Contents

2 KUEHNE & NAGEL AT A GLANCE

3 THE GLOBAL LOGISTICS NETWORK

14 BOARD OF DIRECTORS AND MANAGEMENT BOARD

16 Report of the Board of Directors

20 Report of the Management Board

24 STATUS REPORT

26 Turnover

27 Income

30 Financial Position

32 Investments, Depreciation and Amortisation

35 Corporate Development

36 Research and Development

40 Human Resources

44 Quality Management

45 Environment and Safety Management

48 Information Technology

50 REPORTS OF THE BUSINESS UNITS

52 International Forwarding

64 Contract Logistics

68 Insurance Broker

71 CORPORATE GOVERNANCE

78 CONSOLIDATED FINANCIAL STATEMENTS OF THE KUEHNE & NAGEL GROUP

81 Income Statement

82 Balance Sheet

84 Changes in Equity

85 Cash Flow Statement

86 Notes to the Consolidated Financial Statements

112 Main Investments

116 FINANCIAL STATEMENTS OF THE KUEHNE & NAGEL INTERNATIONAL AG

117 Income Statement

118 Balance Sheet

120 Cash Flow Statement

121 Notes to the Financial Statements

KUEHNE & NAGEL Annual Report: Contents 05

24

Status Report: Contents 25

26 Turnover

27 Income

30 Financial Position

32 Investments, Depreciation and

Amortisation

35 Corporate Development

36 Research and Development

Status Report40 Human Resources

44 Quality Management

45 Environment and Safety Management

48 Information Technology

26

Turnover

Exchange rate fluctuations based on average yearly exchange rates between

2001 and 2002 led to a lower valuation of the EURO against the Swiss Franc

(minus 2.8 per cent), while the U.S. Dollar and currencies dependent on it

(e.g. Hong Kong, Taiwan, Singapore, Mexico as well as a number of the countries

in South America) decreased against the Swiss Franc over the same period by

7.7 per cent. When comparing the figures contained in the income statement,

the average yearly depreciation of the Swiss Franc in 2002 amounted to

approximately 7.2 per cent.

Kuehne & Nagel realised in 2002 an invoiced turnover of CHF 8,805 million

(4.4 per cent versus 2001) and a net invoiced turnover of CHF 6,947 million

(excluding customs duties and taxes) respectively. This increase was realised by

organic growth and by acquisitions.

At regional level Europe levelled out its turnover, while the Americas

increased its turnover by 9.4 per cent, Asia Pacific by 5.5 per cent, whereas in

the Middle East and Africa turnover incresed by 20.8 per cent.

At business unit level, International Forwarding reported an increased

turnover of 3.5 per cent (seafreight 2.6 per cent, airfreight 5.7 per cent), while

Contract Logistics realised an increased turnover of 22.9 per cent (warehousing

20.9 per cent and distribution 27.4 per cent).

It should be noted however that in the forwarding industry – with its con-

siderable outlays such as customs duties and freight charges – turnover provides

only a limited indication of the way business is progressing, as is proven by the

following remarks on income.

REGIONAL TURNOVER

CHF million 1998

1999

2000

2001

2002

3,776 1,813 754 293 6,636

3,990 1,675 660 295 6,620

Europa

Americas

Asia Pacific

Middle East and Africa

Europa

Americas

Asia Pacific

Middle East and Africa

REGIONAL TURNOVER

in %

4,643 2,322 906 376 8,247

558 CHF million 6.4%

893 CHF million 10.1%

2,658 CHF million 30.2%

4,696 CHF million 53.3%

4,696 2,658 893 558 8,805

4,696 2,430 847 462 8,435

Status Report: Turnover and Income 27

Income

The gross profit, which in the logistic and forwarding industry provides a better

indication of performance than turnover, reached CHF 1,911 million in 2002,

an increase of 10.7 per cent, of which minus 6.7 per cent were due to currency

effects. Seafreight and airfreight produced a gross profit of 51.3 per cent.

Contract Logistics is the other main business unit with a gross profit contribution

of 37.4 per cent.

At regional level, Europe was the largest contributor to gross profit with

48.9 per cent, followed by the Americas with 36.6 per cent, and Asia Pacific

with 11.4 per cent. The balance of 3.1 per cent relates to Middle East and

Africa.

The operational cash flow – the sum of the net income for the year plus

non cash related transactions – increased from CHF 274.6 million in 2001 to

CHF 367.3 million in 2002, i.e. by 33.8 per cent.

When considering the EBITA, further improvements have been realised,

particularly in the business field sea freight from CHF 126.2 million in 2001 to

CHF 141.8 million in 2002 (12.4 per cent); the business field airfreight showed

strong recovery in comparison with 2001 (CHF 83.5 million in 2002 versus

CHF 62.3 million in 2001, plus 34.0 per cent). The business field international

overland showed an amount of CHF 13.3 million in 2002 and the business

field rail experienced an increase of CHF 2.5 million. The business field customs

brokerage recovered from a CHF 0.8 million in 2001 to CHF 3.1 million in

REGIONAL GROSS PROFIT

in %

59 CHF million 3.1%

219 CHF million 11.4%

699 CHF million 36.6%

934 CHF million 48.9%

Europa

Americas

Asia Pacific

Middle East and Africa

1 adjusted for comparison purposes

GROSS PROFIT

CHF million

1998

1999

2000

2001

2002

1,453

1,238

1,216

1,911

1,727

OPERATIONAL CASH FLOW

CHF million

19981

19991

20001

2001

2002

199

155

151

367

275

INCOME BEFORE TAX

CHF million

1998

1999

2000

2001

2002

194

134

125

5

228

28

2002. The business unit Contract Logistics achieves an EBITA of CHF 31.9

million in 2002 which is a minus of CHF 2.9 million versus 2001, mainly due to

North America performance, partly compensated by strong recovery in Europe.

The business unit Special Logistics, which includes fairs & exhibitions and

travel activities, includes the one off impact of CHF 4.6 million which is the

result of the divesture of the non core business of travel activities in Canada,

South Africa, Turkey and Germany.

All regions, except the Americas, where a decrease in EBITA of CHF 8.7

million occurred, improved the results in 2002. Above average increases were

realised in Europe (CHF 30.9 million or 22.5 per cent) as well as in the Asia

Pacific region (CHF 15.5 million or 22.5 per cent).

The expense structure including depreciation shows an increase of 9.8 per

cent (manpower 9.1 per cent) versus an increase in gross profit of 10.7 per cent,

resulting in an improvement of the EBITA margin as a percentage of gross profit

from 15.2 per cent in 2001 to 15.9 per cent in 2002.

Europa 1 adjusted for comparison purposes

Americas

Asia Pacific

Middle East and Africa

REGIONAL RESULTS (EBITA)

CHF million 1998

1999

2000

2001

2002

137 54 69 263

108 55 54 218

60 35 37

2

133

58 40 31 131

3

168 84 3046

1

1

46

Status Report: Income 29

The net finance result amounted to minus CHF 12.8 million versus a profit

of CHF 14.7 Mio. in 2001. This reduction was realised due to the lower cash

position in 2002 as a result of the USCO acquisition as well as negative currency

results.

INCOME BEFORE TAX/

NET INCOME FOR THE YEAR

CHF million

EXPENSE STRUCTURE

CHF million 1998

1999

2000

2001

2002

799 121 94 83 89 1,186

712 100 80 78 75 1,045

706 97 80 80 79 1,042

Personnel expense

Facility expense

Communication, travel and selling expense

Vehicle and operational expense

Administrative expense

Income before tax

Net income for the year

1,043 211 117 86 97 1,554

956 173 108 81 97 1,415

1998

1999

2000

2001

2002

228 160

194 126

134 95

125 82

5 0

30

Financial Position

The equity ratio of the Kuehne & Nagel Group decreased from 41.3 per cent in

2001 to 32.6 per cent in 2002 as a result of refinancing of the US acquisition

from intercompany loan to third party and the reduced net income due to

impairment of goodwill.

The return on equity declined from 18.9 per cent in 2001 to 0.0 per cent in

2002 as a result of the net income for the year of TCHF 131.

The net-cash position (including marketable securities less bank liabilities)

amounts to CHF 271 million in 2002 versus CHF 177 million in 2001. The

increase is a result of the improved cash flow.

The total assets of CHF 2,694 million increased by 12.9 per cent in 2002 as

a result of refinancing of the US acquisition.

Trade receivables (before provision for bad debts) amounting to CHF 921

million represent the most significant asset of the Kuehne & Nagel Group. Due to

the rigid collection procedures applied in 2002, the days outstanding of 37.8

days in 2001 decreased slightly to 37.7 days in 2002.

The development of the vendor terms decreased from 42.6 days in 2001 to

41.9 days in 2002.

Developments of other key figures on capital structure are shown in the

adjacent table.

ASSETS AND CAPITAL STRUCTURE

ASSETS

CHF million

Cash and marketable securities

Receivables and other current assets

Non current assets

1998

1999

2000

2001

2002

1,166 2,413

423 946 427 1,796

429 744 412 1,585

788 459

1,078 2,386303 1.005

1,125 2,694821 748

Status Report: Financial Position 31

KUEHNE & NAGEL GROUP: KEY FIGURES ON CAPITAL STRUCTURE

1998 1999 2000 2001 2002

1 Equity ratio 25.5% 25.1% 36.6% 41.3% 32.6%2 Return on equity 22.9% 25.0% 29.4% 18.9% 0.0%3 Self-financing ratio 304.4% 350.4% 636.6% 720.8% 630.9%4 Debt ratio 74.0% 74.7% 63.3% 58.6% 67.3%5 Short-term ratio of indebtedness 57.7% 61.2% 54.2% 50.6% 60.9%6 Intensity of long-term

indebtedness 16.6% 13.5% 9.1% 8.0% 6.3%7 Fixed asset coverage ratio 162.8% 163.4% 240.6% 117.2% 140.7%8 Working Capital

(CHF million) 258.7 270.5 646.1 173.3 304.69 Receivable terms (in days) 32.2 41.5 40.4 37.8 37.710 Vendor terms (in days) 39.2 48.3 43.1 42.6 41.911 Intensity of capital expenditure 26.0% 23.8% 19.0% 42.1% 27.8%

LIABILITIES

CHF million

Trade, tax and other liabilities

Bank liabilities

Provision for pension plans and severance payments

Equity (incl. minority interest)

1 Total equity in relation to total assets at the end of the year2 Net income for the year in relation to share capital + capital reserves + retained earnings as of 1.1. of the

current year less dividend paid during the current year as of date of distribution + capital increase (incl. share premium) as of date of payment3 Capital reserves + retained earnings + net income for the year in relation to share capital4 Total liabilities + provisions in relation to total assets5 Short-term liabilities in relation to total assets6 Long-term liabilities + provisions for pension plans and severance payments in relation to total assets7 Total equity (including minority interest) + long-term liabilities + provisions for pension plans and severance payments in relation to non current assets8 Total current assets less short-term liabilities9 Turnover in relation to the receivables outstanding at end of current year10 Expenses for services from third parties in relation to trade liabilities / accrued trade expenses at end of current year11 Non current assets in relation to total assets

1998

1999

2000

2001

2002

1,248 886 2,413

942 252 148 454 1,796

778 258 140 409 1,585

144135

1,132 987 2,386141126

1,115 882 2,694147550

Investments, Depreciation and Amortisation

In 2002, the Kuehne & Nagel Group invested a total of CHF 171 million

for capital expenditures (CHF 116 million in fixed assets, CHF 54 million in

intangible assets and CHF 1 million in financial assets).

The financing of these capital expenditures was done from the operational cash

flow of CHF 367,3 million generated during the current year.

Investments in fixed assets comprise CHF 46 million for properties and build-

ings, and CHF 70 million for other fixed assets, operating and office equipment.

32

INVESTMENTS AND AMORTISATION

CHF million

Investments

Depreciation and amortisation

Western Europe CHF million

Munich 6 Purchase of 37,000 sqm of land

Duisburg 18 Extension of logistics center

Grossostheim 2 Extension logistics center

Frankfurt 12 Preparation cost new logistics center

Gärtringen (Stuttgart) 5 Purchase of 22,000 sqm of land

43

USA

Naugatuck 3 Purchase of office building

Total 46

The properties and buildings include the following:

1998

1999

2000

2001

2002 171

620 117

126 77

95 60

72 62

362

Status Report: Investments, Depreciation and Amortisation 33

Capital expenditures in operating and office equipment related to the following

categories:

Capital expenditures for intangible assets amounted to CHF 54 million

covering goodwill of CHF 27 million and IT software of CHF 27 million.

Depreciation and amortisation in 2002 amounted to CHF 362 million and

are recorded in the Consolidated Financial Statements as indicated in note 6 and

8 to the consolidated financial statements.

The allocation by region was as follows:

CHF million

Operating equipment 23

Vehicles 7

IT hardware 29

Office furniture and equipment 11

Total 70

CHF million

Europe 28

Americas 35

Asia Pacific region 4

Mitddle East and Africa 3

Total 70

34

CHF million 1998 1999 2000 2001 2002

Capital expenditures

Fixed assets

Properties and buildings 22 37 40 48 46

Operating and office equipment 43 44 66 53 70

Financial investments

Investments in associates

and joint ventures – 1 – – 1

Intangible assets

Goodwill in consolidated companies 2 6 5 500 27

IT Software 5 7 15 19 27

72 95 126 620 171

Depreciation and amortisation

Fixed assets

Buildings 11 8 9 12 15

Operating and office equipment 35 39 48 54 61

Intangible assets

Goodwill in consolidated companies 11 6 5 31 53

Impairment of goodwill – – – – 206

IT Software 5 7 15 19 27

62 60 77 116 362

DEVELOPMENT OF CAPITAL EXPENDITURES, DEPRECIATION AND AMORTISATION

OVER A PERIOD OF 5 YEARS:

Status Report: Corporate Development 35

Corporate Development

Industry analysis

A further increase in consolidation occurred in the logistics industry in the year

2002. The major postal companies contributed to this by expanding their market

position through selective acquisitions. The takeover of Stinnes / Schenker by the

Deutsche Bahn saw a carrier intervene in the consolidation process, again raising

the general question regarding the neutrality of a direct carrier/freight forwarder

combination. At the same time the state – at least in Germany – continued to

extend its influence over the logistics industry.

For many companies in the industry the economic situation was strained. The

number of insolvencies in the road transport / forwarding / warehousing sectors

increased. At the same time, providers of purely standard services and logistics

companies whose business structures do not allow them to compete on a global

level found themselves under growing pressure.

Companies like Kuehne & Nagel, which have reached a critical size, have an

available global network, special industry competence and a highly developed

information technology, were able to increase their market share again in 2002

in spite of the difficult economic situation. At the same time they benefited

from their customer-oriented business policies and the trend by companies in

trade and industry not only to outsource services that are not part of their core

competencies but also to reduce the number of logistics providers.

Market position and main focus of growth for Kuehne & Nagel

Global market leadership in the seafreight business unit was consolidated not

least through a high level of market expertise and excellent IT-based products.

In airfreight the foundations were laid for achieving the medium-term target of

becoming one of the top three global airfreight companies by an expansion

programme in selective European and Asian markets.

In contract logistics, the prime objective is to combine internal growth with

strategic acquisitions in the core markets of Europe and Asia to consolidate the

global market position amongst the top ten. Furthermore, additional growth is

expected by widening the industrial focus to include the pharmaceutical and

healthcare industries.

In the business units of International Forwarding and Contract Logistics

synergetic growth will be further pushed forward in the coming year. Apart

from a consistent evaluation of external growth options, the success of special

industrial models is to be raised through complementary cooperations.

36

Research and Development

Globalisation, competition and cost pressure are forcing companies in trade and

industry to look at ways of improving and refining their logistics activities. The

task is to optimise the supply chain and eliminate inefficiencies. In this context,

the practice of outsourcing logistics services that go beyond mere operational

provision of transportation and warehousing functions has taken on additional

importance – not least to fully maximise internal potential for rationalisation.

This provides further business potential for the logistics provider. However, an

integrated service offering, a finely meshed network and a highly advanced

information technology are essential.

Lead Logistics Provider concept offers additional added value

With its Lead Logistics Provider concept Kuehne & Nagel offers its customers,

besides logistics services, additional value through support in supply chain

management. Practical expertise and extensive knowledge in assessing the

feasibility of innovative business processes are central when Kuehne & Nagel,

as general service provider, takes over the task of optimising and managing

customer-specific supply chains.

In the year under review, Kuehne & Nagel demonstrated its ability in this

field by realising a project of substantial complexity. A globally operating high-

tech firm, convinced by Kuehne & Nagel’s information logistics concept and

excellent performance record as a service provider, put the management of its

entire worldwide logistics activities in Kuehne & Nagel’s hands. Core elements of

the solution include the full integration of relevant logistics data for all partici-

pating companies in the supply chain, as well as the implementation of manage-

ment tools based on this information, which support reduced costs and an in-

creased service level in the provision of logistics. As the general service provider

where all elements of the so-called supply chain execution meet, Kuehne &

Nagel also manages the customer’s other logistics providers worldwide.

Status Report: Research and Development 37

Another important aspect of Kuehne & Nagel’s range of services as “Lead

Logistics Provider” is to consolidate diverse elements of an order within the

transport chain to deliver the entire customer request. As a result, warehouse

inventories are reduced, creating advantages in the cash-to-cash cycle and

the order cycle time. Moreover, customers can expect synergies in logistics

operations whether through gains in time and quality or by economies of scale.

Information Technology as key position

IT integration plays a key role in the optimisation and management of complex

supply chains. It must ensure that relevant information from all involved partners

is available at the appropriate place and time to control the flow of goods and

stocks efficiently.

Based on Lead Logistics Solutions implemented in recent years a scaleable

system and process platform has been established at Kuehne & Nagel, from

which many customers can benefit. Current market developments promise a

continuation in the trend towards global supply chains that require value added

operations and innovative business models such as those offered by Kuehne &

Nagel.

38

HUMAN RESOURCES

Learning in multinational teams constitutes a core element of

Kuehne & Nagel’s training and further education programme.

Status Report: Human Resources 39

40

Human Resources

Kuehne & Nagel proved itself to be a reliable employer even in an unsettled

economic environment. At year-end 2002, the Kuehne & Nagel Group employed

17,689 employees worldwide. This means an increase of 277 positions over

2001 resulting essentially from several new large-scale customer projects, but

also reflecting measures to strengthen the sales team.

“The Glocal Networker” – Think global, act local

Kuehne & Nagel’s progression from an international forwarding company to a

global provider of integrated logistics services has led to the creation of a new

corporate approach and an increased commitment to education, further training

and staff development.

The objective of these measures is to support employees in presenting

themselves to customers all over the world as competent, highly qualified and

engaged logistics partners.

“The Glocal Networker” management model, developed at international level,

describes the demands that Kuehne & Nagel specialists and managers face in

global competition. Since 2002, the qualification criteria defined within this

framework have formed the basis for the worldwide management of human

resources with regard to recruitment and staff selection, the filling of new and

vacant positions, assessment of potential and career development. Innovative

training programmes are geared specifically to raise employee competence levels.

<1 year 18%

1–3 years 36%

4–5 years 14%

6–10 years 15%

11–25 years 14%

>25 years 3%

>50 years 11%

41–50 years 20%

31–40 years 34%

26–30 years 19%

<25 years 16%

EMPLOYMENT OF PERSONNEL DURATION OF EMPLOYMENT AGE

Status Report: Human Resources 41

Personally Committed to Training and Further EducationWith the establishment of the Kuehne-Institute for Logistics at the

University of St. Gallen (KLOG-HSG) in November 2002 the Kuehne-

Foundation, a public interest organisation based in Schindellegi/

Switzerland, has conceived its most significant project to date.

The growing importance of the transport and logistics business and the related interaction

between countries, cultures and services require innovative measures for training and further

education of the highest degree. Exceptionally well educated logistics specialists who distin-

guish themselves through creativity and systematic and integrated thinking and who are

also capable of carrying out multi-disciplined project work will be needed more and more

in industry, trade and commerce.

The Kuehne-Foundation has been meeting these requirements for years with corre-

sponding programmes. For example, in 2000 a “Competence Centre for Logistics and

E-commerce” was established at the Graduate School of Management in Vallender. In 2001,

the Kuehne-Foundation initiated the series of seminars with the title “Network Management

for Logistics Processes – NetloP” which provides 15 advanced training days on a yearly basis

for management potential from industry, trade and commerce.

With the establishment of the Kuehne Institute for Logistics at the University of St. Gallen

in November 2002, the Kuehne-Foundation has launched its most important programme yet.

The Institute is to receive an initial annual grant of CHF 2 million and will employ a staff of

up to 15 people. It will be managed as a joint stock public interest company with a not-for-

profit purpose. Among the Board of Directors are the President of the Kuehne-Foundation,

Klaus-Michael Kuehne, and the Rector of the University of St. Gallen, Professor Dr. Peter

Gomez.

42

The Institute, which began its work on January 1, 2003, is setting the trend for integrated

and innovative logistics. With its “Executive Master of Business Administration for Logistics

Management” (EMBA Logistics), the Kuehne-Institute for Logistics is bridging the gap between

a first class General Management Training programme at the University of St. Gallen and the

transfer of state-of-the-art logistics know-how in collaboration with other renowned logistics

institutes. The KLOG-HSG is also an ideal platform for an intense dialogue between high-

level representatives from academia and practice.

In the future too, the Kuehne-Foundation will devote itself in close cooperation with its

partners to the continued expansion of training and further education measures as well as to

fostering science and research in the fields of transportation and logistics. Furthermore, the

Kuehne-Foundation supports humanitarian and cultural projects.

The public interest Kuehne-Foundation, set up by the Kuehne family in 1976, has as its sole

donor, Klaus-Michael Kuehne, the main shareholder of the Kuehne & Nagel Group.

Status Report: Human Resources 43

Furthermore, this procedure offers employees clear and obligatory orientation

to meet the challenges faced. Self-initiative and a willingness for lifelong learn-

ing advance to requirements made on each individual. For only highly skilled

employees assure the company its innovative strength and competitiveness as

well as a superior quality of services.

Staff and management development

In staff and management development the systematic delegation of responsibility

at all company levels and strategic international job rotation have always had a

special importance.

Within the framework of the management development programme key

personnel in all areas of the company are identified. Through continual dialogue

individual career expectations are synchronised with the interests and require-

ments of the company, leading to a tailor-made development plan. The manage-

ment development programme was especially promoted in the year under review.

Moreover, contacts with universities having a logistics bias and support for

logistics students were intensified with the aim of securing the best talents for

the company.

Committed implementation of the staff and management development pro-

gramme enabled more than 70 per cent of vacant positions in top management

to be filled by personnel from the company’s own ranks in the year 2002. This

not only guarantees optimal support for customers, but at the same time under-

scores the attractiveness of Kuehne & Nagel as a career partner.

PERSONNEL STRUCTURE Management 12%

Waged 24%

Salaried 64%

Women 40%

Men 60%

Quality Management

The operational quality of the logistics provider but also its contribution to

quality assurance is of great importance to every customer. For this reason data

quality as well as process and service quality in all Kuehne & Nagel business

units are subject to a wide range of examinations and continuous optimisation.

Worldwide certification according to the latest quality norm ISO 9001: 2000

In the year under review the Kuehne & Nagel Group restructured its entire

quality management system, adapting it to the requirements of the latest

ISO-Norm 9001: 2000.

Following intensive audits, the renowned classification company Bureau Veritas

Quality International certified in November that the Kuehne & Nagel Group’s

entire business processes and all its locations throughout the world now conform

to this norm, which includes customer and process orientation among its main

points.

Fast access to the correspondingly revised quality manual, including all central

guidelines, instructions and forms, is available via the Kuehne & Nagel Intranet.

Improvement in data quality

The market is demanding maximum transparency. Great importance is therefore

attached to securing a globally consistent quality of data across the entire supply

chain and constantly improving it. All data placed on the Internet to enable

customers seamless, up-to-date and detailed tracking of their consignments is

examined for completeness, plausibility and actuality on an ongoing basis.

Diverse key performance indicators are used to measure and monitor the actual

quality level achieved. Through continuous training and the analysis of devia-

tions, data integrity was improved by a further 5 per cent in the year under

review, thereby contributing to a better quality of service and, as a consequence,

increased customer satisfaction.

Awards for high quality standards

In the reporting year 2002, Kuehne & Nagel won a number of awards for its

high quality services and innovative IT systems. Exemplifying this is the IFW

“Freighting Industry Award for Information Technology”, which the British

national company received in July. The jurors especially appreciated the fact that

Kuehne & Nagel’s advanced IT systems offer customers optimal transparency

throughout the entire supply chain.

44

Status Repot: Quality Management – Environment and Safety Management 45

Environment and Safety Management

Careful Handling of Resources

Kuehne & Nagel fulfils its ecological responsibility by pursuing systematic

management of the environment. In addition to a prudent, corporate-wide use of

energy sources, all aspects of resource conservation are considered when, among

other things, new logistics centres are constructed.

Additional locations certified to environmental norm ISO 14001

The number of locations with a certified environment management system rose

to 21 in the year under review. In addition to the offices already certified in

Great Britain, Luxembourg and Sweden, six company locations in Finland and

Switzerland were awarded ISO 14001 certification.

Environmentally friendly offer of transport services

Whether through the optimum utilisation of transportation capacities, the intelli-

gent bundling of the flow of goods at logistics hubs or multi-modal transportation

using rail and river shipping, Kuehne & Nagel has given serious thought to

environmental concerns for decades. Ecology and economy are not regarded as

conflicting factors, but are harmonised on a daily basis. In the year under review,

as in previous years, freight volumes transported by rail and river shipping could

again be increased, therefore relieving the traffic burden on roads.

Security management

Through its participation in the “Customs-Trade Partnership Against Terrorism”

(C-TPAT) initiated by the American customs authorities, Kuehne & Nagel under-

lined its strong commitment to reducing security risks in the container business.

The security measures that have always been an integral part of Kuehne &

Nagel’s transportation processes correspond largely to the demands stipulated by

the initiative and needed only marginal adjustment. Customers benefit from this

voluntary membership not only through a guarantee of higher safety, but also

through faster customs clearance.

Quality, Safety, Health, Environment (QSHE)

With its integrated QSHE management system Kuehne & Nagel meets the high

expectations of international key accounts with regard to quality, safety, health

and the environment. Within the framework of this system many locations already

correspond to the requirements of TAPA (Technology Asset Protection Associa-

tion), the aim of which is to substantially increase security standards in the

storage and transportation of valuable IT products as well as to considerably

reduce the risk of theft.

46

Status Report: Information Technology 47

IT: A CORE COMPETENCE

The logistics business is no longer imaginable

without Information Technology – IT has advanced

to a core competence.

Information Technology

In the logistics industry Information Technology has developed into a driving

force for business success and makes a decisive contribution to higher added

value for customers. In the year under review, Kuehne & Nagel has taken further

important steps in the implementation of its IT strategy. This is followed on the

assumption of meeting customer demands even more quickly and efficiently

primarily by the global standardisation of processes and systems.

Extension of KNLogin functionality

KNLogin belongs to Kuehne & Nagel’s standardised and integrated range of IT

services and products. This Internet-based system for tracking consignments has

been significantly extended in terms of functionality. The globally rolled out

Order Management System (OMS) allows individual purchase orders to be

displayed and monitored, providing customer-oriented, password-protected access

to detailed information down to the individual item level. By use of the OMS

function customers in the retail or textile industries for example can more pre-

cisely control material management with suppliers across the entire supply chain.

The Container Management System (CMS) also increases transparency and flexi-

bility in the supply chain. Customers can follow the progress of their containers

without interruption from the moment the order is placed to the final destination

intervening, if necessary, to make rearrangements.

Homogeneous process and system platform supported Cargo 2000 certification

The Kuehne & Nagel Group’s homogeneous process and system platform, which

comprises both the forwarding application and the visibility and monitoring

function was decisive for early certification under Phase 2 of Cargo 2000. The

core element of the new system for airfreight is the IT-based management of

every transaction within the process chain and its alignment with the schedule

provided by the logistics provider for each individual consignment. If an error is

identified specific alarms are activated so that immediate corrective measures

may be taken.

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Standardised Warehouse Management System

The system is geared for high productivity in warehousing processes, with

standardisation allowing the customer global transparency of inventories via the

Internet. The system architecture features real time capabilities and high

flexibility to accommodate future customer needs.

Central availability of data

Central data availability is essential for reliable business operations and consist-

ent information generation. The centralisation of systems in three regional data

centres also advanced in the year under review. A major role here is played by

data and system security. Kuehne & Nagel’s communication and data network is

designed for maximum availability and operates seven days a week, 24 hours a

day.

Advantages of a standardised IT system

A standardised worldwide IT system is of equal benefit to both Kuehne & Nagel

customers and employees. Whether the customer or employee is in Australia or

Zimbabwe, online access to all necessary information to control and monitor the

supply chain is guaranteed at all times. The IT system provides reliable and

up-to-date information.

With its installed Information Technology Kuehne & Nagel is equipped to

meet future challenges, which in particular will be in the areas of real time infor-

mation for customers and process integration. Tests have also been carried out

with RFID (Radio Frequency Identification) use, a technology supplementing the

barcode, allowing customers greater access to real time information via the

Internet and mobile communications technology.

Status Report: Information Technology 49