1. The Air Cargo outlook: trends, opportunities and threats
Michael Vorwerk – President CNS
April 2011
Health and Personal Care Logistics Conference / Spring 2011

2. IATA Introduction
Founded in 1945, the International Air Transport Association (IATA) is the industry’s global trade association
With 225 members in more than 130 countries, IATA represents 93% of international scheduled traffic
IATA’s mission is to represent, lead and serve the air transport industry
IATA delivers standards and solutions to ensure successful air transportation

3. Introduction Cargo Network Services Corp.
Established in 1985 to support the Air Cargo Industry in the USA
Located in Miami
Key Services
CASS USA & e-billing
Agent Endorsement Program
Global Cargo Agenda Implementation
Industry Statistics
Information & Distribution services
Partnership Conference

4. Introduction continued
A m
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A n
E conomist

5. I’d rather talk about ….Did you know?
Every fifth drug is temperature-sensitive
20% of the world’s best selling pharmaceuticals are temperature sensitive
$ 130 billion of the total pharmaceutical market ( about $ 650 billion ) is represented by temperature sensitive products
The share of temperature-sensitive products will rise the next years Biological’s % Chemical based + 10%
Nearly 100 % of all vaccines and 68 % of all products sold by biotech companies need to be stored and transported between 2 to 8 ºC
43 % of all diagnostics and about 11 % of all products from large pharmaceutical companies have to be handled with the same precautions
There is a correlation between product price and temperature-sensitivity and that some biological’s, vaccines and hormones can reach a package price of up to $ or you can fill a LD3 Container with up to $ 20 million of product value.

6. Industry Overview
“Prediction is very difficult, especially about the future”
Niels Bohr

7. Squeeze on cargo profits started late 2010
Source: US BTS

8. Heads of cargo confidence losing altitude
Source: IATA

9. Travel markets strong trend but cargo?
Source: IATA

10. Coincident indicators have slowed sharply
Source: IATA, SIA

11. Boost from business restocking is over
Source: IATA, Haver

12. World trade rising rapidly once more
Source: IATA, Netherlands CPB

13. Business is spending on capital goods
Source: Haver

14. Mixed picture for the consumer
Source: Haver

15. Leading indicators very positive
Source: IATA, JP Morgan/Markit

16. Business travel market remains strong
Source: IATA

17. Europe’s economic situation remains grim
Source: Haver

18. But optimism over ‘emerging’ markets
Source: EIU

19. Rising oil price is the major threat this year
Source: Platts, Bloomberg

20. Fuel prices will squeeze airline profitability
Source: IATA

21. Despite Economic Development Airfreight always has a future
Ongoing Airfreight Drivers
Current Airfreight Suppressors
Wage Disparity: Low value work moving to low cost production areas Maturing Markets: As emerging economies mature consumers demand more imported goods Special Products: Live Animals, Perishables, Pharmaceuticals, & Valuables = Airfreight Emergency Shipments: Rapid recovery from breakdown or crisis situations Speed to Market: Protecting innovation from competitors Capital Costs: Reducing inventory costs in the supply chain through faster delivery Just In Time: Reducing inventory volumes & costs by destocking the supply chain
Diversion to other modes: Shift of lower value items to sea / road / rail freight Demand for low cost products: Consumer demand shifting to low cost products to preserve purchasing power Further structural change: Only likely to occur if economical and/or regulatory environment will considerably

22. Source: Adapted from The Economist
This sums it up
REGULATORY CONSTRAINTS
Source: Adapted from The Economist

23. Thank-you
Any Questions?