
10 percent of Panalpina employees.
19%
of senior management are female
48%
25%
Employees by gender
Senior Management
Employees by gender
Other employees
Employees by age
of other employees are female
employees under age of 30
1
1
1
4
3
2
2
3
2
1. Female 147
2. Male 611
Note: Charts are based on employee headcount.
1. Female 6,756
2. Male 7,315
3. Not stated 40
1. Under 30 3,778
2. 30 to 39 5,377
3. 40 to 49 3,478
4. 50 or over 2,236
panalpina.com
50
QUALITY, HEALTH AND SAFETY PERFORMANCE
Commitment
to performance
The importance of quality,
health and safety performance
was reinforced at Panalpina
in 2015, with the goal of
driving process improvements
and ultimately supporting
operational excellence
for customers. While these
subjects have always been
important for Panalpina, the
commitment of all employees
to these important principles
was reinvigorated.
Health and safety performance
in 2015
For the second year in a row, Panalpina
achieved all global safety targets set to
reduce accidents and improve near miss
reporting. By continuing to improve on
the health and safety foundations built
over previous years, Panalpina increased
awareness on specific safety topics and
engaged management support to further
enhance the culture of safety globally.
The awareness campaigns, preventative
measures and increased reporting have
all contributed to a near 50 percent
reduction in lost work days due to
accidents from 2013 to 2015.
Trainings and certifications
The core of Panalpina’s health and
safety programs is based upon its global
certification according to the standards
of OHSAS18001. Panalpina was the
first logistics company to achieve such
certification globally. In the spring of 2015,
Panalpina underwent a global audit of
its health and safety programs to ensure
ongoing compliance with the processes,
systems and documentation. The audit
found no major non-conformities globally,
and a substantial reduction in the number
of minor issues that required attention.
Corrective action plans were promptly
developed for all non-conformances
that were identified.
In 2015 more than 30
external GDP audits and
inspections were performed
to ensure compliance
with GDP certification.
health and safety inspections
The company also places a strong
emphasis on corrective action/preventive
action (CAPA) trainings. Through defined
training programs and workshops
Panalpina’s employees can learn and
adopt the methodology in their respective
functions and focus on continual
improvement programs. With dozens of
CAPA trainings and workshops conducted
throughout the world, Panalpina’s quality,
health, safety and environment teams are
equipped to take active steps to design
appropriate and effective corrective actions
that address the underlying root causes
of problems.
HEALTH AND SAFETY PERFORMANCE
Total 2014
Total 2015
+/-
First-aid incidents
89
54
-35
Medical treatment incidents
49
35
-14
Restricted work cases
11
9
-2
865
706
-159
66
53
-13
0
0
–
Near misses
2,892
Another key part of Panalpina’s approach
to health, safety and quality is its focus on
identifying behavioral and systemic safety
issues, and understanding the causes of
the problems that do arise. In 2015, the
country and regional QHSE teams and
managers from other functions participated
in root cause analysis trainings to
strengthen their abilities to recognize,
understand and ultimately prevent problems
before they arise. Panalpina also continued
its long-running program called O.O.P.S.
(Observation of Performance Standard),
which encourages staff to freely report any
concerns or incidents regarding health and
safety or compliance with workplace safety
standards and regulations.
Lost-time incidents
Fatalities
Subcontractor HSE violations
Inspections
188
172
-16
3,036
2,892
-144
panalpina.com
QUALITY, HEALTH AND SAFETY PERFORMANCE CONTINUED
Two years ago, Panalpina became the
first global logistics company to gain
accreditation for its Lean training program.
In 2015, the training program at Panalpina
was reaccredited, demonstrating the
company’s leadership in the area of
continuous improvement. Already more
than 300 Panalpina employees have been
awarded certification from Cardiff University,
and more than 500 improvement projects
have been initiated around the world.
Health and safety initiatives
A highlight of health and safety
management at Panalpina in 2015 was
Global Safety Week. Corporate-wide, the
organization held workshops, trainings and
awareness-raising events that focused on
various health and safety topics – ranging
from competitions, health and safety
quizzes, and educational activities that
discussed various safety rules including
safe driving. There were also events that
included collaborations with Panalpina
subcontractors. Senior managers and
executives were encouraged to take part
and provide feedback for the activities and
non-HSE staff were engaged to ensure their
awareness of the importance of health and
safety topics to their work.
Regular health and safety programs and
training at Panalpina cover a wide range
of topics that include not only workplace
safety but also employee health and
wellbeing. These trainings and workshops
are offered on an ongoing basis to
employees, including many that are part
of courses offered through Panalpina’s
e-learning platform.
In 2015, approximately 2,000 employees
took part in online trainings regarding
warehouse and office safety and hundreds
more participated in courses on health and
wellbeing topics. There were numerous other
health campaigns organized for Panalpina
employees. These included awareness
efforts on breast and prostate cancer,
and regular health exams for employees.
In Belgium, the Panalpina facility introduced
a new safety principle called “LUEZ”
(Loading, Unloading Exclusion Zones).
Three principles outline this program for
defining exclusion zones for areas where
cargo loading and unloading occurs.
• Segregating forklifts and other equipment
used for loading and unloading from
drivers and pedestrians
• Ultimate responsibility for the area where
loading and unloading is occurring
resides with the forklift operator
• If the forklift operator loses his/her direct
line of sight to the driver and others, then
activity should immediately stop until line
of sight is re-established.
It is programs such as this and others
that have improved health and safety
performance. For example, in 2015 at
Panalpina’s Brazil facility, there was
a 23 percent reduction in operational
incidents. Panalpina Canada saw a
reduction in workplace injuries from
ten in 2014 to three in 2015.
Delivering quality
Panalpina’s success as a business is
strongly dependent on the quality of the
service it provides to its customers, and
2015 saw refocused attention to this issue.
The internal systems and processes it has
deployed to ensure the quality of service
are critically important.
This attention to quality is highlighted by
the establishment of the Regional Asia
Pacific Quality Competence Center (QCC).
The QCC includes the country quality
organizations, operating within the matrix
organization, who will work on four primary
pillars: Incident Handling Analysis and
Reporting, Audits, Continuous Improvement
and Information Management Systems.
A new safety approach in
Belgium defines exclusion
areas for loading and
unloading cargo.
2,000
number of employees who took
part in online trainings in warehouse
and office safety in 2015
50%
reduction in lost work days due
to accidents from 2013 to 2015
51
panalpina.com
52
The incident handling pillar in the QCC is
focused on standardizing incident handling
and reporting for each of the APAC
countries. Reported incidents are analyzed
and, where deemed appropriate, followed
by a robust corrective action/preventive
action (CAPA) process. The audit pillar
consists of a program of internal quality,
health, safety and environmental audits
conducted by both internal and external
parties, which is focused on Panalpina’s
operations as well as those of its
subcontractors. A team of professional
auditors conduct over 150 audits per year.
The continuous improvement pillar seeks
to target quality hotspots in Panalpina
operations in the region and design and
implement improvement plans. Lastly,
emphasis is given to the collection
and centralization of data and information
in Panalpina’s Information Management
System to ensure solid record keeping
and well-documented processes.
The emphasis on quality paid dividends
in 2015, as evidenced by the numerous
awards and recognitions given to Panalpina
recognizing the high level of service they
provided to customers. For example, in
Brazil, the company received the coveted
“Best Freight Forwarder” at the Viracopos
airport, in addition to several other awards
in different vertical segments.
Quality certifications
Panalpina has achieved global certification
according to the ISO 9001 and 14001
frameworks (Quality and Environmental
Management Systems respectively) and
global certification according to the OSHAS
18001 health and safety management. In
addition to these certifications, Panalpina
also utilizes a variety of other qualityfocused methodologies including 5S,
QRQC (Quick Response Quality Control),
Lean training and the Six Sigma
methodology in its facilities worldwide.
The company has implemented corporatewide the Logistics Excellence Program
(LogEx) as an essential part of the
corporate philosophy and strategy for
quality performance. LogEx is an internal
corporate continuous improvement
program that increases productivity
and reduces errors and reaction times for
corrective actions. Ultimately this system
can be a decisive advantage as it impacts
competitiveness and productivity and in
the long-term, the value of the company.
This past year, the European region started
preparation for the implementation of a
comprehensive continuous improvement
concept for all products offered in Europe.
Implementation of this system is scheduled
to commence in early 2016. Panalpina
Belgium will seek certification from the
Centre of Excellence for Integrated
Validators (CAIV) against performance
standards for the shipment of
pharmaceutical products. This audit took
place in late 2015, with the results to be
reported in early 2016. Achieving this
certification also involved personnel taking
courses and passing examinations on the
subjects of Temperature Controlled-Cargo
Operations and Risk, Quality and Audit of
Temperature-controlled Cargo.
For the second year in a row,
Panalpina achieved all global
safety targets set to reduce
accidents and improve near
miss reporting.
panalpina.com
53
Good Distribution Practice
Good Distribution Practice (GDP) ensures
that the quality of the pharmaceutical
product is maintained throughout the
storage and distribution network and
consequently protects the health of the
patient. This rigorous set of standards
requires extensive training for personnel
involved in the handling of shipments
containing pharmaceutical materials.
In 2015, Panalpina continued its
commitment to GDP compliance and
signed an agreement with Concept
Heidelberg Institute to develop an
e-learning training on the subject. This
module provides training to personnel
involved in GDP operations worldwide,
and during the year more than 1,500
Panalpina employees were properly
trained and certified using this module.
GDP Certification for Pharmaceuticals is
recognized by independent certification
agencies, and demonstrates that the
company meets the required standards for
maintaining product quality and has proper
safety procedures during distribution from
manufacturer until final destination. In 2015,
all of Panalpina’s GDP certified facilities
successfully renewed their certifications.
In addition, the business units in Barcelona
and Roissy (Paris) in Europe successfully
attained GDP certification for the first time.
Audits and verifications
In 2015, more than 30 GDP external audits
and inspections were performed to ensure
that not only was Panalpina complying
with the requirements of GDP certification,
but that all specific requirements of
Panalpina’s customers were also being
met. Fifty GDP audits were also performed
on Panalpina’s critical subcontractors to
ensure their ongoing compliance with the
required standards.
In addition to the external audits, GDP
certification requires that critical computer
systems are validated regularly to ensure
continuity of operations and system
security. A strategy to validate GDP critical
computer systems has been defined and
validation will start early in 2016.
Leadership for GDP compliance
As part of the supply chain of
pharmaceutical products and on behalf
of its customers Panalpina must be in
compliance with the GDP guidelines
worldwide. To bolster the leadership
and oversight in this critical function, this
year the company created and filled the
position of Corporate Healthcare Quality
Assurance & Regulatory Manager, to
provide guidance on GDP compliance
and meet the exacting standards required
by Panalpina’s customers.
In 2015, Panalpina’s country
and regional QHSE teams
participated in root cause
analysis trainings to strengthen
their abilities to recognize,
understand and ultimately
prevent health and safety
problems before they arise.
panalpina.com
54
ENVIRONMENTAL PERFORMANCE
Managing
environmental impacts
Environmental impacts are managed under the framework
of Panalpina’s ISO14001 certified global environmental
management system. This extensive and comprehensive
management system provides management and employees
with clear procedures, guidelines and requirements for
documentation regarding a variety of environmental
performance and compliance issues. Preparations are
under way to seek global certification in 2016 according
to the latest ISO14001:2015 standards.
Impacts from operations
Panalpina’s environmental impact is
primarily attributable to the transport of
customers’ products around the world on
the ships, planes and trucks operated by
its subcontractors. Regardless of the origin
of the impacts, Panalpina’s customers
increasingly expect that their logistics
providers are actively engaged in efforts
to reduce their environmental footprint.
Therefore, it is imperative that Panalpina not
only seeks to reduce the impacts from its
own, directly controlled operations, but that
it also engages in a robust dialogue with its
vendors to identify all practical opportunities
to minimize those impacts.
Tracking impacts
Twice yearly, Panalpina collects a
variety of key performance indicators
regarding environmental impacts from
all facilities globally. These metrics
include information regarding:
•
•
•
•
•
•
Paper consumption
Electricity consumption
Heating
Fuel consumption
Water consumption
Business travel, primarily flights
These metrics are collected using an
online, cloud-based data platform, and
are analyzed for trends and opportunities
to reduce impacts wherever possible.
Panalpina is currently working towards implementing
the latest 2015 version of the ISO14001 Environmental
Management System.
In 2015, Panalpina continued to reduce
its overall environmental footprint in almost
every category measured. Electricity
consumption decreased 5 percent from
255 terajoules in 2014 to 241 terajoules
in 2015. Direct energy used for heating
decreased slightly while the usage of district
heating increased from 2014 figures to
11 terajoules. Energy usage by Panalpinaowned vehicles decreased by 15 percent
to 144 terajoules. Overall CO2 emissions
decreased by 4 percent from 2014 levels
to 57,608 metric tons, with most of the
reduction attributable to the reduction in
vehicular fuel usage. Scope 2 emissions
from indirect energy usage and Scope
3 emissions from business travel were
essentially level. In 2015, there were
3.7 tons of CO2 equivalent emissions
per full-time equivalent employee.
panalpina.com
55
ENVIRONMENTAL PERFORMANCE CONTINUED
Energy balance by energy category
Terajoule
224
17
Electricity
11
91
Heating
142
1.4
Owned vehicles
0
50
100
150
200
250
Indirect energy
Indirect renewable energy
Direct energy
Direct renewable energy
CO2 emission by scope and activity
Tonnes of CO2 equivalent
32,322
0
Electricity
5,238
1,452
Heating
10,342
0
Owned vehicles
0
8,255
Business flights
0
6,500
13,000
19,500
Direct CO2 emission
Indirect CO2 emission
26,000
32,500
Paper usage decreased by 16 percent
due to Panalpina’s increasing reliance on
paperless processes as well as behavioral
change on the part of employees, and
water usage decreased 11 percent to
289,000 cubic meters.
In 2015, several initiatives were launched
to reduce the energy and environmental
impacts from Panalpina’s operations.
Some were simple in concept but
nonetheless an important part of instilling
a culture of conservation and awareness
among Panalpina’s employees. For
example, in Ghana, a campaign titled
“Dumsor: Do Your Bit” was introduced.
“Dumsor” is a term in the local language
which refers to switching things off to
reduce energy consumption. This campaign
utilized Panalpina’s behavioral change kit, a
collection of educational materials to reduce
energy consumption in Panalpina’s facilities.
In Panalpina’s Iraq facility, attention was
given to simple, yet highly impactful items
such as installing energy efficient lighting,
replacing dripping faucets in the toilets,
replacing water heaters with more energy
efficient models, and planting trees and
bushes in the front of offices.
Reducing paper consumption was the
target of campaigns in multiple Panalpina
offices. Inspired by Panalpina’s shift to
paperless shipping records, many offices
were able to reduce their per capita paper
consumption. In Poland, a program to
maximize the loading of trucks destined for
Russia was implemented. By introducing
additional load analysis and optimization
steps into the planning process, the team
was able to load the trucks more efficiently
and increase utilization of the vehicles by
13 percent, resulting in saving the load
capacity of 235 trucks, increasing
calculated profits for this route by over
650,000 euros and decreasing fuel
consumption on this route by over 200,000
liters. In Brazil, Panalpina vehicles are only
allowed to use ethanol, a fuel generated
from renewable resources, that emits 89
percent less greenhouse gases compared
to gasoline.
In 2015, Panalpina continued to provide
on-demand reporting to customers
regarding the environmental impacts
of the services they provided. Using the
EcoTransIT platform, integrated into
Panalpina’s enterprise IT systems, key
account managers and Panalpina’s QHSE
team are able to quickly and efficiently
generate detailed reports of the energy
and greenhouse emissions associated
with shipment services across multiple
modes of transportation and trade lanes.
Recognitions for accomplishments
Panalpina annually reports its energy and
greenhouse gas performance and policies
to the Carbon Disclosure Project (CDP).
Year over year, the company has shown
improvements in the scores that it receives.
In 2015, Panalpina received its highest
Carbon Disclosure Project supply chain
program score to date, 94 points out of
100 – significantly higher than the sector
average score of 60 points – demonstrating
the extent to which climate change is
integrated into the company’s business
strategy, its overall performance in
greenhouse emissions and emission
reductions, and its reporting methodology.
In spring 2015, at the Lufthansa Cargo
Conference, Panalpina was awarded
second place in the “Customer Care
Towards Climate Change” category.
Because of Panalpina’s internal initiatives
for managing energy use and greenhouse
gas emissions, as well as the employee
engagement demonstrated in the Global
Sustainable Action Day, Lufthansa
recognized Panalpina as a leader among
12 major cargo carriers for its commitment
to environmental performance.
A commitment to future performance
During the UN Climate Talks in Paris held in
December 2015, it was announced that
Panalpina was one of 114 international
companies and the only logistics company
so far to commit to set science-based
emissions reduction targets as part of a
global effort to mitigate climate change.
These targets will be consistent with what
the Intergovernmental Panel on Climate
Change (IPCC) says is necessary to keep
global warming below 2 degrees centigrade,
a potentially dangerous threshold.
panalpina.com
56
According to the IPCC, global greenhouse
gas emissions must be cut by up to 70
percent by 2050 in order to limit global
warming to this 2-degree threshold and avert
irreversible climate change. The ScienceBased Targets initiative, a joint effort of CDP,
the United Nations Global Compact, World
Resources Institute and the World Wildlife
Fund, only approves corporate targets that
meet its strict criteria. The targets must
cover a minimum of five years and
companies are encouraged to develop
long-term goals as well. Panalpina will
establish its science-based emissions
targets in the first half of 2016.
Global Sustainable Action Day
In 2015, Panalpina renamed its Global
Environment Day to Global Sustainable
Action Day, to reflect the breadth of
activities undertaken by Panalpina
employees. This corporate-wide event was
a celebration of Panalpina’s commitments
to protecting the environment and serving
the communities where it operates.
Around the world, over 500 activities were
organized by the local Panalpina offices.
The activities were planned with local
environmental or community needs in mind,
and consisted of a wide range of charitable,
volunteer and educational programs.
Many offices organized donations to
support local community organizations and
charities. In Argentina, the Panalpina team
organized the donation of computer and
electronic equipment to a local school.
In Canada, used clothing was collected
and provided to local charities and
organizations that support families in need.
The Panalpina organization in Germany
collected clothing to be donated to local
refugee families, part of the large influx of
people fleeing violence from the Middle
East and other regions. The Panalpina US
team organized a contest among all of the
local offices for the best program for Global
Sustainable Action Day. The winning office,
Dallas, organized a food drive, collecting
food for a local organization that supports
needy families in their community.
In China, the teams made donations to
a local school, including art and drawing
supplies, and sports goods such as
basketball, football, badminton and other
athletic equipment. Several other Panalpina
offices collected old cell phones with the
goal of recycling the minerals contained
within to avoid the need to continue
mining these minerals from the habitats of
endangered animals in sub-Saharan Africa.
Panalpina teams also volunteered hundreds
of hours to environmental, educational and
humanitarian organizations around the
world. In Brazil Panalpina Brazil staff bought
and delivered Christmas gifts to children
who otherwise would not have received
any. In Chile, employees visited the San
Joaquin de Renca School, where they
worked with students to make wallets and
other items out of recyclable and reusable
materials such as old milk containers, tires,
plastic bottles and bottle caps. In India,
employees worked with underprivileged
children, spending time with mentally and
physically challenged children and working
with young girls in a local orphanage.
In the Philippines, the Panalpina Cebu
office is located on the island of Lapu-lapu.
Panalpina employees partnered with
CENRO (City Environment and Natural
Resources Office) to strengthen the
mangrove in the coastal area and help
provide natural protection against typhoons.
The Panalpina team in Mexico volunteered
at the “Alimento para Todos” food bank,
selecting and packing more than 12 tons
of food in one day to be donated to various
charity organizations.
I feel honored to be a part
of the recently conducted
sustainable action day. From
the feeding program to the
games and the distribution
of goods and supplies, I can
say we did a great job. The
joy that I felt after hearing
the sincere appreciation of
the people is truly priceless.
Through this activity, we
have proven that Panalpina
is more than just a company
because we change and
touch lives.
Jizelle Liwag
Panalpina, Philippines
+500
activities were organized by the
local Panalpina offices as part
of Global Sustainable Action Day
panalpina.com
57
Activities*
Performance indicator
UNIT
2014
2015
Energy and CO2
Electricity
Consumption
Terajoule
255
241
Heating
Overall consumption
Terajoule
104
103
District heating
District heat
Terajoule
10
11
Vehicle fuel
Consumption (Panalpina-owned and leased vehicles only)
Terajoule
168
144
CO2 emissions†
Total emissions
Tons
59,725
57,608
– Direct (Scope 1)
Tons
17,566
15,579
– Indirect (Scope 2)
Tons
33,836
33,774
– Indirect (Scope 3, business air travel)
Tons
8,323
8,255
Tons / FTE
3.7
3.7
Tons
990
829
m /1000
326
289
Relative emissions per FTE‡
Materials
Paper
Water
Consumption
Consumption
3
* For each indicator, data accuracy from many contributing countries was improved compared to the previous year. Several data gaps could be closed.
†
CO2 emissions were calculated according to guidelines of the Greenhouse Gas Protocol. Emission factors for direct emissions were taken from IPCC, 2006.
Emission factors for indirect emissions were taken from the International Energy Agency (IEA) and from the UK Department for Environment, Food and Rural
Affairs (DEFRA).
‡
Calculated using 2015 average headcount.
Educational activities were also a major
part of Panalpina’s Global Sustainable
Action Day. In Ghana, employees organized
and conducted an environmental quiz to
help their colleagues understand how their
actions impact the environment. In Poland,
representatives of a local food bank met
with Panalpina employees to discuss ways
in which food waste can be prevented.
In Germany, the operator of the Frankfurt
Airport, Fraport, gave a presentation
regarding how animals can play an
important role in environmental education
by sensitizing people to the importance
of environmental protection.
Volunteers at the “Alimento para Todos” food bank in Mexico,
selecting and packing more than 12 tons of food in one day
to be donated to various charity organizations.
panalpina.com
58
GROUP FINANCIAL PERFORMANCE
Net Forwarding
Revenue (NFR)
by region Million CHF
EUROPE
2,339
2,597
AMERICAS
1,922
2,251
APAC
AIR FREIGHT
500
1,000 1,500 2,000 2,500 3,000
OCEAN FREIGHT
4
1
0
500 1,000 1,500 2,000 2,500 3,000 3,500
2015
2014
by product 2015
3
1
3
2
1. Europe 40%
2. Americas 33%
3. APAC 20%
4. MEAC 7%
2,587
2,835
LOGISTICS 623
730
2015
2014
by region 2015
2,646
3,142
1,199
1,327
MEAC 395
531
0
Net forwarding revenue in 2015
amounted to CHF 5,855 million,
a decrease of 13 percent compared
to CHF 6,707 million the year before.
by product Million CHF
2
1. Air Freight 45%
3. Logistics 11%
At the regional level, net forwarding
revenue in Europe — the Group’s largest
region in terms of turnover — decreased
10 percent from CHF 2,597 million to
CHF 2,339 million in 2015. In North,
Central and South America (Americas),
NFR decreased by 15 percent from
CHF 2,251 million to CHF 1,922 million.
Compared to 2014, Panalpina’s NFR in
2015 in Asia Pacific (APAC) decreased
10 percent from CHF 1,327 million to
CHF 1,199 million. The Middle East,
Africa and CIS (MEAC) saw a decrease
in NFR of 26 percent from CHF 531 million
to CHF 395 million.
In 2015, the Panalpina Group generated
40 percent of its net forwarding revenue
in Europe, 33 percent in the Americas,
20 percent in APAC and 7 percent
in MEAC.
On a product level, net forwarding
revenue in Air Freight decreased 16
percent from CHF 3,142 million in 2014
to CHF 2,646 million in 2015. In Ocean
Freight, NFR decreased by 9 percent from
CHF 2,835 million to CHF 2,587 million.
In Logistics, NFR saw a decrease of
15 percent from CHF 730 million to
CHF 623 million.
45 percent of its net forwarding revenue
with Air Freight, 44 percent with Ocean
Freight and 11 percent with Logistics.
panalpina.com
59
GROUP FINANCIAL PERFORMANCE CONTINUED
Gross Profit (GP)
In the forwarding industry gross profit
is considered a better measure of sales
performance than net forwarding revenue
as GP is less distorted by external factors
such as movements in carrier freight rates
and oil prices, which can materially inflate
or deflate revenues.
Gross profit of the Group decreased by
7 percent to CHF 1,474 million in 2015
(2014: CHF 1,586 million). The translation
of foreign currencies into Swiss francs had
a negative impact on the Group’s GP in
the amount of CHF 98 million or 7 percent.
Million CHF
With respect to regional performance,
Europe remains the most important
region for Panalpina in terms of gross
profit generation. In 2015, gross profit
in Europe decreased by 11 percent to
CHF 548 million from CHF 614 million
in the previous year; in Americas, gross
profit decreased by 9 percent from
CHF 486 million to CHF 441 million;
APAC increased gross profit by 2 percent
from CHF 340 million to CHF 348 million; in
MEAC, gross profit decreased by 6 percent
from CHF 147 million to CHF 138 million.
Million CHF
584
636
AIR FREIGHT
548
EUROPE
614
0
100
138
147
200
0
300
400
480
492
LOGISTICS
348
340
APAC
MEAC
OCEAN FREIGHT
441
486
AMERICAS
500
600
100
300
400
2015
2014
2015
4
2015
1
1
3
3
2
1. Europe 37%
2. Americas 30%
3. APAC 24%
4. MEAC 9%
In Ocean Freight, volumes decreased by
1 percent, from 1,606,500 TEU in 2014 to
1,593,900 TEU in 2015. Gross profit per
TEU came in 1 percent below the previous
year’s level. Gross profit generated through
Ocean Freight services was CHF 480
million versus CHF 492 in 2014.
600
700
In 2015, Panalpina generated 39 percent
of its gross profit with Air Freight, 33
percent with Ocean Freight and 28 percent
with Logistics.
2015
2014
700
500
In Air Freight, tonnage decreased by
3 percent or roughly 22,000 tons to
a total of approximately 836,200 tons
(2014: 857,800 tons). Increasing competitive
pressure led to gross profit per ton of
air freight decreasing by approximately
6 percent. In total, gross profit realized
through Air Freight services posted a
decrease of 8 percent from CHF 636
million in 2014 to CHF 584 million in 2015.
Gross profit in Logistics saw a decrease
of 11 percent from CHF 458 million in 2014
to CHF 409 million in 2015, which is mainly
a result of exiting nonstrategic locations.
409
458
200
37 percent of its gross profit in Europe,
30 percent in Americas, 24 percent in
APAC and the remaining 9 percent
in MEAC.
2
1. Air Freight 39%
3. Logistics 28%
panalpina.com
60
Earnings Before Interest
and Taxes (EBIT)
Management considers earnings before
interest and taxes (EBIT) a key performance
indicator for assessing the Group’s
operating performance. The Group’s
EBIT in 2015 amounted to CHF 117
million (2014: CHF 117 million). Panalpina
achieved an EBIT/GP margin of 8 percent
(2014: 7.4 percent).
Overall development
Million CHF
117
117
EBIT
EBIT
EBIT/GP MARGIN 8%
EBIT/GP MARGIN 7.4%
0
20
40
60
80
100
120
140
2015
2014
EBIT by region
Million CHF
25
EUROPE
7
AMERICAS 15
31
65
68
APAC
MEAC 12
11
0
10
20
30
40
50
60
70
80
2015
2014
EBIT by product
Million CHF
88
AIR FREIGHT
112
OCEAN FREIGHT
27
13
LOGISTICS
2
-8
20
0
2015
2014
20
40
60
80
100
120
The two main items included in operating
expenses — personnel expenses and
other operating expenses — developed
as follows:
• Personnel expenses amounted to
CHF 896 million in 2015 and showed
a decrease of 8 percent from the
previous year (2014: CHF 977 million).
The decrease was mainly a result of
currency exchange.
• Other operating expenses amounted
to CHF 409 million in 2015 and thus
came in approximately 6 percent
lower compared to the previous year
(2014: CHF 435 million). Other operating
costs decreased despite an historically
high incremental IT investment of CHF 18
million for the Operational Transformation
Program / SAP TM.
Depreciation and amortization charges
changed from CHF 57 million in 2014
to CHF 51 million in 2015.
With respect to regional EBIT performance,
the largest contribution to Group EBIT
comes from APAC with CHF 65 million
(2014: CHF 68 million). In Europe, EBIT
increased from CHF 7 million in 2014 to
CHF 25 million in 2015. EBIT in the
Americas decreased from CHF 31 million in
2014 to CHF 15 million in 2015. In MEAC,
EBIT increased from CHF 11 million in 2014
to CHF 12 million in 2015.
In the products, Air Freight delivered the
highest EBIT with CHF 88 million,
a decrease compared to the CHF 112
million achieved in the previous year. In
Ocean Freight, EBIT increased from CHF
13 million in 2014 to CHF 27 million in
2015. In Logistics, the EBIT result improved
from a loss of CHF 8 million in 2014 to a
positive result of CHF 2 million in 2015.
panalpina.com
Balance sheet
Current assets
Total assets
Million CHF
Panalpina’s cash and cash equivalents
amounted to CHF 392 million on December
31, 2015 and thus increased by CHF 20
million from the year before (December 31,
2014: CHF 372 million). The cash increase
can mainly be attributed to lower net
working capital.
274
329
Non-current assets
106
104
954
1,124
Trade receivables and unbilled forwarding services
392
372
Cash and cash equivalents
200
400
600
800
1,000 1,200
Trade receivables and unbilled forwarding
services decreased by CHF 170 million,
from CHF 1,124 million at the end of
2014 to CHF 954 million at the end
of 2015. The decrease can be mainly
attributed to lower turnover and
improvement in the collection process.
The net working capital intensity (defined
as net working capital as a percentage
of gross forwarding revenue) at the end
of 2015 was 1.8 percent, compared
to 2.2 percent a year earlier.
2015
2014
Total liabilities and equity
Million CHF
Non-current assets
653
733
Equity
405
457
Other liabilities
669
739
Trade payables and accrued cost of services
0
200
2015
2014
Panalpina’s trade payables and accrued
cost of services at year-end 2015
amounted to CHF 669 million compared
to CHF 739 million at year-end 2014 and
hence saw a reduction of CHF 70 million.
Other liabilities
Other current assets
0
Trade payables and accrued
cost of services
400
600
800
Panalpina’s non-current assets
decreased by CHF 55 million and
amounted to CHF 274 million on
December 31, 2015 (December 31,
2014: CHF 329 million). The decrease
can mainly be attributed to amortization
of tangible and intangible assets.
Panalpina’s other liabilities decreased
by CHF 52 million from CHF 457 million
at year-end 2014 to CHF 405 million at
year-end 2015.
Total equity
Total equity decreased by CHF 80 million
during the reporting period, from CHF
733 million on December 31, 2014, to
CHF 653 million on December 31, 2015.
61
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62
Cash flow
Net cash from operating activities
NET CASH
Dec 31
2014
Dec 31
2015
372.0
392.3
5%
0.0
0.0
0%
Short-term debt
-0.5
-0.1
-73%
Long-term debt
-0.1
0.0
-77%
371.4
392.0
6%
Panalpina’s net cash from operating
activities in the reporting period amounted
to CHF 152 million (2014: CHF 123 million).
A main contributor was the improvement
in working capital.
Cash and cash equivalents
Cash flow from investing activities
Expenditures on property, plant and
equipment decreased to CHF 16 million
(2014: CHF 19 million). Capital expenditures
in 2015 amounted to 0.3 percent of net
forwarding revenue (2014: 0.7 percent).
Overall, the net cash outflow from investing
activities decreased from CHF 36 million
in 2014 to CHF 9 million in 2015.
Net cash
Cash flow from financing activities
The company paid an ordinary dividend
amounting to CHF 65 million in 2015.
The net cash used in financing activities
thus increased from CHF 55 million in
2014 to CHF 69 million in 2015.
Net Cash
Net cash increased by CHF 21 million
during the year under review to CHF
392 on December 31, 2015 (December
31, 2014: CHF 371 million).
Other current financial assets
Difference
panalpina.com
63
INVESTMENTS
Building for
the future
Strategy for growth
During 2015 Panalpina pursued its strategy
for growth based on three pillars: organic
growth (growth from within), external
growth (by acquisitions) and innovation.
The company expanded its air freight
offerings further during the year, introducing
the Brazil Wings service between Huntsville,
Alabama and São Paulo, Brazil, and
adding additional calls to the service
between Luxembourg and Hong Kong
with stops in Baku. Ocean Freight
continued to optimize and expand its
Managed Solutions and services for
less than container load (LCL) shipments,
especially in the Asia outbound markets
to Asia, the US, Latin America and Europe.
Expansion in growing economies
and industries
Supporting its growth strategy for
northern and eastern Africa, Panalpina
opened offices in Casablanca, Morocco
and Nairobi, Kenya. In both economies,
opportunities for growth exist in the
energy and infrastructure sectors as
well as in perishables and consumer
goods. A new office was established
in Yangon, Myanmar, where a new
civil government is opening up new
opportunities for industry and trade at
the crossroads between Asia and Europe.
The biggest opportunities for growth
for Panalpina are in telecommunications,
manufacturing, oil and gas, as well
as capital projects.
As a further demonstration of its intention
to expand in Africa, and to increase its
share in the perishables sector, Panalpina
agreed to acquire a majority share in
Airflo, a freight forwarder specializing in the
worldwide export of fresh cut flowers, plant
cuttings and vegetables. The company has
over 160 employees in Nairobi, Kenya and
Aalsmeer, the Netherlands. Panalpina also
acquired its Egyptian partner Afifi with
offices in three locations.
The company made major investments in
new centers in Panama and Dubai as part
of its Logistics Manufacturing Services
(LMS) approach, which brings Panalpina
closer into its customers’ supply chains
through last-minute assembly, testing,
repairs and returns. The centers support
major telecommunications companies and
are now being expanded to encompass
a wider range of services.
To enable growth through innovation,
Panalpina is gathering ideas through
an Innovation Board. Led directly by the
CEO, the Board encourages input from
employees, management, universities,
partners and customers and focuses on
proposals that will bring a business benefit.
A solid base in Egypt
In 2015 Panalpina acquired
its long-time partner in Egypt,
Afifi, with approximately
150 employees in Cairo,
Alexandria and Suez. While
all major industries are
represented in the country,
Panalpina sees the greatest
growth potential in the oil
and gas, capital projects,
telecom, automotive and
healthcare sectors.
Corporate
governance
panalpina.com
64
panalpina.com
65
CORPORATE GOVERNANCE
Corporate
governance report
Panalpina is committed to a transparent management structure that is governed by
international principles. This Corporate Governance Report complies with the directive
of the SIX Swiss Exchange and therefore provides investors with the corresponding
key information.
GROUP MANAGEMENT STRUCTURE
+
Executive Board (EB)
Executive Committee (ExCom)
Corporate Audit
Compliance
Board of Directors
Markus Heyer
Daniel Trefzer
Corporate
Development
Peter Ulber
Rafic Mecattaf
Chief
Operating
Officer
Chief
Commercial
Officer
Chief
Financial
Officer
Chief Human
Resources
Officer
Chief
Legal
Officer
Chief
Information
Officer
Andy Weber
Karl Weyeneth
Robert Erni
Karsten Breum
Christoph Hess
Ralf Morawietz
Energy Solutions
Air Freight
Europe
Michel Dubois*
Lucas Kuehner
Volker Böhringer
Ocean Freight
Americas
Daryl Ridgway*
Frank Hercksen
Logistics
Asia Pacific
Mike Wilson
Stefan Karlen
Middle East ⁄Africa ⁄CIS
Peter Triebel
Andy Weber, Chief Operating Officer, member of the EB since July 1, 2015.
Roderick Angwin, Chief Information Officer, served as EB member until June 30, 2015.
Hans Toggweiler, Head of Energy Solutions, served as ExCom member until December 31, 2015.
Ferdinand Kurt, Regional CEO Americas, served as ExCom member until December 31, 2015.
Ralf Morawietz, Chief Information Officer, member of the EB since October 15, 2015.
Frank Hercksen served as Head of Ocean Freight until December 31, 2015 and is Regional CEO Americas since January 1, 2016.
* ExCom member as of January 1, 2016.
panalpina.com
CORPORATE GOVERNANCE CONTINUED
1 Group structure and shareholders
1.1 Group structure
1.1.1 Operational Group structure
Panalpina’s business activities are
primarily regionally oriented. The operating
structure is divided into the following four
regional segments:
• Americas (North, Central and
South America)
• Asia Pacific
• Europe
• MEAC (Middle East, Africa and CIS)
Secondly, the business activities
are subdivided into the following
business segments:
• Air Freight
• Ocean Freight
• Logistics (value-added services,
distribution solutions)
Supplementary information can be taken
from the segmental reporting section of
the Consolidated Financial Statements.
1.1.2 Listed companies within the scope
of consolidation
Panalpina World Transport (Holding) Ltd.
(PWT), the ultimate holding company of the
Panalpina Group, is the only listed company
within the scope of consolidation. PWT has
its registered office in Basel, Switzerland.
The PWT shares are exclusively listed on
the SIX Swiss Exchange. The market
capitalization on the closing date amounted
to CHF 2.67 billion (23,750,000 registered
shares at CHF 112.50 per share).
The PWT shares are traded under Valor
no. 216808, ISIN CH0002168083,
symbol PWTN.
1.1.3 Non-listed companies within
the scope of consolidation
The main subsidiaries and associated
companies are disclosed in the
Consolidated Financial Statements itemized
by registered office, nominal capital, equity
interest in percent, investment and method
of consolidation.
1.2 Significant shareholders
On December 31, 2015 the Ernst Göhner
Foundation, Zug, Switzerland, is the main
shareholder of PWT, with an equity
participation of 45.9 percent.
Cevian Capital II Master Fund LP held a
share capital of 12.3 percent on closing
date. Other significant shareholders
according to their most recent disclosure
notices are Artisan Partners Limited
Partnership (≥10 percent) and Janus Capital
Group (≥5 percent). During the reporting
year the following disclosure notices (listed
by shareholders and transaction date) were
filed on the SIX online publication platform.
Janus Capital Group
December 9, 2015: decrease of share
ownership to 4.99 percent
December 28, 2015: transfer in kind to
5.02 percent
1.3 Cross-shareholdings
No cross-shareholdings exist between
PWT and any other company.
2 Capital structure
2.1 Capital
On the closing date, the ordinary share
capital of PWT amounted to CHF
2,375,000 and is divided into 23,750,000
registered shares, with a nominal value of
CHF 0.10 each.
2.2 Authorized and
conditional share capital
The extraordinary Shareholders’ Meeting
of PWT held on August 23, 2005 agreed
with the Board of Directors’ proposal to
create an authorized share capital up to
a maximum aggregate amount of CHF
6,000,000 by issuing a maximum of
3,000,000 registered shares with a
nominal value of CHF 2.00 each. At the
Shareholders’ Meeting of May 10, 2011
the authorized share capital was renewed
at the same value until May 2013. At the
Shareholders’ Meeting of May 8, 2012,
the authorized share capital was reduced
in conjunction with the reduction of the
share capital (see section 2.3 below)
to a maximum aggregate amount of
CHF 300,000 by issuing a maximum
of 3,000,000 registered shares with
a nominal value of CHF 0.10 each.
At the Shareholders’ Meeting of May
15, 2013, the authorized share capital
was renewed at the same value until
May 15, 2015.
At the Shareholders’ Meeting of May
12, 2015, the authorized share capital
was renewed at the same value until
May 12, 2017.
The Board of Directors is authorized
to exclude the pre-emptive rights of
shareholders and to convey them to third
parties, provided that such new shares
are to be used for the takeover of
entire enterprises, divisions or assets
of enterprises or participations or for the
financing of such transactions. The Board
of Directors has not yet made use of
this authorization.
No decision has been made regarding
the creation of conditional capital.
2.3 Change in capital over the past
three years
No changes were made over the last
three years.
2.4 Shares and participation
certificates
On the closing date, 23,750,000 fully
paid-in PWT registered shares with a
nominal value of CHF 0.10 each were
issued. On this date, no participation
certificates were issued.
2.5 Dividend-right certificates
On the closing date, no dividend-right
certificates had been issued.
66
panalpina.com
67
2.6 Limitations on transferability
and nominee registrations
2.6.1 Limitations on transferability
for each share category; indication
of statutory group clauses and
rules for granting exceptions
Acquirers of PWT shares are entered into
the share register as shareholders with
voting rights upon provision of proof of the
acquisition of the shares and provided that
they expressly declare that they hold the
shares in their own name and for their
own account.
The Articles of PWT specify that any
shareholder may exercise voting rights to a
maximum of 5 percent of the total number
of shares recorded in the commercial
register. This limitation for registration in the
share register shall also apply to persons
who hold shares fully or in part through
nominees within the meaning of the
Articles. Furthermore, this limitation for
registration in the share register also applies
to registered shares that are acquired
through the exercising of pre-emptive
rights, warrants and conversion rights.
The Board of Directors is empowered
to wallow exemptions from the limitation
for registration in the share register in
particular cases.
The Articles make provision for group clauses.
The limitations on transferability do not
apply to the shares held by the Ernst
Göhner Foundation because it held PWT
shares prior to the implementation of the
limitations (so-called grandfathering).
2.6.2 Reasons for granting exceptions
in the year under review
No exceptions were granted during the
reporting year.
2.6.3 Admissibility of nominee
registrations; indication of any percent
clauses and registration conditions
The Articles of PWT specify that the
Board of Directors may register nominees
with voting rights in the share register up
to a maximum of 2 percent of the share
capital recorded in the commercial register.
Nominees are persons who do not
expressly declare in their application that
they hold the shares for their own account
and with whom the company has entered
into an agreement to this effect.
The Board of Directors is empowered to
register nominees with voting rights
exceeding 2 percent of the share capital
recorded in the commercial register as
long as the respective nominees inform
PWT of the names, addresses, nationalities
(registered office in the case of legal entities)
and the shareholdings of those persons
for whose account they hold 2 percent
or more of the share capital recorded
in the commercial register.
3 Board of Directors
3.1 Members of the Board
of Directors
At the Annual General Meeting of May 12,
2015, Thomas E. Kern and Pamela Knapp
were elected and Rudolf W. Hug, Beat
Walti, Ilias Läber, Chris E. Muntwyler,
Roger Schmid and Knud Elmholdt Stubkjær
were re-elected to the Board of Directors
for a one-year term, whereas Hans-Peter
Strodel stepped down from the Board due
to his retirement.
On the closing date, the Board was
composed of eight persons.
Three members of the Board of Directors
(Rudolf W. Hug, Roger Schmid and Beat
Walti) are also members of the Board of
Trustees (Stiftungsrat) of PWT’s main
shareholder, the Ernst Göhner Foundation.
Ilias Läber is a member of the Board of
Directors of Cevian Capital AG, the Swiss
office of PWT’s second largest shareholder.
The Articles make provision for
group clauses.
The biographies of the members are
as follows:
2.6.4 Procedure and conditions for
canceling statutory privileges and
limitations on transferability
A resolution of the General Shareholders
Meeting of PWT on which at least twothirds of the voting shares represented
agree is required for any abolition or
change of the provisions relating to
transfer limitations.
Rudolf W. Hug, Chairman. Swiss
citizen. Born in 1944. Re-elected in 2015
(until 2016).
2.7 Convertible bonds, warrants
and options
There were no convertible bonds
outstanding on the closing date.
The only issued options relate to the
share and option participation program
(Management Incentive Plan (MIP)) and
are for currently 1,030 senior managers
of Panalpina. As of 2009, the Board of
Directors and the Executive Board have
been excluded from participation in this
program. As of 2011, the options under
the MIP program have been replaced by
a free share ratio scheme. Please refer
to page 84 of the Compensation Report.
Rudolf W. Hug holds a PhD in law from
the University of Zurich and an MBA from
INSEAD, Fontainebleau (France). In 1985,
he participated in the Executive Program
of the Graduate School of Business at
Stanford University. From 1977 to 1997,
he worked in several positions for
Schweizerische Kreditanstalt (today Credit
Suisse). During the period from 1987 to
1997, he ran the international division and
served as a member of the Executive Board
of Credit Suisse and Credit Suisse First
Boston. Since 1998, Rudolf W. Hug has
been active as an independent
management consultant.
Rudolf W. Hug has been a member of
the Board of Directors since 2005 and
was appointed Chairman of the Board
of Directors on May 15, 2007 following
the retirement of his predecessor.
panalpina.com
68
Beat Walti, Member of the Board of
Directors since 2010. Swiss citizen. Born
in 1968. Re-elected in 2015 (until 2016).
Beat Walti holds a PhD in law from the
University of Zurich. From 1998 to 2001
he worked as a consultant and engagement
manager with McKinsey & Company in
Zurich. In 2001, he was a co-founder and
project manager of a start-up company in
the healthcare sector. Since 2002, Beat
Walti has worked as a lawyer with Wenger
& Vieli in Zurich specializing in corporate,
commercial, contract, competition and
antitrust law. He became a partner with
Wenger & Vieli in 2007 and was the firm’s
managing partner from 2012 to 2014.
Ilias Läber, Member of the Board of
Ilias Läber holds a Master of Science from
ETH Zurich and a PhD in Finance from the
University of Zurich. From 2001 to 2008,
Ilias Läber worked at McKinsey & Company,
ultimately as an Associate Principal. During
this time he was responsible for projects
in the area of operational improvement
and corporate finance for mid-sized and
multinational companies in Europe, the
US and South America. In 2008 he joined
Cevian Capital AG. In his role as Partner
and Managing Director he is responsible
for Cevian’s Swiss office and investments
in Switzerland and England.
Chris E. Muntwyler, Member of the Board
of Directors since 2010. Swiss citizen. Born
Chris E. Muntwyler attended the School of
Commerce in Zurich and completed various
executive programs at Harvard University,
IMD in Lausanne and at the Wharton
University. From 1972 to 1999 he held
several positions at Swissair, until 1981
in various leadership functions in the
Marketing Division, in 1982 as General
Manager Marketing and Sales Scandinavia
and from 1986 for North America. In 1990,
he took over responsibility for the global
Price and Distribution Policy and then led
the development and introduction of the
new Group IT strategy. Before leaving
Swissair at the beginning of 1999, he was
Vice President Global Distribution.
From 1999 to 2008, Chris E. Muntwyler
held several executive positions at DHL
Express, in 1999 as Managing Director
Switzerland, in 2002 as Managing Director
Germany, in 2003 as Chief Executive
Central Europe, and in 2005 as Chief
Executive United Kingdom.
Today Chris E. Muntwyler is President
and CEO of the management consulting
company Conlogic AG.
Roger Schmid, Member of the Board of
Roger Schmid holds a university degree
in law as well as a PhD in law from the
University of Zurich. From 1991 to 1995,
he was Legal Counsel and Director at Bank
Leu (today Credit Suisse). Roger Schmid
works as an Executive Director of the Ernst
Göhner Foundation.
Knud Elmholdt Stubkjær, Member of
the Board of Directors since 2011. Danish
citizen. Born in 1956. Reelected in 2015
(until 2016).
Knud Elmholdt Stubkjær holds a shipping
degree from the Mærsk International
Shipping Academy, supplemented with
various executive programs, e.g. from IMD
and INSEAD. From 1977 through 2007,
he held various positions within the A.P.
Møller-Mærsk Group, including a number
of postings in Asian and European
countries. This included positions as Head
of Mærsk Line United Kingdom, President
of Mærsk K.K. Japan, CEO A.P. MøllerMærsk Singapore and Regional Manager
A.P. Møller Group Asia/Oceania/Middle
East. In 1999, he became Head of Mærsk’s
container business worldwide, based in
Copenhagen, and the same year became
one of five partners in the A.P. MøllerMærsk Group. In 2008, he became a
partner in the E.R. Capital Holding Group
in Hamburg, serving as CEO of one of its
subsidiaries, E.R. Schiffahrt GmbH, a
leading maritime service provider within
container, bulk and offshore shipping.
Since July 30, 2012, Knud Elmholdt
Stubkjær is acting as CEO and CSO
of Carrix Inc., Seattle, Washington.
Thomas E. Kern, Member of the Board
of Directors since 2015 (until 2016).
Swiss citizen. Born in 1953.
Thomas E. Kern holds a university degree
in law from the University of Zurich and an
MBA from INSEAD, Fontainebleau (France).
Thomas E. Kern held various management
positions in established organizations.
From 2002 to 2006 Thomas E. Kern was
Chief Executive Officer of Globus-Gruppe,
Spreitenbach (Switzerland) and from 2008
to 2014 Chief Executive Officer of Zurich
Airport AG, Zurich (Switzerland).
Pamela Knapp, Member of the Board
of Directors since 2015 (until 2016).
German citizen. Born in 1958.
Pamela Knapp holds a diploma degree in
economy from the Freie Universität Berlin/
Free University Berlin (Germany) and
completed the Advanced Management
Program (AMP) at Harvard University,
Boston (USA).
Pamela Knapp held various management
positions at Siemens AG, Munich
(Germany) and was Chief Financial Officer
of the Power Transmission & Distribution
Division from 2004 to 2009. From 2009 to
2014 Pamela Knapp was a member of the
Board of Directors and Chief Financial
Officer of GfK SE, Nuremberg (Germany).
All members of the Board are non-executive
members and do not actively perform any
managerial functions at PWT or any of the
Group companies. Nor have they held any
executive positions within the past three
years prior to this reporting year. None
of the members of the Board of Directors
has a substantial business relationship
with PWT or any of its Group companies.
panalpina.com
69
3.2 Other activities and
vested interests
Rudolf W. Hug, Member of the Board of
Trustees (Stiftungsrat) of the Ernst Göhner
Foundation, Zug (Switzerland), Vice
Chairman of the Board of Directors of
Deutsche Bank (Schweiz) AG, Geneva
(Switzerland), Member of the Board of
Trustees of the Ernst von Siemens
Musikstiftung, Zug (Switzerland) and
Chairman of the Board of Trustees of
Stiftung Hoffnung für Menschen in Not,
Kerzers (Switzerland).
Beat Walti, Chairman of the Board of
Trustees of the Ernst Göhner Foundation,
Zug (Switzerland) and a member of the
National Council (Swiss Federal Parliament).
Ilias Läber, Managing Director of Cevian
Capital AG, Pfäffikon (Switzerland).
Chris E. Muntwyler, Member of the Board
of Directors of Austrian Post in Vienna
(Austria) and of National Express Group
PLC, London (United Kingdom).
Roger Schmid, Member of the Board
of Trustees and Executive Director
of the Ernst Göhner Foundation,
Zug (Switzerland).
Knud Elmholdt Stubkjær, Member of
the Board of Directors of various Carrix,
Inc.-related entities.
Thomas E. Kern, Member of the Board
of Directors of Berne Airport, Berne
(Switzerland); Chairman of the Board of
Trustees of the Zoo Zurich Foundation,
Zurich (Switzerland).
Pamela Knapp, Member of the Board of
Directors of PSA Peugeot Citroën S.A.,
Paris (France), Compagnie de Saint-Gobain
S.A., Courbevoie (France) and hkp group
AG, Zurich, (Switzerland).
Other than these, the members of the
Board of Directors do not hold other
material offices, nor do they carry out
any other principal activities that affect
the Group.
3.3 Elections and terms of office
3.3.1 Principles of the election
procedure and limitations on the
terms of office
The Articles of PWT do not make provision
for the general renewal of office for the
Board of Directors. The members of the
Board of Directors are elected at each
General Meeting of Shareholders with a
one-year period of office. They may be
re-elected at any time. The Organizational
Regulations of PWT specify an age limit
of 72 years for the members of the Board
of Directors.
3.3.2 The first election and remaining
term of office for each member of the
Board of Directors
The timing of the first election and the
remaining term of office for each member
of the Board of Directors is specified under
section 3.1.
3.4 Internal organizational structure
The Board of Directors is responsible for
the ultimate management of the company
and monitoring of the Executive Board.
It represents the company externally and
is responsible for all matters which have
not been transferred to another executive
body of the company by the Swiss Code
of Obligations or the Articles. In line with
the Articles, the Board of Directors has
established Organizational Regulations that
transfer certain management responsibilities
to the Executive Board.
3.4.1 Allocation of tasks within
the Board of Directors
The Chairman of the Board of Directors
is elected at each General Meeting of
Shareholders with a one-year period of
office. The Vice Chairman is appointed
by the Board of Directors. The Chairman
(in his absence the Vice Chairman) directly
supervises the business affairs and activities
of the Executive Board and is entitled to
regularly attend Executive Board meetings.
The Corporate Auditor as well as the
Corporate Secretary, in his capacity as
secretary to the Board of Directors, are
directly subordinated to the Chairman
of the Board of Directors.
3.4.2 Member list, tasks and areas
of responsibility for each committee
of the Board of Directors
Three committees exist under the
Board of Directors.
The Audit Committee consists of the
following members of the Board of
Directors: Ilias Läber (Chairman), Pamela
Knapp and Roger Schmid. The Audit
Committee supports the Board of Directors
with the review of the company’s financial
statements, the supervision of the financial
accounting standards and reporting, the
review of the effectiveness of the internal
control system and with the efficiency
of external and internal audit procedures,
including risk management. The Audit
Committee reviews the consolidated
annual financial statements as well as the
published interim financial statements and
submits an application to the Board of
Directors for approval. It regularly maintains
contact with the Group Auditors and the
Corporate Auditor. On this basis, it adopts
the detailed reports of the Group Auditors
and semi-annual reports of Corporate
Audit. It is therefore in the position to
audit the quality, effectiveness and
interaction between the control systems,
to determine the audit priorities, to
introduce proposed measures and to
monitor their implementation. The Audit
Committee determines the organization of
Corporate Audit, adopts the internal audit
charter and approves the annual planning
and scope of internal audit.
In the field of risk management, the Audit
Committee approves the detailed and
weighted risk map of the Executive Board,
adopts the necessary measures for risk
control and risk mitigation and reports
the respective outcome to the Board
of Directors on a yearly basis. The risk
map itself covers any strategic, financial,
operational, legal and compliance risks that
could significantly impact the company’s
ability to achieve its business goals
and financial targets. Identified risks are
weighted and prioritized by the Executive
Board according to their significance
and likelihood of occurrence. For each risk,
specific risk mitigation measures – including
their current status – are defined and
responsibilities are allocated. The risk map,
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which is compiled by the Risk Review
Committee, chaired by the Corporate
Secretary, for review by the Executive
Board and subsequent approval by
the Audit Committee, contains risks
identified and assessed by the respective
corporate functions, Regional Management,
Corporate Audit and the Group Auditors.
The Group’s key risks are annually reported
to the Board of Directors.
During the reporting year the Audit
Committee held five half-day meetings.
During Audit Committee meetings, direct
discussions took place with representatives
of the Group Auditors and Corporate Audit.
Representatives from the Group Auditors
were present at three of these meetings
and the Corporate Auditor (being a
permanent participant at the Audit
Committee meetings since August 2010)
attended all of the above-mentioned
meetings. At these meetings, the Executive
Board was regularly represented by the
CEO, the CFO and the Corporate Secretary.
The Compensation and Nomination
Committee consists of the following
members of the Board of Directors: Rudolf
W. Hug (Chairman), Thomas E. Kern, Chris
E. Muntwyler and Knud Elmholdt Stubkjær.
The members of the Committee are elected
at each General Meeting of Shareholders
with a one-year period of office. It monitors
the selection process for members of the
Board of Directors, the Executive Board
and other selected senior management
positions, determines the overall
remuneration and terms of employment for
members of the Board of Directors and the
Executive Board as well as remuneration
bands for highly compensated employees.
Regarding the compensation of the
members of the Executive Board, the
Committee makes a decision subject to
the final approval of the Board of Directors;
applications for the compensation of
the Board members are decided by the
Committee and shared with the Board
of Directors. Each year the Committee
decides on the bonus compensation for
the CEO and the other members of the
Executive Board for the previous year,
based on recommendations of the
Chairman (for the CEO) and the CEO
(for other Executive Board members).
Furthermore, the Committee regularly
reviews the Board Stock Award Plan,
the Executive Board Mid-Term and
Long-Term Incentive Plans and the Group’s
Management Incentive Plan and submits
proposals for final approval to the Board of
Directors. Moreover, it approves concepts
and policies for the Group’s management
performance assessment, succession
planning and expat programs.
3.4.3 Working methods of the Board
of Directors and its committees
During the reporting year, the Board
of Directors held four full-day meetings.
The Executive Board was represented
by all its members at these meetings.
In urgent cases, telephone conferences
are organized in order for decisions to
be taken.
During the reporting year, the
Compensation and Nomination Committee
held four meetings of approximately two
hours each. The Executive Board was
regularly represented at these meetings
by the CEO, the Chief HR Officer and
the Corporate Secretary.
At every meeting, the Executive Board
updates the Board of Directors on business
and key financial developments and main
regional and segment developments. On
a quarterly basis, detailed consolidated
financial statements on the Group, regional
and business segment levels are reported
to the Board of Directors in accordance
with International Financial Reporting
Standards (IFRS). The Board of Directors
is furnished in time with an agenda,
detailed meeting documentation related
to topics on the agenda and minutes.
The Ethics and Compliance Committee
consists of the following members of
the Board of Directors: Rudolf W. Hug
(Chairman), Roger Schmid and Beat Walti.
It oversees the company’s business ethics
program. It monitors the handling of major
legal matters as well as the development
of the company’s compliance policies
and procedures.
During the reporting year, the Committee
held four meetings. The Executive Board
was represented at these meetings by the
CEO and the Corporate Secretary.
The committees generally meet prior
to Board of Directors meetings. The
chairmen of the committees inform and
update the Board of Directors on the topics
discussed and decisions made during
such meetings. They submit proposals for
approval related to decisions that fall within
the scope of the Board of Directors.
Objectives, organization, duties and
cooperation with the Board of Directors
are defined in the Terms of Reference of the
respective committees which are reviewed
and adopted by the Board of Directors.
The overall responsibility of the
Board of Directors is not affected
by these committees.
3.5 Definition of areas
of responsibility
In line with the law and the Articles, the
Board of Directors has transferred the
responsibility to develop and implement
the Group strategy, as well as the
responsibility to supervise business
and financial development of the Group’s
subsidiaries, to the Executive Board.
The Organizational Regulations adopted
by the Board of Directors govern the
cooperation between the Board of
Directors, the Chairman and the Executive
Board. They contain a detailed catalogue of
duties and competencies which determine
the financial thresholds within which the
Board of Directors and the Executive Board
can efficiently execute their daily business.
The Organizational Regulations, which also
contain the Group’s approval matrix with
the related decision-making powers of the
various bodies on corporate and regional
level, are accessible on Panalpina’s website.
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The main responsibilities of the Board
of Directors at Group level include the
determination of the business strategy
on the basis of applications filed by the
Executive Board, the approval of major
Group policies and organizational
structures, including topics related to
Corporate Governance and Compliance,
the approval of the annual operational
and investment budgets, the approval
of any extraordinary additional investment
applications as well as financial planning.
Further responsibilities include decisions
regarding mergers and acquisitions
and major management staff and
remuneration decisions following the
recommendations and preparatory
work of its Compensation and
Nomination Committee.
3.6 Information and control
instruments vis-à-vis the
senior management
The Executive Board informs the Board
of Directors in a written format on a
monthly basis on the current course
of business, covering the Group’s
consolidated monthly and year-to-date
income statements, including deviation
from budget and preceding year,
regionaland product income statements,
functional costs/FTE development, financial
position, statements on cash flows and
net working capital development.
A detailed update is provided at each
Board of Directors’ meeting.
On a quarterly basis, the reporting
covers the condensed consolidated
interim financial statements including
key developments, income statement,
statement of comprehensive income,
statement of financial position, statement
of changes in equity, statement of cash
flows and explanatory notes, IR
presentations and media release.
Further information regarding personnel
and organizational changes, extraordinary
events and the activities of analysts,
investors and competitors form part of the
regular reporting. Moreover, the Board of
Directors annually reviews and approves
the Group’s targets for the individual regions
and business segments and adopts the
respective report of the Executive Board.
During the reporting year, the Chairman of
the Board of Directors regularly receives the
minutes of the Executive Board meetings.
The members of the Executive Board
regularly join meetings of the Board of
Directors. In addition, individual senior
executives attended specific topic
discussions pertaining to their particular
field of expertise. Furthermore, specific
meetings of the Board of Directors are
dedicated to a detailed review of major
markets, business segments and the
Group’s strategy according to a predefined
schedule. For further details please refer
to sections 3.4.2 and 3.4.3.
The Audit Committee of the Board of
Directors monitors and assesses the
activities of the Corporate Auditor as well as
his cooperation with the Group Auditors.
The Audit Committee receives the
Corporate Auditor’s half-year reports and
also adopts the comprehensive annual risk
map of the Executive Board. The Audit
Committee approves the proposed risk
control and risk mitigation measures as
well as the annual planning and scope of
the internal audit, which is also based on
the risk map. For further details please refer
to section 3.4.2.
4 Executive Board
4.1 Members of the Executive Board
On the closing date, the Executive Board
was composed of six persons.
Peter Ulber, President and Chief Executive
Officer since June 2013, German citizen.
Born in 1960.
Following his studies at the International
School of Logistics in Hamburg, Peter Ulber
held various management positions from
1985 to 2011 at Kuehne + Nagel in Europe,
as well as North and South America. During
his tenure, Peter Ulber was responsible for
both ocean freight and air freight, had
overall responsibility for the global sales
organization and joined the management
board in 2008. As a result of a series of
strategic acquisitions by Kuehne + Nagel,
Peter Ulber was also heavily involved in
the company’s expansion in Europe, Asia
and America.
At the end of 2011 he co-founded
Charleston Enterprise Group LLC, a
strategic management consultancy that
offers consulting, management and
investment strategies for international
logistics companies and private equity
firms with a primary focus on mergers and
acquisitions as well as growth strategies.
Robert Erni, Chief Financial Officer since
January 2013, Swiss citizen. Born in 1966.
Robert Erni has worked in various finance
positions at Kuehne + Nagel for more than
19 years. Prior to the head office functions
such as Head of Corporate Controlling
(2009 to 2012) and Head of Accounting
and Treasury (2004 to 2009), he gained
profound finance and managerial expertise
through several senior postings in Asia
Pacific (Hong Kong and India), in South
America (Argentina) and in the USA.
Robert Erni holds a degree in Economics
and Business Administration of the
University of Economics and Business
Administration, Lucerne (Switzerland).
Christoph Hess, Chief Legal Officer and
Corporate Secretary, Swiss citizen. Born in
1955. Member of the Executive Board since
October 2006. Responsible for Corporate
Legal Services and Insurance.
Christoph Hess joined the Group’s head
office in 1994 as Secretary of the Board of
Directors and the Executive Board. In this
capacity he manages both the Group’s
Legal and Insurance departments. He
also managed Corporate Communications
until August 2008. Christoph Hess holds
a degree in law from the University of
Basel and has been admitted to the bar
in Switzerland.
Karl Weyeneth, Chief Commercial Officer,
Swiss citizen. Born in 1964. Member
of the Executive Board since April 2008.
Responsible for Sales, Marketing and
Communication, QHSE and Operations
Transformation.
Karl Weyeneth joined the Group in 2007 as
Regional CEO for North America, where he
was responsible for the development and
results of the subsidiaries in the USA and
Canada. He is a professional with profound
leadership and management experience
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in logistics, including freight management,
3PL and contract logistics. Before joining
Panalpina, he was President and CEO
Americas of Hellmann Worldwide Logistics,
Inc. (USA) and prior to this he was
Executive Vice President and CFO
of Danzas Management Latin America
(USA), where he attained extensive
experience in all finance matters. He holds
a Bachelor in Economics and Business
Administration from the University of
Berne, Switzerland.
Karsten Breum, Chief Human Resources
Officer, Danish citizen. Born in 1972.
Member of the Executive Board since
2014. Responsible for Human Resources.
Karsten Breum, a Danish citizen, joined
Panalpina’s Executive Board in 2014 as the
company’s Chief Human Resources Officer.
After receiving a Masters in economics and
business administration from Aarhus School
of Business, Denmark in 1998, Karsten
Breum spent a decade working in various
human resources positions at A.P. MøllerMærsk in Copenhagen, Antwerp and
Singapore. In 2008, he was appointed
Vice President Global Head of Human
Resources for Damco; during his time
at the company he was a member of the
Global Executive Leadership Team and,
in addition, completed his MBA at the
University of Chicago’s Booth School
of Business. He was appointed Vice
President Regional CEO of Damco in
2013, responsible and accountable
for operational, as well as commercial
activities in Asia Pacific.
Karsten Breum brings a wealth of expertise
and knowledge to his role at Panalpina,
gained from spending more than 14 years
working internationally in all areas of
human resources.
Roderick Angwin, Chief Information
Officer, British citizen. Born in 1959.
Member of the Executive Board as of
January 1, 2014. Responsible for
Information Technology; he left the
company in June 2015.
Roderick Angwin joined Panalpina in
2012 as Chief Information Officer. He
has extensive experience gained across
a number of sectors and a broad range
of international companies. His previous
roles include five years as Group CIO for
Wolseley plc, the international building
materials distributor, and as IT Director on
the Board of B&Q, part of the Kingfisher
retail group. Other roles include ten
years in various positions with Mars Inc.,
and as Group IT Director for Meyer
plc, subsequently part of St. Gobain.
Roderick Angwin holds a degree in Marine
and Freshwater Biology from Stirling
University Scotland.
Andy Weber, Chief Operating Officer,
Swiss Citizen. Born in 1959. Member of
the Executive Board as of July 1, 2015.
Andy Weber started his freight forwarding
career in 1976 with Panalpina. He then
moved to Kuehne + Nagel where he held
a variety of management positions in South
Africa, Iraq, the Ivory Coast, Japan, Taiwan,
Hong Kong, Singapore and Dubai/UAE.
From 1999 to 2013 Andy Weber was
Kuehne + Nagel’s regional CEO for Asia
Pacific. Before rejoining Panalpina, he was
Kuehne + Nagel’s regional CEO for the
Middle East, Africa and Central Asia.
Ralf Morawietz, Chief Information Officer,
German citizen. Born in 1967. Member of
the Executive Board as of October 15, 2015.
Responsible for Information Technology.
Ralf Morawietz joined Panalpina as Chief
Information Officer in 2015. A German
citizen, he brings with him more than 15
years of leadership experience as well as
IT development and operations expertise
in various positions within the logistics
industry. He spent five years on the global
IT management team at Kuehne + Nagel.
Prior to that, Ralf Morawietz served in
different IT leadership positions for
Deutsche Post DHL Group (DPDHL).
Ralf Morawietz holds an MBA from
European Business School in Germany
and Durham Business School in the UK.
4.2 Other activities and
vested interests
Peter Ulber: Managing partner and
co-founder of Charleston Enterprise
Group LLC, Charleston, USA.
4.3 Management contracts
No management contracts exist with
any third party outside the Group.
5 Compensation,
shareholdings and loans
5.1 Content and method of
determining the compensation
and the share-ownership programs
Please refer to the Compensation Report
on pages 73-83.
6 Shareholders’ participation
6.1 Voting rights and
representation restrictions
Each share carries one vote at the General
Meeting of Shareholders. The Articles
state that when exercising voting rights,
no shareholder may directly or indirectly
represent more than 5 percent of the total
shares issued by the company for own and
represented shares.
The Articles provide for group clauses.
The voting right restrictions are not
applicable to representatives of the
independent proxy holder of voting rights
(unabhängiger Stimmrechtsvertreter).
The voting restrictions do not apply to
the shares held by the Ernst Göhner
Foundation, because it held PWT shares
prior to the introduction of the voting
restrictions (grandfathering).
Any abolition or change of the provisions
relating to the restrictions on voting
rights requires a resolution of the General
Meeting of Shareholders on which at
least two-thirds of the voting shares
represented agree.
A written proxy entitles a shareholder
to be represented at the General Meeting
of Shareholders by his or her legal
representative, or by another shareholder
with the right to vote, or by the independent
proxy holder of voting rights (unabhängiger
Stimmrechtsvertreter).
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6.2 Statutory quorums
In principle, the legal rules on quorums
apply. Supplementary to the quorums
legally listed, a two-thirds majority of
the shares represented at the General
Meeting of Shareholders is required for
the following resolutions:
• any abolition or change of the provisions
relating to transfer restrictions;
• any abolition or change of the provisions
relating to the restriction of voting rights;
• the transformation of registered shares
into bearer shares;
• the dissolution of the company by way
of liquidation;
• the removal of two or more members
of the Board of Directors;
• the abolition of the respective provision in
the Articles as well as the repeal or relief
of the stated quorum. A resolution to
increase the quorum as set forth in the
Articles must be based on the consent
of the increased quorum.
For the purpose of determining voting
rights, the share register is closed for
registration from the date upon which the
General Meeting of Shareholders has been
called (date of invitation) until the day after
the General Meeting of Shareholders has
taken place.
7 Changes of control and
defense measures
7.1 Duty to make an offer
No opting-out or opting-up provisions exist.
7.2 Clauses on changes of control
Neither the contracts of the members of
the Board of Directors nor of the Executive
Board have a change-of-control clause.
8 Auditors
8.1 Duration of the mandate and
term of office of the lead auditor
6.3 Convocation of the General
Meeting of Shareholders
The mandate to act as statutory and Group
Auditors is assumed by KPMG, Zurich on a
yearly basis. Marc Ziegler, the lead auditor,
took up office on January 1, 2014 for a
seven-year term.
There are no provisions deviating
from the law.
8.2 Auditing fees
6.4 Agenda
Shareholders who individually or together
with other shareholders represent shares
in the nominal value of CHF 1 million may
request that an item be placed on the
agenda. Such a request must be made
in writing to PWT at least 60 days prior
to the General Meeting of Shareholders.
According to financial accounting,
invoices for auditing fees for the financial
year amounted to CHF 2.7 million.
8.3 Additional fees
The auditors KPMG were compensated
with an additional amount of CHF 1.2
million for further services rendered in the
financial year.
6.5 Inscriptions into the share
register
8.4 Informational instruments
pertaining to the external audit
Registered shares can only be represented
by shareholders (or nominees) who have
been entered into the PWT share register.
Shareholders (or registered nominees)
who cannot personally attend the General
Meeting of Shareholders are entitled to
nominate a representative according to the
provisions in the Articles, who represents
them by written proxy.
The Group Auditors are supervised
and controlled by the Audit Committee.
The Group Auditors report to the Audit
Committee and periodically the lead auditor
participates in the meetings. During these
meetings, the Group Auditors present a
detailed audit plan for the current year
including risk-based audit priorities, the
audit scope, proposals regarding audit fees,
organization and timing as well as updates
and status of the results of the internal
control system. In subsequent meetings
they present interim audit findings
with respective statements and
recommendations later followed by
a detailed audit report. Presentations also
contain references to upcoming changes in
legislation and IFRS. The main criteria for
the selection of Group Auditors include
independence, network capabilities,
industry and IT experience of the audit
team, a risk-based audit approach, a
central process management as well as
the integration of Corporate Audit and
risk management functions. The Audit
Committee annually assesses the
performance of the Group Auditors
and determines the audit fees (refer
to section 3.5).
9 Information policy
Panalpina regularly updates its website at
www.panalpina.com, informing the public
of any major events, organizational changes
and (quarterly) financial results. Press
releases are accessible to all visitors to
the website; alternatively, subscriptions can
be made so that the latest press releases
are automatically forwarded via e-mail.
Furthermore, all publications such as the
Annual Report (including the Corporate
Governance and Compensation Report),
customer magazine and sales brochures
are available online. The dates of the
General Meeting of Shareholders as well as
dates of publication of the quarterly financial
results are published in the Annual Report
and appear in the Financial Calendar on
the website (under Investor Relations).
The minutes of shareholder meetings
are available online.
Compensation
report
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panalpina.com
75
Compensation
report
The Compensation Report describes the
remuneration philosophy and principles, as
well as the governance framework related
to the compensation of the Board of
Directors and the Executive Board of
Panalpina. The report also provides details
of the compensation programs and the
remuneration related to the 2015
performance year.
The Compensation Report is based on
sections 3.5 and 5 of the annex to the
Corporate Governance Directive issued by
SIX Swiss Exchange and Art. 13 to 16 of the
Ordinance against Excessive Compensation
in Listed Stock Companies (OaEC).
Compensation governance
Compensation and Nomination
Committee (CNC)
following members of the Board of
Directors were re-elected as members
of the CNC for a one-year term:
Rudolf W. Hug, Chris E. Muntwyler and
Knud Elmholdt Stubkjær. Thomas E. Kern
was elected as an additional member to
the CNC. Rudolf W. Hug continues to act
as the Chairman of the CNC.
With the exception of the election of the
CNC Chairman by the Board of Directors,
the CNC is self-constituting. It designates
the secretary, who need not be a
member of the CNC. If the CNC is not
fully constituted, the Board of Directors
appoints the missing members for the
remaining term in office.
compensation of the members of the Board
of Directors and the Executive Board, and
the presentation of respective motions and
recommendations to the Board of Directors.
The CNC monitors the selection process
for members of the Board of Directors,
the Executive Board, and other key senior
management positions. The CNC also
determines the overall remuneration
and terms of employment, and submits
proposals for final approval to the Board
of Directors for these positions.
The CNC regularly reviews the Group-wide
compensation policy, including the incentive
plans (i.e. the Board of Directors Restricted
Stock Award Plan, the Executive Board
Mid-Term and Long-Term Incentive Plans,
the Performance Share Unit Plan and the
Group’s Management Incentive Plan) and
submits proposals for final approval to the
Board of Directors.
The Compensation and Nomination
Committee (CNC) consists of two or
more members of the Board of Directors
who are independent, insofar as they do
not hold any executive position, nor act
as consultant for the company and its
subsidiaries. At the Annual General Meeting
of Shareholders of May 12, 2015 the
The CNC’s main duties comprise the
development and regular review of the
compensation policies, principles, and
performance criteria of the Panalpina
Group. In addition, they regularly
review the presentation of motions and
recommendations to the Board of Directors
on these subjects. Furthermore, they cover
the preparation of all relevant decisions of
the Board of Directors in relation to the
Item
Recommendation from
Final approval from
Compensation principles including incentive &
share-based programs and pension provisions
Board of Directors
Remuneration of the Board of Directors
Board of Directors
Remuneration (at target) for the CEO
Chairman of the Board
Board of Directors
Remuneration (at target) for the members of
the Executive Board
CEO
Board of Directors
Incentive payouts for the CEO
Chairman of the Board
Incentive payouts for the members of the
Executive Board
CEO
Nomination process for Executive Board and
Board of Directors
Board of Directors
External Board of Directors mandates for
Executive Board and Board of Directors
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COMPENSATION REPORT CONTINUED
The CNC holds its ordinary meetings
normally one day before the meetings
of the Board of Directors, typically four
times per year. The Chairman of the CNC
regularly updates the Board of Directors
on the activities and decisions made during
the CNC meetings and may call for further
meetings as necessary.
During the 2015 reporting year, the CNC
held four meetings. The Executive Board
was regularly represented by the CEO,
the CHRO and the CLO in his capacity
as Secretary of the CNC. Members of the
Executive Board do not attend discussions
related to their own remuneration.
The Annual Shareholders’ Meeting votes
separately each year on the approval of
motions from the Board of Directors
concerning the aggregate maximum
amount of compensation for the Board
of Directors until the following ordinary
Shareholders’ Meeting; and for the
Executive Board for the following financial
year. The Board of Directors may subdivide
the relevant maximum aggregate amount
into fixed and variable compensation and
present the corresponding motions to the
Annual Shareholders’ Meeting separately
for approval. If the Shareholders’ Meeting
refuses to grant its approval, the Board of
Directors may present a new motion or
call an extraordinary Shareholders’
Meeting. According to the company’s
Articles of Association, an additional
amount is available to the maximum
aggregate amount for the compensation
of Executive Board members who are
appointed after the Shareholders’ Meeting
has approved the relevant maximum
aggregate amount. Such additional amount
is 40 percent for the CEO and 25 percent
for each new member of the Executive
Board respectively.
Method of determination
of remuneration
The remuneration of the Executive
Board members is reviewed yearly in
order to ensure market competitiveness,
performance-driven remuneration and
alignment with shareholder interests.
The remuneration of the Executive Board
members is benchmarked using the
Switzerland Executive Remuneration
Survey published by Mercer. This survey
includes remuneration data of multinational
companies in the general industry sector.
No specific peer group is created; however
each Panalpina role is evaluated using the
Mercer job evaluation methodology in
order to compare with roles of comparable
size, scope and level of responsibilities.
The median of the benchmark data is
considered relevant for measuring
market competitiveness.
On the basis of the external benchmark
information, combined with internal peer
comparisons, the CNC defines the targeted
level of remuneration and the pay mix
between fixed and variable remuneration
for the CEO and the other members of the
Executive Board, and submits its proposal
to the Board of Directors for final approval.
The variable remuneration may contain a
range of short- to long-term remuneration
elements, and may be made dependent
upon the achievement of one or more
performance criteria. Performance criteria
can include individual targets or targets
relating to the Panalpina Group, the market
or peer groups. Performance criteria may
take into account the function and level of
responsibility of the relevant member of the
Board of Directors or the Executive Board.
The CNC sets the applicable performance
criteria, weighting, and achievement
measurement.
If remuneration is provided in the form
of shares, the Board of Directors or, if
so delegated, the CNC determines the
relevant conditions and prerequisites in
one or more plans or regulations. This
includes the date of allocation, fair
valuation, holding, vesting and exercise
periods (including acceleration, curtailment
or annulment thereof in the event of
predefined occurrences such as a
change of control or the termination
of an employment relationship), and
any clawback mechanisms.
The remuneration paid out for a given
business year depends on the actual
financial performance of the Group and
individual performance, assessed during the
annual performance management process.
The performance management process
including the performance assessment at
year-end is conducted by the Chairman
of the Board of Directors for the CEO and
by the CEO for the other members of the
Executive Board. The performance
assessment consists of two elements,
the “WHAT” (individual objectives) and
the “HOW” (competencies and behaviors),
resulting in one overall performance rating.
Individual objectives and performance
assessment for the CEO and the other
members of the Executive Board are
subject to the approval of the CNC.
panalpina.com
77
Remuneration philosophy
In the volatile economy and the challenging
business context in which Panalpina
operates, it is critical to recruit, retain and
develop a dedicated and capable team
of employees with excellent skills, integrity
and high ethical standards.
Remuneration at Panalpina is built around
the fundamental objective to support the
achievement of the strategic business
objectives and demonstrate behaviors
that are consistent with Panalpina’s values.
Remuneration principles
• Provide a competitive remuneration
package compared to the relevant
talent market
• Align with shareholders’ interests,
especially in terms of long-term
value creation
• Align performance orientation with
the achievement of the company’s
strategic objectives
• Encourage behaviors that are consistent
with Panalpina’s values and high
ethical standards
• Ensure fair and transparent application
throughout the Group
The remuneration programs are designed
to provide an appropriate balance
between fixed and variable pay, as well
as between short-term, mid-term and
long-term incentives.
Principles of remuneration of
the Board of Directors
The members of the Board of Directors
receive a fixed annual compensation,
which consists of a Board membership
compensation of CHF 150,000, including
committee memberships; an attendance
compensation of CHF 500 per meeting;
and a potential grant of free shares of the
company in the amount of CHF 50,000
at the discretion of the CNC’s evaluation
of the Group’s overall situation.
The Chairman of the Board of
Directors receives a Board chairmanship
compensation of CHF 450,000, an
attendance compensation of CHF 500
per meeting, and a grant of shares of CHF
50,000 under the same conditions as the
other Board members as defined above.
The Board membership/chairmanship
compensation and the attendance
compensation are paid out in cash in June
and December for the compensation period
from AGM to AGM. The shares are granted
for the previous business year at the share’s
closing price listed on the SIX Swiss Stock
Exchange on April 30th. Any shares granted
are blocked from trading for the duration
of one year, except in the case of a change
of control, liquidation, death or disability,
when the shares are unblocked
immediately. The shares remain
blocked in all other instances.
The members of the Board of Directors
do not participate in Panalpina’s employee
benefit or incentive plans, except for
social security where applicable.
Remuneration model for the
Board of Directors
Chairman
Board
member
Annual board
membership
fee (cash)
450,000
150,000
Annual grant
of shares
50,000
50,000
500
500
in CHF
Meeting fee (per
meeting)
Principles of remuneration for
the Executive Board
The remuneration of the members
of the Executive Board consists of the
following elements:
• Fixed compensation: annual base salary
• Variable compensation: annual bonus,
mid-term incentive and long-term
incentive (through performance
share units)
• Benefits: pension, insurances and
benefits in kind
Annual base salary
The annual base salary takes into
consideration the scope and responsibilities
of the role, its market value and the
skills, experience and performance of
the individual in the role. The annual base
salary of the members of the Executive
Board are reviewed every year, taking
into consideration the company’s financial
situation, the economic environment,
comparative ratio versus benchmark
and the individual performance.
panalpina.com
78
Remuneration for Executive Board
Fixed
compensation
Variable
compensation
Purpose
Instrument
Annual
Base Salary
Recognize market value of role
and individual skills, experience and
performance
Monthly cash payments
Annual Bonus
Drive and reward short-term performance
over one year
Annual cash incentive
Mid-Term
Incentive (MTIP)
Align short-term and long-term
rewards through co-investment
Compulsory deferral of 40 percent
of annual bonus into blocked shares,
with free matching shares (1:1) after
a one-year period
Long-Term
Incentive (PSU)
Drive and reward long-term performance
(TSR) over three years versus peer group
Performance Share Unit Plan
Pension
Benefits
Provide competitive retirement benefits
and reward seniority and loyalty
Pension fund and insurances
Perquisites
Provide competitive and cost-effective
benefits by leveraging company’s size
Perquisites and benefits in kind
Benefits
Annual bonus
In 2015 a new annual bonus scheme was
introduced that, similar to 2014, rewards
the company’s financial performance
(accounting for 70 percent of the total
bonus) and the individual’s performance
(accounting for 30 percent of the total
bonus) over a period of one year. In
contrast to 2014 where the company’s
financial performance was measured
on three components (Group Earnings
Before Interest and Tax (EBIT) weighting
90 percent, and Days of Sales Outstanding
(DSO) and Days of Payable Outstanding
(DPO), both 5 percent), the company’s
financial performance is fully measured
on the Group’s EBIT.
Under the new bonus scheme, the
company’s financial performance
component for each member of the
Executive Board was converted into an
individual percentage (X percent) of the
Group’s EBIT between threshold and target,
plus a second percentage (Y percent) of
EBIT above target up to the maximum.
The minimum EBIT achievement level,
below which no bonus is paid out, is 60
percent of the target. The maximum EBIT,
above which the bonus payout is capped,
is 140 percent of the target. The payout
for the company’s financial performance
ranges from 0 percent to 200 percent,
whereas the maximum payout was
increased in 2015 from 150 percent
to 200 percent.
The individual performance is assessed
through the formal performance
management process. The overall
performance rating, Performance
Evaluation Assessment Review (PEAR)
rating, translates into a payout percentage
for the individual portion of the annual
incentive. The payout ranges from
0 percent to 150 percent of the target,
whereas the maximum payout was
increased in 2015 from 120 percent
to 150 percent.
For communication purposes the annual
bonus target is expressed as a percentage
of annual base salary and amounts to
100 percent for the CEO and between
67 percent and 80 percent for the other
members of the Executive Board depending
on their function. The actual bonus payout
may range from 0 percent to 185 percent
for the members of the Executive Board
and 0 percent to 200 percent for the
CEO, depending on the effective
performance achievement.
panalpina.com
79
Overview of Annual Bonus Structure
Financial Objective
EBIT
“Bonus as
% of EBIT”
Threshold
Threshold
Target
Target
X%
Objective
+
Measurement
Maximum
Maximum
Weight
70%
Y%
Target Performance
(indicative)
Individual Objectives
1
2
3
4
5
20%
Leadership Competencies
1
2
10%
3
Mid-Term Incentive Plan (MTIP)
The Mid-Term Incentive Plan (MTIP) was
created in 2009 to foster the long-term
success and prosperity of the company
through co-investment, align with
shareholders’ interest, and facilitate the
retention of the executives. For members
of the Executive Board, 60 percent of the
annual bonus is payable in cash and 40
percent is converted into PWTN shares
with a three-year fixed share price that is
restricted for one year. After the restriction
period, and subject to continuous
employment, deferred bonus shares
are matched with free shares that are
restricted for one year.
The fixed share purchase price rewards the
participants for a positive share price
development, while a negative share price
evolution reduces the value of the award.
The applicable share price for determining
the number of deferred bonus shares
related to the bonus paid in 2015
(performance year 2014) was defined for
the three-year cycle (from 2015 to 2017) as
the PWTN closing price on April 30, 2015,
which amounted to CHF 130.70.
In case of voluntary resignation or
termination for cause, the free matching
shares will forfeit. The matching may be
accelerated in case of termination without
cause, retirement, death or disability. In
case of change of control or liquidation,
the CNC reserves the right to determine
any appropriate measure with regard to
the unvested free matching shares.
panalpina.com
80
As of January 1, 2014, the members
of the Executive Board participate in a
Performance Share Units Plan (PSUP) that
serves the purpose of rewarding executives
for long-term shareholder value creation.
Performance Share Units (PSUs) will be
delivered through an annual rolling grant
with a cliff vesting after three years,
dependent on the relative position of the
Cumulative Total Shareholder Return
(TSR) versus a peer group.
The peer group consists of a balanced
selection of companies within the industry
taking into consideration, among other
factors, market capitalization, turnover
and geographic distribution.
The vesting of the PSUs in case the TSR performance ranks below Q1 (25th percentile)
versus the external peer group is 0 percent. Between Q1 and Q3 (75th percentile),
a linear vesting from 0 percent up to the maximum of 100 percent vesting is applied.
PSU vesting curve
100
Vesting in % of Target Payout
Performance Share Units Plan
80
60
40
20
0
0%
Panalpina World Transport (Holding)
AG – TSR Peer Group
1
United Parcel Service, Inc. Class B
2
Deutsche Post AG
3
FedEx Corporation
4
Kuehne & Nagel International AG
5
C.H. Robinson Worldwide, Inc.
6
Expeditors International of Washington, Inc.
7
Nippon Yusen Kabushiki Kaisha
8
Nippon Express Co., Ltd.
9
DSV A/S
10 Agility Public Warehousing Co. K.S.C.
11 Kawasaki Kisen Kaisha, Ltd.
12 UTi Worldwide Inc.
13 Hitachi Transport System, Ltd.
14 Hub Group, Inc. Class A
15 Kintetsu World Express, Inc.
16 Forward Air Corporation
17 Sinotrans Air Transportation
Development Co. Ltd. Class A
18 Aramex PJSC
19 Norbert Dentressangle SA
20 SITC International Holdings Co., Ltd.
21 Hanjin Shipping Co., Ltd
22 CWT Limited
25% = Q1
50% = Medium
75% = Q3
100% = Q4
TSR rank vs. peer index
The performance period related to the 2015 PSU grant started on January 1, 2015
and ends on December 31, 2017 (2014 PSUP started on January 1, 2014 and ends
on December 31, 2016).
In case of retirement, disability or death, accelerated prorated vesting applies at the
end of the respective performance year. The CNC has the right to apply discretion
for special circumstances.
panalpina.com
Benefits
Executive Board members participate in
the regular employee pension plans of the
country where they have their employment
contract. For Executive Board members
employed in Switzerland, the company
pension fund covers their annual base
salary and the actual bonus up to an overall
insured income of CHF 846,000. Pension
fund contributions are equally split between
employer and employee for insured income
up to CHF 400,000. In the supplemental
scheme covering income between CHF
400,000 and CHF 846,000 (current
maximum under Swiss law), contributions
are paid by the company. The benefits
provided under the pension fund exceed
the legal requirements of the Swiss Federal
Law on Occupational Retirement, Survivors
and Disability Pension Plans (BVG) and are
in line with typical market practice of other
multinational companies in Switzerland.
Certain Executive Board members
participate in a non-Swiss pension fund
scheme whose benefits and contributions
are equivalent to those of the Swiss
pension plan.
Members of the Executive Board do not
receive any executive benefits. They are
entitled to a company car allowance and a
general expense allowance, in accordance
with the expense rules applicable to all
employees at management levels in
Panalpina Switzerland.
Employment contracts
Employment agreements with Executive
Board members stipulate a notice period
of 12 months. They do not contain any
“golden parachutes” in case of a change
of control, or any severance provisions in
case of termination of employment.
81
panalpina.com
82
Remuneration of the Board of Directors and the Executive Board for 2015
2015 reward table
Annual
remuneration
Meeting
attendance
fees
Other
long-term
benefits
Termination
benefits
Sharebased
payments
Employer
contributions
to social
security and
retirement
benefits
Rudolf W. Hug, Chairman
450
4
0
0
50
58
562
Beat Walti, Vice Chairman
150
3
0
0
50
28
230
Ilias Läber, Member
150
5
0
0
50
27
232
Chris E. Muntwyler, Member
150
4
0
0
50
28
232
Roger Schmid, Member*
150
5
0
0
50
12
217
Knud Elmholdt Stubkjær, Member
150
3
0
0
50
1
204
Pamela Knapp, Member
75
4
0
0
0
11
90
Thomas Kern, Member
75
4
0
0
0
11
90
75
2
0
0
50
14
141
1,425
32
0
0
350
190
1,998
Peter Ulber, Chief Executive Officer
1,848
0
0
0
1,274
371
3,493
Members of the Executive Board
4,459
0
0
0
1,328
980
6,766
Executive Management leaving
1,690
0
95
0
0
222
2,008
Total remuneration of Executive Board
7,998
0
95
0
2,602
1,573
12,267
Total remuneration of key
management personnel
9,423
32
95
0
2,952
1,763
14,265
2015 in thousand CHF
Total
compensation
2015
Board of Directors
Board of Directors leaving
Hans-Peter Strodel, Member
Total remuneration of Board
of Directors
Executive Board
* Representative of Ernst Göhner Stiftung (employer of respective Board member) and the social security reported is actually VAT (as payments are made
to the Stiftung).
2015 versus 2014 remuneration
of the Board of Directors and
the Executive Board
Board of Directors
At the Annual General Meeting of May 12,
2015, Thomas E. Kern and Pamela Knapp
were elected to the Board of Directors
(BoD). Rudolf W. Hug, Beat Walt, Ilias
Läber, Chris E. Muntwyler, Roger Schmid
and Knud Elmholdt Stubkjaer were
re-elected to the BoD. Hans-Peter Strodel
stepped down from the Board of Directors
due to retirement.
No changes have been made to the
structure of remuneration of the BoD. The
increased total remuneration of the BoD is
the result of an additional board member.
For 2015 the PWTN share value per
April 30, 2015 amounted to CHF 130.7;
therefore the amount of CHF 50,000 to be
distributed translates into 382 restricted
share grants. The effective grant date per
May 12, 2015 at a fair market value of CHF
131.0 resulted in a value of CHF 50,042.00.
These restricted shares are blocked for one
year as from the date of grant.
panalpina.com
83
Remuneration of the Board of Directors and the Executive Board for 2014
2014 reward table
Annual
remuneration
Meeting
attendance
fees
Other
long-term
benefits
Termination
benefits
Sharebased
payments
Employer
contributions
to social
security and
retirement
benefits
Rudolf W. Hug, Chairman
450
4
0
0
50
58
562
Beat Walti, Vice Chairman
150
2
0
0
50
24
226
Ilias Läber, Member
150
5
0
0
50
24
229
Chris E. Muntwyler, Member
150
4
0
0
50
24
228
Roger Schmid, Member*
150
4
0
0
50
12
216
Hans-Peter Strodel, Member
150
4
0
0
50
20
224
Knud Elmholdt Stubkjær, Member
150
3
0
0
50
0
203
0
0
0
0
0
0
0
1,350
25
0
0
350
163
1,888
Peter Ulber, Chief Executive Officer
1,828
0
0
0
946
264
3,039
Members of the Executive Board
4,111
0
0
0
1,936
830
6,878
368
0
0
0
0
126
494
Total remuneration of Executive Board
6,308
0
0
0
2,883
1,221
10,411
Total remuneration of key
management personnel
7,658
25
0
0
3,233
1,384
12,299
2014 in thousand CHF
Total
compensation
2014
Board of Directors
Board of Directors leaving
NA
Total remuneration of Board
of Directors
Executive Board
Executive Management leaving
* Representative of Ernst Göhner Stiftung (employer of respective Board member) and the social security reported is actually VAT (as payments are made to
the Stiftung).
Executive Board
In 2015 no fundamental changes to the
overall remuneration mix (i.e. fixed and
variable remuneration, short- and longterm incentives) have been made. The
new annual bonus scheme is based on
the principles of profit sharing, direct
accountability and focus on the bottom line.
The increased total remuneration of the
Executive Board in 2015 is the result of
an additional Board member.
2015 reward table comments:
1. Composition of the Executive Board:
The COO joined the Executive Board as
per July 1, 2015.
The new CIO joined the company and the
Executive Board per October 15, 2015.
2. Executive management leaving:
The previous CIO was employed until
December 31, 2015.
3. Share-based payments:
The share-based payments for 2015
include the MTIP (value of the deferred
bonus shares to be granted in May 2016
and matching free shares offered on May
12, 2015 to be granted in May 2016) and
PSU grants (granted on May 12, 2015).
The theoretical value of the PSUs is based
on the company’s valuation model at grant
date of CHF 43.22 (assuming median TSR
performance versus peer group) versus a
market value at grant date of CHF 131.00.
panalpina.com
84
Annual bonus
The annual bonus payout amounts to 76 percent on average for the members of
the Executive Board and 148 percent for the CEO. The bonus included in the 2015
reward table above is related to the cash bonus paid out in 2016, which related to
the performance year 2015. The financial and individual objectives have been achieved
as follows:
On May 14, 2016, 2,928 matching free
shares in total were granted to these
executives at a fair market value of CHF
128.4. This relates to the bonus paid in
2014 for performance in 2013.
2015 Annual Bonus outcomes
On May 12, 2015, 10,250 PSUs in total
were granted to these executives.
Measures
Weight
Outcomes relative to plan
Company performance
70.0%
Threshold
Target
Maximum
30.0%
Threshold
Target
Maximum
Earnings Before Interest and Tax
Individual performance
Key Performance Indicators
Overall outcome
MTIP (part of share-based payments
in the reward tables above)
In total 7,871 deferred bonus shares were
granted on May 12, 2015 to the Executive
Board, out of which the CEO received
4,139 deferred bonus shares, with a
fair market value of CHF 131 per share.
Based on the Executive Board members
in service per December 31, 2015, 7,189
matching free shares will be granted on
May 12, 2016.
For transparency and reconciliation
purposes only, on May 14, 2015, a
total of 4,943 matching free shares were
granted to the Executive Board at a fair
market value of CHF 128.4. This grant
relates to the bonus paid in 2014 for
performance in 2013.
PSU (part of share-based payments
in the reward tables above)
On May 12, 2015, 4,000 PSUs were
granted to the CEO and 7,942 PSUs to
other Executive Board members. As per
December 31, 2015, the TSR related to the
2015 Performance Share Unit Plan ranked
slightly above the 25th percentile of the
peer group and at present would result in
an approximate vesting of 5 percent.
Other share-based or long-term
incentive compensation plans for top
executives and senior management
Top executives:
Some executives of the core business
functions (eight executives in 2015), who
are not members of the Executive Board,
participate in the Performance Share Unit
Plan (PSUP) and the Mid-Term Incentive
Plan (MTIP) similar to the above described
Executive Board plans but with the
following details:
MTIP: For these executives, 80 percent
of the annual bonus is payable in cash and
20 percent is converted into PWTN shares
that are matched with one free matching
share each at the end of the one-year
restriction period. All other plan features
are the same as for the Executive Board
as described above.
MTIP grants in 2015
for these executives
On May 12, 2015, 2,126 deferred bonus
shares in total were granted to these
executives at a fair market value of CHF
131. This relates to the bonus paid in 2015
for performance in 2014. Based on the top
executives in service per December 31,
2015, 2,126 free matching shares will be
granted on May 12, 2016.
PSU
Senior management – MIP
(Management Incentive Program)
Within this old plan the senior management
had the option (voluntary) to invest part of
their annual bonus in Panalpina shares
with a discounted share price of 25
percent versus the moment of grant.
These shares were blocked for one year.
As a consequence Panalpina was matching
these shares with stock options which had a
vesting period of three years (one-third after
one year, one-third after two years and the
last third after 3 years). The total duration
of the options amounts to six years from the
date of grant. For the MIP 2010 there are
still outstanding stock options on December
31, 2015 as per the table below. All options
from previous years have expired.
This plan was changed in 2011, replacing
the stock options with matching free shares.
Within this plan the senior management had
the option (voluntary) to invest part of their
annual bonus in Panalpina shares with a
discounted share price of 10 percent versus
the moment of grant. These shares are
blocked for one year. As a consequence
Panalpina is matching these shares with
free share grants based on a ratio of one
free share for four shares bought by the
participant (for the 2011, 2012 and 2013
plans) and based on a ratio of one free
share matched for three shares bought by
the participant (for the 2014 and 2015 plan).
These free shares have a vesting period
of three years (one-third per year). For senior
management positions for the years 2011,
2012, 2013, 2014 and 2015, the grants
are summarized on December 31, 2015
as per the following table.
panalpina.com
85
Management Incentive Plan (Option Plan)
Exercise
price
Exercise
price for US
participants
Options
vested
but not
exercised yet
Expiry
date
Year
Nr of
participants
Discount
Nr of
shares
purchased
2010
51
25%
13,453
13,453
95.65
87.75
1,762
Jun 14 2016
Nr of shares
purchased
Free share
ratio
Matching
shares
granted
Vested free
shares
Forfeited
free shares
Non-vested
free shares
Options
granted
Management Incentive Plan (Free Share Plan)
Year
Nr of
participants
Discount
2011
87
10%
28,444
1 to 4
7,124
6,423
701
0
2012
38
10%
11,242
1 to 4
2,816
2,478
338
0
2013
30
10%
6,768
1 to 4
1,698
1,070
193
435
2014
51
10%
9,995
1 to 3
3,342
1,112
308
1,922
2015
83
10%
12,819
1 to 3
4,289
171
56
4,062
To avoid overlaps, the members of the
Executive Board and the top executives
who participate in the MTIP and PSUP
are not eligible for the MIP plan as
described above.
Credits, loans or other monetary
allowances
No contributions or other monetary
allowances have been made to closely
related parties of current or former
members of the Board of Directors
and Executive Board respectively.
Credits or loans in favor of members of the
Board of Directors or Executive Board do
not exist.
Report of the Statutory Auditor to the
General Meeting of Panalpina World
Transport (Holding) Ltd, Basel
We have audited the accompanying
remuneration report of Panalpina World
Transport (Holding) Ltd for the year
ended December 31, 2015. The audit
was limited to the information according
to articles 14 to 16 of the Ordinance
against Excessive Compensation in Stock
Exchange Listed Companies contained
in the table Remuneration of the Board of
Directors and the Executive Board for 2015
on page 82 of the Compensation report.
Responsibility of the Board
of Directors
The Board of Directors is responsible for
the preparation and overall fair presentation
of the remuneration report in accordance
with Swiss law and the Ordinance
against Excessive Compensation in Stock
Exchange Listed Companies (Ordinance).
The Board of Directors is also responsible
for designing the remuneration system and
defining individual remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion
on the accompanying remuneration report.
We conducted our audit in accordance
with Swiss Auditing Standards. Those
standards require that we comply with
ethical requirements and plan and perform
the audit to obtain reasonable assurance
about whether the remuneration report
complies with Swiss law and articles
14 – 16 of the Ordinance.
An audit involves performing procedures
to obtain audit evidence on the disclosures
made in the remuneration report with
regard to compensation, loans and credits
in accordance with articles 14 – 16 of
the Ordinance. The procedures selected
depend on the auditor’s judgment, including
the assessment of the risks of material
misstatements in the remuneration report,
whether due to fraud or error. This audit
also includes evaluating the reasonableness
of the methods applied to value
components of remuneration, as well as
assessing the overall presentation of the
remuneration report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to
provide a basis for our opinion.
Opinion
In our opinion, the remuneration report
for the year ended December 31, 2015
of Panalpina World Transport (Holding)
Ltd complies with Swiss law and articles
14 – 16 of the Ordinance.
KPMG AG
Marc Ziegler
Licensed Audit Expert
Auditor in Charge
Martin Rohrbach
Licensed Audit Expert
Zurich, February 26, 2016
Panalpina World
Transport (Holding) Ltd.
Viaduktstrasse 42
P.O. Box
CH-4002 Basel
Phone: +41 61 226 11 11
Fax: +41 61 226 11 01
[email protected]
www.panalpina.com
Publisher
Panalpina World Transport
(Holding) Ltd
Concept and design
Photographers
Cai Dingyan, Mike Hall,
Julian Salinas

Panalpina Annual Report 2015

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Foto torte GHVC eng - Grand Hotel Villa Castagnola

alaska freight - Tazmanian Freight Systems, Inc.

The Alpha-Palmiers Hotel offer it`s rental meeting room by the hour

English [pdf | 3 MB]

NRT Flyer

sea freight - C.HARTWIG Gdynia SA