Tianjin Port Group (TPG) and PSA International (PSA) signed a Strategic Cooperation Framework Agreement on 18 May 2012 to strengthen ties and foster greater cooperation between the two organisations. The Agreement was signed by Mr Tian Chang Song, Group President, TPG and Mr Tan Chong Meng, Group CEO, PSA, in the presence of Mr Yu Ru Min, Chairman of TPG and Mr Fock Siew Wah, Group Chairman of PSA.

TPG and PSA currently have extensive collaboration on port projects in China. PSA has invested in two of Tianjin Port's container terminals, namely Tianjin Port Pacific International Container Terminal (TPCT) and Tianjin Port Alliance International Container Terminal (TACT). These two facilities have altogether 10 berths and can handle the biggest container ships plying the oceans today, hence making Tianjin Port one of the preferred hub ports of call for mega container vessels in the Northeast Asia region and the Agreement signed forms the basis for both companies to seek further collaboration and expansion.

Mr Tian Chang Song, Group President of TPG, said, “This Agreement is another critical milestone in the very friendly and positive relationship that TPG has with PSA. Both organisations recognise the tremendous potential of Tianjin Port as a major container hub port in the Bohai Rim to support the further development of industries and hinterland investments in Northeast China. Together, TPG and PSA aim to ensure that Tianjin Port will be a world class facility for global container shipping.”

Mr Tan Chong Meng, Group CEO of PSA, was also very positive about the signing of the Agreement. He commented, “I thank TPG for giving PSA this opportunity to enhance our bilateral ties and further our involvement in developing Tianjin Port. PSA is committed to give its best expertise and resources to help develop Tianjin Port into a resounding success.”

About Tianjin Port Group

Tianjin Port (Group) Co., Ltd. is a large state-owned enterprise owned by Tianjin Municipality Government, and is responsible for the overall management and development of Tianjin Port. As the core enterprise responsible for implementing the nation’s development plan for the Northern Region Maritime and Logistics Center, TPG operates the largest integrated, full-service port in northern China.

CEVA Logistics announced the opening of a new Control Tower in Istanbul, an innovative information hub which enables the monitoring of all operations throughout the entire supply chain from a single central point.

Developed with the latest IT solutions, the Control Tower will provide customers with significant advantages through this unique approach, allowing them a full and comprehensive overview of their operations and movement of goods, optimizing transport and costs and thus improving supply chain efficiency.

This investment will allow CEVA in Turkey to constantly monitor its countrywide operations 24/7, using 600 cameras connected to the Control Tower. This system makes it possible to promptly identify problems and prepare real-time reporting for all processes, covering more than 1,200 trucks daily, delivering further value to our customers, who can rely on a transparent, timely service.

Aslan Uzun, Managing Director of CEVA in Turkey and the Balkans, explained that 60,000 truck trips each month and all CEVA’s home delivery services across Turkey are managed through the Control Tower in Istanbul. “This Control Tower represents a breakthrough in Turkey in our approach to become the strategic logistics partner of choice, since it guarantees superior services to customers while increasing our ability to optimize costs, volume utilization and route planning,” said Aslan Uzun. “This hub represents a pioneering supply chain solution in the Turkish logistics sector which will allow us to reach a higher level of excellence; a vital component in our journey to become the most admired supply chain company,” concluded Aslan.

As with the Control Towers already implemented in Italy and Spain, this hub consists of three main areas with specific functions:

Red Area - dedicated to monitoring overall transport optimization including the network of national and international transports and financial targets. This enables robust management of the entire transportation process.

Blue Area - dedicated to planning and flow optimization. Here planning, utilization and monitoring of all line hauls and home delivery distribution take place, including load optimization
Grey Area – composed of two teams; security, monitoring critical parts of warehouses and high volume product shipments, and Full Truck Load (FTL) GPS monitoring and alarm systems for any unusual activity such as theft, accidents or route changes.

Two employees in Sweden have received the first European Innovation Award from DB Schenker Logistics for a game they developed aimed at combating everyday discrimination. Second place was awarded to a marketing toolbox, and a special electronic document management system for freight forwarding came in third. A panel of judges composed of managers from DB Schenker selected the winners by secret ballot out of the final top ten award-worthy entries. Employees from over 30 European national companies took part in the competition, which was launched by the Land Transport division. Twenty-eight innovations were nominated, some by customers, and the top ten were selected for the final round.

"As part of our innovation management activities, we were looking for ideas that further strengthen our network and can be applied to other areas as well," explained Karl Nutzinger, Member of the Board of Management of Schenker AG responsible for Land Transport, in his speech at the award ceremony at the Zeche Zollverein in Essen. "Many of the ideas developed at DB Schenker are now the industry standard. We target innovations which allow us to stand out from the competition and also benefit our customers. At the same time, we want to show that sensible changes to our network processes are an important part of our corporate culture."

The Innovation Award was introduced last year by the European management team as a new element of innovation management. Ulla Ahrlin and Yvonne Prokopek came up with the idea of playfully drawing attention to everyday discrimination at work. Their idea, for which they were awarded EUR 15,000, has already been implemented at DB Schenker Logistics’ Swedish national company. Thorsten Meffert was awarded EUR 10,000 for his marketing toolbox, which is already being used as a sales tool at the German organization. Radim Chval received an award of EUR 5,000 for the document management system he developed, which has been successfully utilized at the Austrian national company.

Executives from all over Europe took part in the presentation of the ten best innovative ideas to evaluate how solutions that had proven themselves in other countries could be applied across Europe. The proposals submitted included telematics solutions for temperature-controlled transports and for monitoring swap bodies, as well as payment solutions for online purchases, the Raubox, which has already been given the European Packing Award, and a new trainee selection procedure.

“Although most of our businesses deliver good results and the Group’s net result is on a par with last year, we are not satisfied with the Group's operational performance for the first quarter. Earnings in shipping were weak due to the continued loss-making rates in the container and tanker markets. However, our efforts to increase container rates are paying off and we will continue our initiatives to improve rates throughout the year. We will also maintain a high level of costs for oil exploration and development of discoveries for production. We are confident that these investments will enable us to stop the decline in our oil production and then return to growth towards our target of 400,000 barrels per day,” says Group CEO Nils S. Andersen.

The Group delivered a profit of USD 1.2bn (USD 1.2bn) and a return on invested capital (ROIC) of 10.0% (11.7%) for Q1. Excluding divestment gains and one-off tax income from the settlement of an Algerian tax dispute, the Group recorded a zero profit (profit of USD 1.1bn) and a ROIC of 1.1% (11.2%). Cash flow from operating activities was USD 1.2bn (USD 2.3bn) and cash flow used for capital expenditure was negative by USD 0.9bn (negative by USD 1.2bn). The Group’s free cash flow was USD 0.3bn (USD 1.0bn) and net interest-bearing debt was USD 15.5bn (USD 15.3bn at 31 December 2011).
Total equity was USD 37.6bn (USD 36.2bn at 31 December 2011), positively affected by the profit for the period of USD 1.2bn.

Maersk Line lost USD 599m (profit of USD 424m) and ROIC was negative by 12.7% (positive by 10.0%) in Q1. Maersk Line’s volume increased by 18% and the average freight rate declined by 9% versus Q1 last year. Maersk Line announced a general rate increase on the Asia – Europe trades effective from March 2012, that was almost fully accepted, supported by a 9% reduction in capacity. Most of the capacity withdrawal came from a reduction of the average speed. Maersk Line’s introduction of the Daily Maersk has changed the industry standard, leading other liners to consolidate their services in three alliances. 85% of the volume on the Asia – North Europe trades is now handled by Maersk Line or the three alliances.

Maersk Oil’s profit for the period was USD 1.3bn (USD 0.5bn) and ROIC reached 76.5% (46.3%). A one-off tax income of USD 0.9bn from the settlement of an Algerian tax dispute and a gain from a partial divestment of interests in Brazil also had a positive effect on the result. The result was also positively affected by a higher average oil price of USD 119 per barrel (USD 105 per barrel) and negatively affected by a 24% decline in share of production to 254,000 barrels of oil equivalent per day (boepd) compared to 335,000 boepd in Q1 2011. Maersk Oil completed (three) exploration or appraisal wells in Q1 and exploration costs reached USD 299m (USD 141m).

APM Terminals' profit for the period was USD 235m (USD 141m) supported by after tax divestment gains of USD 73m from portfolio optimisation. ROIC increased to 18.1% (11.8%). Despite declining volumes in Europe, overall throughput increased by 10% driven by growth markets and new terminals. EBITDA margin declined to 22.7% (23.3%). APM Terminals took control of the operations in the Skandia Container Terminal in Gothenburg, Sweden, effective January 2012.

Maersk Drilling realised a profit of USD 125m (USD 122m) and a ROIC of 12.2% (12.9%). Several contracts were signed during the quarter, giving good earnings visibility for 2012 and 2013. Rig uptime remained high. Maersk Supply Service reported a profit of USD 42m (USD 43m) and a ROIC of 7.7% (7.7%), with spot market rates at the same level as in Q1 2011. Four long term contracts were signed for the Brazilian and African deepwater markets.

Outlook for 2012
The A.P. Moller - Maersk Group expects a result for 2012 slightly lower than the level reported in 2011 (USD 3.4bn). Cash flow used for capital expenditure is expected to be around the same level as in 2011 while cash flow from operating activities is expected to develop in line with the result.

Maersk Line expects a negative up to neutral result in 2012, based on the assumption that the rate restoration that has taken place since March 2012 will continue. The outlook is very sensitive towards changes in the market balance. Global demand for seaborne containers is expected to increase by 4-6% in 2012, with lower increases on the Asia – Europe trades but higher increases on the North – South trades.

Maersk Oil expects a result for 2012 at the same level as the result for 2011 (USD 2.1bn), impacted by compensation of USD 0.9bn from the settlement of a tax dispute in Algeria. The expected result is based on a share of production of 265,000 boepd at an average oil price of USD 110 per barrel. Exploration costs are expected to be above USD 1bn.

APM Terminals expects a result above 2011 and above market growth in volumes supported by portfolio expansion.

Maersk Drilling and Maersk Supply Service expect results in line with the 2011 results. The total result from all other activities is expected to be at the same level as in 2011 excluding divestment gains and impairments.

The outlook for 2012 is subject to considerable uncertainty, not least due to developments in the global economy. The Group’s expected result depends on a number of factors. Based on the expected earnings level and all other things equal, the sensitivities for four key value drivers are shown in the table below.