Stuart Warren, CAT Group on 'The Reality of Network Realignment & Rate Negotiations with Carriers'

30 novembre 2009 1

CAT Group Vehicle LogisticsEuropean Network Re-Engineering 2009

Stuart Warren

European 3PL Summit, Brussels, 25/11/2009

Evolution born from Crisis

30 novembre 2009 2

Clever CAT!

Adapting Quickly to new Environment

CAT Group Vehicle Logistics, Key Figures

CAT Group Cargo Logistics

• €743 million turnover

• 1,903 employees

• 116 Distribution

centres

• 2,200,000 new

vehicles delivered,

• 65,000 High & Heavy

vehicles

Sea11 %

30 novembre 2009 3

11 %Rail11 %

Road 77 % Barge 1 %

W. European Network (simplified)

Southampton

Teesport

Le Havre

Zeebrugge

Luton

Newcastle

Southampton

Teesport

Le Havre

Zeebrugge

Luton

Newcastle

30 novembre 2009 4

Barcelone

Santander

Valladolid

Palencia

Barcelone

Santander

Valladolid

Palencia

Situation Europe: December 2008

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

janv

ier

févr

ier

mar

s

avril

mai

juin

juill

et

août

sept

embr

e

octo

bre

nove

mbr

edé

cem

bre

0

5 000

10 000

15 000

20 000

25 000

Volume per month Budget 2008 vs Nov 08 Forecast

GLOBAL VOLUME TREND

Spain

VOLUME TREND IMPACTING EQUILIBRIUMS

30 novembre 2009 5

janv

ier

févr

ier

mar

s

avril

mai

juin

juill

et

août

sept

embr

e

octo

bre

nove

mbr

edé

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bre

Budget 08 PFMT 11 08

Linéaire (Budget 08) Linéaire (PFMT 11 08)

0

1 2 3 4 5 6 7 8 9 10 11 12

Budget 08 PFMT 11 08 PFMT 11 09

Rotation France Allemagne Bénélux Pologne <> Espagne - Ratio Montée / Descente

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

PREV 2008 (CP06 2007) REEL 2008 (CP11 2008) PREV 2009 (CP11 2009)

5 main Pillars of our Network were shaken

Southampton

Teesport

Barcelone

Le Havre

Zeebrugge

Santander

Valladolid

Palencia

Luton

Newcastle

Southampton

Teesport

Barcelone

Le Havre

Zeebrugge

Santander

Valladolid

Palencia

Luton

Newcastle

I Imbalanced Flows

Eg : No backload for 70 trucks / week, France�Spain

II Lack of sustainable volume

on « road-relays »

More than 50% of 120 relay dismantled

III Lack of volume to feed full

trains

We had to adapt !

30 novembre 2009 6

I

Ro

ad

ro

un

dtr

ips

II

Fix

ed

“ro

ad

-re

lay”

links

III

Ra

il T

ran

sp

ort

IV

Sh

ort

Se

a S

hip

pin

g

V

Co

mm

it w

ith

su

pp

liers

trains

3 to 4 trains / week out of 20

IV Too low volume on existing

Short-Sea routes

<700 car /w on UK-France-Spain route versus current 1200

V No respect of annual

volumes committed with

suppliers

• Direct Distribution increase

• Limitation of number of capillary

centres (reduced by 7)

• Increased Trans-border deliveries

• Empty mileage reduction through

France

•Reduction of number of centre used

• Increased Direct Delivery

• Domestic Rail transport limited

Spain

•Reduction of number of centre used

•Direct Delivery from Spanish factories

•2 new compounds to be used (on outside Spain and one in the South)

Italy

•New flows via Civitavechia/Fiumicino

•Distribution from our French compounds

Key elements to restore network efficiency

30 novembre 2009 7 77

• Empty mileage reduction through

roundtrips reengineering

• Selection of new suppliers based

on CAT Global Tender responses &

on QCD

• Integration of logistics opportunities

drawn from the Tender

Italy•Approaches by Rail to Vercelli replaced by road

Germany

•Direct delivery from some French factories (not implementable yet)

•Areas distributed by final compounds have been re optimized

Benelux•Direct delivery from French factories.

•Direct distribution from Zeebrugge and Antwerp for short sea imports

Illustration of changes: Slovenia => France

Before New Network :•a significant increase of Direct Delivery

30 novembre 2009 8

Quality : 4% => 2%

Cost : savings over 5%Time

minus > 2 days

European tender

Launch Due date

11st st RFPRFP

Launch Due date

22nd nd RFPRFP

NegotiationsNegotiations

ContractingContracting

Supplier

Event

• In late 2008, CAT already in final rounds of major European

tender

• Prices quoted re-analysed in light of new network

30 novembre 2009 9

1st selection ofbest suppliers

2nd selection of best suppliersStart

Number of suppliers involved in tenderPhased

implementation of new network

starting Q4 2008

European Supply Base

479• 138

30 novembre 2009 10

45

• Italy• Spain & Portugal

• North Eastern Europe

• Germany• France, Belgium & Switzer-land

• South Eastern Europe

Invitedsuppliers*

• 65

• 128

• 58

• 45

Implementation – Further Impacts

• Empty km:•significant reduction

•Suppliers• Uncertainty

• Changes

• Closure of Distribution Centres

30 novembre 2009 11

• Significant reduction of volumes in other centres

• Opening of new centres with IT links

• Social Impacts:• Redundancies

• New jobs – different locations

• Value-Add Services• Changes to PDI points

Conclusion

30 novembre 2009 12

Thank You for your attention!