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| Further growth Swissport’s Cargo Division, which operates cargo warehouses at 71 stations in 24 countries, continues to experience significant growth. Our revenues in 2005 exceeded the 2004 result by some 13%, and are budgeted to grow a further 17% in 2006. 2005 witnessed the opening of warehouses in Amsterdam, Seoul and Singapore, plus significant expansions in Brussels and Johannesburg, and further outsourcing wins in the US. Further developments are planned in the coming year. The profile of Swissport Cargo Services (SCS) SCS is the world’s largest dedicated air cargo ground services company. Complementing Swissport’s global one-stop shopping strategy, SCS adds acceptance and delivery, document handling, build and break-down, transfer, bypass and trucking expertise to the organization’s portfolio of traditional ground handling services. This high-caliber bundling concept brings genuine cost-effectiveness and single-source convenience to the world of cargo. SCS is currently serving more than 80 airports and covers most major European and US airports. Swissport International Ltd. adds an impressive network of passenger and ramp handling operations to this roster. Swissport International has a total of more 170 stations in 41 countries. In 2005, SCS reported revenues of some CHF 360 million (around USD 315 million) and handled more than 3,200,000 metric tons of over 300 customers around the globe. Our mission SCS provides carriers around the world with single-source air freight handling logistics in compliance with benchmark standards. The recent acquisition of Unitpool, an internationally active ULD pooling and management company, emphasizes Swissport’s determination to deliver an extensive range of services to its customers. Furthermore, Checkport, a Swissport partner specialized in all aspects of airside and landside security, is scaling up its cargo-related security services to address the growing need for cargo screening and risk management. With these partnerships, Swissport shows that it believes in the idea of the so-called cross selling. The targets and benefits are obvious: concentrating on fewer handlers and forming long-term relationships with each other leads to cost savings and other substantial synergies. Another advantage of the single-source management is the simplification of service standards, quality control, contracting processes, invoicing and other administrative tasks. Swissport is convinced of this approach and more and more airlines are following the same strategy, since they appreciate the advantage of a major player like Swissport that can also offer a “one point of contact” and a dedicated key account management. And last but not least, our customers do not need to care about who is responsible for a shipment being late. Ramp, cargo, warehousing, logistics, trucking – all out of one hand. But no doubt: Swissport is also more than happy to just offer one of the many services of its product portfolio, such as supervision or call center facilities. Outsourcing As airlines continue to focus on their core businesses, SCS has had several opportunities to substantiate its ability to take over cargo-related services and/or functions of various carriers, delivering higher performance at lower cost. Full service packages of this kind have a positive impact on the carrier’s balance sheet and income statement and are therefore a good reason to team up with a flexible market-leader like Swissport. We are convinced that new collaboration models are a promising way forward. However, Swissport is also exploring the idea of franchising arrangements, where it would lend local handlers its name, expertise and standards. Developing such ideas and exploiting cross selling opportunities is likely to be the key focus at Swissport Cargo Services for some time to come, while acquisitions and the extension of the network will still have a high priority. In other words: the Swissport Cargo world is on the move. One of the advantages of Swissport compared with its competitors is that its scale and financial backing gives it the ability to invest in value added services such as IT. Whereas Swissport may not compete on the price with the local player, it can certainly do so on IT and similar services. Within Swissport, huge investments are done to streamline the interface with airlines and save them costs. A small handler just can’t match that. And what about innovative new ideas and practical optimizations for the daily business? FreightFinder – cargo tracking and tracing tool This system is entirely Internet-based and eliminates the need for customers to own and operate proprietary computing systems at SCS stations. It provides useful information enabling airlines to plan outbound flights or transit cargo movements. Agents and forwarders can use it to plan consolidated pickups. And despite its open architecture, the tool keeps sensitive information secure. The key features are: a state-of-the-art online worktool available 24 hours a day, a real-time cargo tracking and tracing facility that monitors all movements, a new system that plans and optimizes the import/export/warehousing flow, an application that saves you time and money, a system that is as user-friendly as possible and a tool that guarantees total discretion and protection of all your customer data. As you can see, Swissport’s FreightFinder offers a wide range of benefits to everyone involved in the cargo handling process. A classical example that Swissport wants to pay attention to details, too. And where are we heading? The only way for a ground handling company to win the trust of its business partners is to do a better job every single day. Quality and consistency have always been (and will be) Swissport’s key success factors. Across all stations around the globe, and across the entire portfolio of products and services, Swissport wants to have a strict quality management. It’s vital to exceed the customers’ expectations and to make sure that the business partner gets a fine perception of value for money. However, one of the main challenges will be to persuade airlines that cargo handling is a key part of their business that deserves to be of high quality. Many carriers still see it as a commodity, but if they want to improve yields, it is their handling that will enable them to do it. That means they will have to team up with quality-minded ground handlers, and when they want to do that, Swissport is ready for cooperation. In 2006, the Swissport Cargo team expects substantial growth in cargo volumes and is gearing up with capacity expansions at key hubs and new locations. Markets like Asia, Latin America, Africa and Eastern Europe and close collaborations with Cargo Airlines are further areas of major business potential which Swissport will continue to cultivate and explore. Another enhancement is taking place operationally with higher quality levels and optimized logistics processes. And to even better address more customer needs, SCS will be further improving its European trucking network.
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