Panalpina transports record-breaking 1 million tonnes via air freight in 2017 – highest in company history

March 22, 2018: “Panalpina will reach a major milestone in 2018 by demonstrating that the CHF 200 million investment in a new technology platform is headed for success, thus positioning the company among the top players to shape the future of the industry,” outlined Peter Ulber, Chairman of the Board of Directors, Panalpina. This was revealed in its second integrated management report, summarizing the company’s activities during 2017 in terms of business performance and sustainability.

“In 2018, we will continue to strengthen the foundation of the company in terms of organizational stability, financial performance and industry-leading technology. In addition to organic growth targets, we will intensify our focus on external growth through acquisitions,” Ulber added.

The report also highlights the company’s expansion of its global Perishables Network with a focus on 15 key countries and an ambitious plan to double that number by 2020. The network expanded through acquisitions of four companies specializing in perishables logistics—Air Connection in Kenya, Interfresh in the Netherlands, Cool Chain Group in Germany, and Adelantex and AD Handling in Belgium— strengthening Panalpina’s ability to offer complete, end-to-end solutions for customers in both origin and destination countries.

In 2017, air freight reached new heights by transporting close to one million tonnes, the highest in the company’s history. Both profitability and EBIT for air freight improved quarter on quarter. Logistics further improved its profitability and expanded its footprint, inaugurating the new 40,000 sq m manufacturing facility in Dubai and moving ahead with construction of a state-of-the-art warehouse terminal in Singapore. It also won a major oil and gas project in Iraq, where Panalpina’s expertise in marine chartering and transport engineering was the real differentiator.

The major challenges in 2017 were the tight transport capacity and sustained high freight rates; capacity was scarce and carriers pushed up their rates, especially during the peak season. Another challenge was the strain on infrastructure at Europe’s main airports, where ground handling struggled to meet the increased demand.

Panalpina recognized the challenges early in the year and took a proactive approach by engaging with customers to obtain tonnage commitments. This allowed Panalpina to secure capacity with airlines and ensure that its customers would have uplift during the peak season; this also helped to protect Panalpina and its customers from price hikes during the peak season. Another key success factor was the Panalpina Charter Network, a system of charter flights that allows the company to secure freighter capacity on worldwide routes.

Early in the year, Panalpina pre-procured 100 extra flights to operate regular charters during the peak season; in addition, it operated ad hoc charters on a weekly basis during the peak season. The Panalpina Charter Network was called upon for several critical shipments such as delivering a special “carbon black” chemical from Europe to Thailand for a tire manufacturer, as well as transporting the year’s latest gadget, “fidget spinners,” from Asia to Europe. In October 2017, during the exceptionally strong peak season, Panalpina recorded the highest monthly air freight volumes in its history; in November, it surpassed that record. The overall volumes for Air Freight in 2017 were the highest since 2007, with a growth rate of about 8 percent. Panalpina continued to take a strategic approach to working with its core carriers, which also contributed to its ability to secure capacity on a long-term basis. In 2017, the growth with some air freight carriers reached 25 percent to 30 percent.

As top-tier carriers, these companies run modern fleets and meet stringent criteria in terms of environmental impact. Panalpina increased its footprint in innovation and digitalization by piloting a new, centralized ad hoc pricing system with selected Air Freight customers. This digital platform provides customers with a fast, simple and reliable online interface for instantaneous quotation and booking of ad hoc shipments globally; the system will be launched during 2018. Panalpina also co-developed the Validaide program to qualify key suppliers for air freight, ensuring quality and risk management for customers in pharmaceuticals, perishables and other high-value cargo.

Outlook for 2018
The indicators and data suggest that the capacity crunch and high rates will continue in 2018. Panalpina’s target is to secure the right amount of capacity at the best possible rates, and to continue being transparent with customers so that they understand what they can expect. The company has implemented a three-year plan with the global strategic carriers in alignment with each country’s individual plan, with the aim to grow with strategic carriers by 50 percent by 2020.

According to the report, Panalpina successfully piloted its new, fully automated online quotation and booking platform for ad hoc cargo with selected air freight customers. This new centralized digital platform will provide customers with a fast, simple and reliable online interface that enables informed decision-making by giving access to easy and instantaneous quotation and booking of ad hoc shipments globally.

The company also introduced panprojects carrier solution for heavy-lift cargo. With this new carrier model Panalpina can oversee multimodal heavy-lift moves from fabrication to installation sites under one single contract that clearly governs all modes of transport. For customers like EPC (engineering, procurement and construction) companies and oil and gas majors, this offering with its unique legal framework reduces to an absolute minimum the commercial, technical and contractual risks that are inherent to the multimodal transport of project cargo.

Panalpina also received the highest rating from EcoVadis, an independent platform that invites companies to assess the environmental and social performance of their business partners. Panalpina was also recognized as being in the top 1% of those in the industry, and the top 2 percent of all 30,000 companies being assessed by EcoVadis on corporate social responsibility requirements.

Furthermore, Panalpina centralized its Supply Chain Solutions offering with plans to expand the existing team of experts and further invest in technology and infrastructure. Panalpina’s customers from across multiple industries will benefit from solutions that manage their supply chains from end to end and offer greater flexibility, customization, and visibility.

Also, Germany became the first large country where Panalpina implemented the new transportation management system, SAP TM, which will improve the company’s productivity and agility. With this successful rollout in Air and Ocean Freight, Panalpina demonstrated that the system is stable and scalable.