1. 1 The European supply chain from a Dutch perspective Exterior Commerce Seminar Holland, investment opportunities for Spanish companies, and their experiences Auditorio del Palacio de Cibeles, Madrid 4th March 2015 Mathijs Benink Director Business Development & Solutions Holland International Distribution Council

2. 2 Introduction

3. 3 Mathijs Benink: International Management background, Business Development at TNT Express, since August 2011 within HIDC responsible for global business development & solutions team, operational in APAC & EMEA Holland International Distribution Council: private, not-for-profit, publicly/privately financed logistics council offering free of charge European supply chain advice to foreign companies Introduction

4. 4 Top Sector Logistics European supply chain Tax effectiveness in the supply chain Illustrative business case Wrap up Content

5. 5 Dutch Top Sectors Logistics Energy Water Agri-food Chemicals Horticulture Life Sciences & Health Creative Industry High Tech Logistics

6. 6 Top Sector Logistics 8,5% of Dutch GDP

7. 7 Internationalizing a business Sales Supply chain Commercial distribution Fiscal structure Legal entity S&M structure Sending people overseas TradersManufacturers

8. 8 Order lead time? Returns process? Competitive pricing? European presence ? Difficult to deal with? Only large order quantities? Indirect taxes? Customs? Trade compliance? Order-to-cash cycle? Where is my order? Direct taxes? Cash flow and working capital? Incoterms? Stock? Differentiator?

9. 9 What is supply chain? From cost center to competitive advantage

10. 10 Managing and controlling the flow of goods and related information from the source of production to the marketplace Or: to offer the right products at the right time in the right place What is supply chain?

11. 11 Integral supply chain Board Sales Operations / Logistics Sourcing / manufacturing Finance Legal … S&OP Integral supply chain approach: managed at C-level

12. 12 Indirect supply chain model Typical sales terms: EXW, FOB, CIF Your customer takes care of (all) logistics Direct supply chain model Typical sales terms: DAP, DDP Your company takes care of (all) logistics Who manages the European supply chain?

13. 13 How to transport products from source to market ? (sea, air, road, combination?) How much stock to keep in the market? Location of inventory (how many warehouses, which locations, centrally or decentrally managed?) How to transport products to customer ? (groupage, express, barge, rail, short sea?) How to deal with indirect taxes? Which activities to outsource and which activities to manage yourself? … Questions to ask

14. 14 Some of the main advantages of outsourcing include: Expert knowledge Concentration on core business No capital investments, so fewer risks Lower total logistics costs, due to economies of scale and activity based costing Higher service levels and/or shorter lead times Flexibility in space and manpower Shorter time to start up Better insight into logistics costs Flexibility in supply chain set-up Outsourcing your supply chain? Outsourcing makes fixed costs variable!

15. 15 Source: Port of Rotterdam 2013 Singapore Dubai Rotterdam Hamburg Shanghai Hong Kong Shenzhen Busan Qingdao Antwerp Guangzhou Ningbo Zhoushan (Volume 2012 (mln TEU) 1Shanghai (China)32,5 2Singapore (Singapore)31,6 3Hong Kong (China)23,1 4Shenzhen (China)22,9 5Busan (South Korea)17,0 6Ningbo & Zhoushan (China)16,8 7Guangzhou (China)14,7 8Qingdao (China)14.5 9Dubai Ports (UAE)13,3 10Tianjin (China)12,3 11Rotterdam (Netherlands) 11,8 14Hamburg (Germany) 8,9 15Antwerp (Belgium) 8,6 Tianjin Infrastructure: top 10 container ports worldwide 2012

16. 16 Source: Port of Rotterdam 2013 Total throughput 2012 Hamburg – Le Havre range: 1,176 million metric tons Infrastructure: Rotterdam, market leader in Hamburg-Le Havre range NL = 48,5%

17. 17 Major part of Asia – Europe deep sea freight flow enters Europe via ports in Northern Europe (Hamburg – Le Havre range) Main reasons: cost (economy of scale), efficiency and connectivity Proposition of Mediterranean ports is improving Port of Rotterdam strategy report

18. 18 Source: Amsterdam Airport Schiphol Infrastructure: Amsterdam third largest European cargo airport 2012 Cologne Leipzig London Liège Brussels Paris Amsterdam Luxembourg Frankfurt Milan Istanbul Volume x 1.000 tons: Frankfurt (FRA) 1,986 Paris (CDG) 1,950 Amsterdam (AMS) 1,483 London (HR) 1,465 Leipzig (LEJ) 864 Cologne (CGN) 730 Luxembourg (LUX) 615 Liège (LGG) 577 Istanbul (IST) 522 Brussels (BRU) 459

19. 19 Hinterland Connections Rail Road Pipeline Inland shipping Shortsea - feeder

20. 20 Tax effectiveness in the supply chain VAT deferment / Article 23 > no pre-financing of VAT on import, relatively easy to obtain, also below € 6 mln import value Bonded warehousing > postponement of import duties payment, relatively easy to implement Fiscal representation > not necessary to set up legal entity Customs: pro-active, open minded and trade facilitating mentality > certainty on beforehand by rulings Cash flow optimization

21. 21 Illustrative business case Spanish company X is expanding in Europe, developing new markets in Western, Eastern and Northern Europe Sourcing/manufacturing in Spain and Asia FCL flow from Asia to Europe, several destinations, FOB/CIF Clients prefer ordering smaller quantities, more frequently, DDP Point of stock with order preparation and value added services needed Outbound distribution to Northern, Western, Eastern and Southern European countries How to structure the supply chain?

22. 22 Consolidation of container flow Sea freight cost optimization Center of gravity analysis Optimization of cash flow related to indirect taxes Flexible operation with Value Added Services Activity based costing Illustrative business case Direct supply chain model Typical sales terms: DAP, DDP Your company takes care of (all) logistics Improved customer satisfaction, new potential to develop

23. 23 Wrap up 1.Integral supply chain approach is key for using your supply chain as a differentiator / competitive advantage 2.(Tax) effective (European) supply chain structuring can unlock working capital, lead to cash flow optimization and lead to improved customer experience 3.The Netherlands has an excellent fiscal and physical infrastructure to facilitate Spanish companies with structuring their European supply chains

24. 24 NDL/HIDC – Holland International Distribution Council Mr Mathijs Benink Director Business Development & Solutions E: m.benink@hidc.nlm.benink@hidc.nl I: www.hidc.nlwww.hidc.nl T: +31 79 343 81 10 F: +31 79 347 92 17 Address: P.O. Box 660 2700 AR Zoetermeer The Netherlands Contact us