<PAGE> 1
EXHIBIT 10.9
Business
Partnership Agreement
between
Lufthansa Cargo AGI
("Lufthansa Cargo")
and
UNION - Transport
("UNION")
Frankfurt, November 15, 1999
<PAGE> 2
Contents
--------
1. THE UNDERLYING PHILOSOPHY
2. MAIN PRINCIPLES OF BUSINESS PARTNERSHIP
3. FIELDS OF PARTNERSHIP
3.1 COMMUNICATION BETWEEN THE PARTNERS
3.2 QUALITY MANAGEMENT
3.3 INFORMATION TECHNOLOGY
3.4 OPERATIONAL PROCESSES
3.5 SERVICES AND PRICING
3.6 CAPACITY ACCESS
3.7 BRANDING AND JOINT LOGO
3.8 MARKETING / COMMUNICATION
3.9 SALES SUPPORT
3.10 GLOBAL RECOGNITION
3.11 HUMAN RESOURCES
3.12 INVOICING
3.13 ENVIRONMENTAL POLICY
3.14 CAPACITY PLANNING
3.15 SALES TARGETS AND GLOBAL INCENTIVE
3.16 IMPLEMENTATION AND MONITORING
4. MISCELLANEOUS
5. LIABILITY
6. VALIDITY AND DURATION
7. GENERAL TERMS
7.1 CONFIDENTIALITY
7.2 TERMINATION
7.3 SEVERABILITY
7.4 COSTS AND EXPENSES
7.5 NOTICES
7.6 ENTIRE AGREEMENT AND VARIATION
7.8 GOVERNMENTAL LAW AND JURISDICTION
ATTACHMENTS 1 - 6
Lufthansa Cargo Business Partnership Program Page 2
<PAGE> 3
1. THE UNDERLYING PHILOSOPHY
UNION and Lufthansa Cargo ("The Partners") recognize the necessity for a more
innovative and broader-based approach to their mutual business interests.
Global market structures in the transportation industry are changing radically:
o The production networks of customers are becoming more and more global and
therefore require a more globalized and individualized response from their
logistics partners
o Concentration and specialization within customers' and agents' industries
will continue and within both is a clear trend to shortlist suppliers
o Customers are requesting better services at lower cost - and a new quality
in the supply chain in terms of logistic solutions
o Information technology is becoming a key success factor
o Integrators are increasing competitive pressure by investing in innovative
processes and services, thus forcing airlines and forwarders to think in
new directions
At the same time airlines and freight forwarders have to realize that their
joint efforts do not produce results that are up to the expectations of the
shipper and consignee. Findings of the CARGO 2000 working group clearly prove
that the transportation chain of airline and freight forwarder is organized
sub-optimally.
Addressing these developments, the Partners express their intention to go beyond
the traditional definitions of airline and freight-forwarder roles for the
purpose of modernising the overall process and for access to new cost saving
potentials and product/service improvements. Many of these potentials are only
achievable if jointly addressed and worked upon. Since this cannot be
accomplished throughout all present business relations, it implies on both sides
a concentration on fewer partners with a much more intense relationship.
In view of this background the Partners agree that the present IATA Agency
Agreement should no longer serve as the only basis for joint business efforts.
The understanding of a future-oriented "Business Partnership" is laid down in
this Agreement ("the Business Partnership Agreement"). It is designed to open up
new areas of cooperation and to intensify the relationship over and above the
standard IATA Agreement.
By means of a new understanding between the Partners with well-defined goals and
responsibilities, the Partners will be able to better satisfy the needs of their
customers and will achieve unique selling propositions resulting in faster
growth and higher profits.
Lufthansa Cargo Business Partnership Program Page 3
<PAGE> 4
In concluding this Agreement the Partners are creating the basis for this new
Partnership with the aim to act in new directions:
2. MAIN PRINCIPLES OF BUSINESS PARTNERSHIP
The Partners agree to work closer together for the benefit of all parties
involved.
BENEFITS FOR CUSTOMERS:
o Better adaptation to needs and requirements
o More customized logistic solutions for whole transportation chain
o Higher transparency of transportation chain
o Integrated/synchronised information/communication systems for complete
order processing and logistic chain
o Better reliability and continuity
o Better value proposition
BENEFITS FOR UNION:
o Joint training programme
o Guidelines of joint sales
o Participation in Lufthansa Cargo's network - potentially including its
alliance Partners at a later point of time, thus increasing global presence
and availability of UNION
o Special conditions for Guaranteed Capacity Agreements
o Global recognition within Lufthansa Cargo's organization
o Preferential access to capacity
o Preferential access to Lufthansa Cargo's expertise
o Preferential service and marketing support by Lufthansa Cargo
o Dedicated telephone access offering preferential attention wherever
appropriate
o Participation in Lufthansa Cargo's network planning process
o Improved interfaces/processes through coordinated investment in
IT-solutions
o More efficient transportation processes through coordination, harmonization
and standardisation
o Environmentally responsible airline as supplier for air freight services
o Higher market shares
o Preferential information policy
BENEFITS FOR LUFTHANSA CARGO:
o Better knowledge of and faster adaptation to market requirements
o Joint planning and sales targets help to exploit market potential to the
full extent
o Preferred carrier status and higher carrier share with UNION
o Improved interfaces/processes through coordinated investment in EDP
Lufthansa Cargo Business Partnership Program Page 4
<PAGE> 5
o More efficient processes through coordination, harmonization and
standardisation
o Coordinated quality standards
o Higher visibility of Lufthansa Cargo's contribution and reduced
exchangeability within logistic solutions
The fields of Partnership between the Partners include joint planning, joint
sales targets, communication and information exchange, quality management,
optimization of interfaces and processes, development and promotion of joint
products/services, training of personnel, information technology, joint
branding, marketing and general communication, environmental policy. Other
fields of cooperation may be added at any time if both Partners wish to do so.
The Partners agree, that organizational arrangements will be in place to support
such a Partnership.
Lufthansa Cargo has developed a system of different types of Business
Partnerships. Depending on the structure of UNION as well as on the progress
towards mutual integration different levels of Partnership may be achieved.
UNION and Lufthansa Cargo agree that their relationship shall start immediately
with the category, "Global Partner". Should the Partnership prove to be
successful under this Agreement, the Partners may upgrade their Partnership to a
higher degree of cooperation.
THERE WILL BE DIFFERENT TYPES OF PARTNERSHIPS DEPENDING ON THE SPECIFIC
STRUCTURE OF THE INDIVIDUAL PARTNER AND ON THE DEGREE OF INTEGRATION.
[CHART]
Lufthansa Cargo Business Partnership Program Page 5
<PAGE> 6
Although this Partnership is not proposed and may not be construed as exclusive,
the Partners intend to keep the number of their own individual Partners
reasonably limited.
Lufthansa Cargo will organize an annual "Business Partner Event" in order to
strengthen the dialogue among the Partners and with Lufthansa Cargo's top
management.
3. FIELDS OF PARTNERSHIP
3.1 COMMUNICATION BETWEEN THE PARTNERS
The Partners agree to appoint special Partnership contacts. A designated
"Partnership Manager" on each side is responsible for the overall Partnership
and serves as the prime contact. These "Partnership Managers" have decision
making authority to support the Partnership in the respective organizations.
Their tasks include:
o Responsibility for success of the Partnership
o Implementation of Partnership within the Partner's own organization
o Monitoring, performance measurement and benchmarking
o Initializing adjustments and corrective actions
o Initializing projects for joint cost reduction by redesigning of processes
o Development and improvement of the Partnership
o Joint strategic planning
o Pro-active exchange of information on market developments, new products and
internal changes
Both "Partnership Managers" will meet on a regular basis, at least four times
per year, and review the Partnership.
The following have been appointed as "Partnership Managers":
UNION: LUFTHANSA CARGO:
Peter Thorrington Georg Midunsky
Chief Executive VP USA, Canada and Mexico
19443 Laurel Park Road, Suite 107 3400 Peachtree Road NE
Rancho Dominguez Lenox Towers, Suite 1225
California 90220-6043 Atlanta, Georgia 30326
USA USA
Phone +1 (310) 604-3311-210 Phone +1 (404)-814-5310
Fax +1 (310) 604-8411 Fax +1 (404)-814-5300
E-mail [email protected] E-mail [email protected]
Lufthansa Cargo Business Partnership Program Page 6
<PAGE> 7
Lufthansa Cargo will support their Partnership Manager with a dedicated "Team
Captain UNION" who will manage the Partnership on a day-to-day basis.
Furthermore the Partners will nominate "Regional Partnership Managers" for the
implementation of the Partnership in jointly determined geographical areas.
These "Regional Partnership Managers" are responsible for practicing and
improving the Partnership locally by:
o Joint planning
o Joint sales targets
o Joint actions to reach targets including marketing and communication
o Joint sales meetings with regional sales teams
o Joint quality standards and quality groups
o Implementation of special communications between Lufthansa Cargo's ASCs
(Account Service Center) and UNION offices according to local preferences
o Cross-training of staff of local Partner office
Meetings are held between the "Regional Partnership Managers" at least four
times per year to communicate performance evaluation and future goals. These
meetings will also be used to discover and discuss local cost reduction and
business opportunities.
3.2 QUALITY MANAGEMENT
Since quality is of the utmost importance, the Partners are committed to their
service standards. The Partners seek to coordinate their respective service
standards.
To this end the Partners will achieve:
o Quality parameters to measure the quality of joint services (proposed dual
scorecard is laid down in Attachment 2)
o The completition of ISO 9002 certification by December 31st, 2000.
o Monthly reporting
o Quality improvement program based on results of performance reviews
o Regular training and seminars conducted by both Partners ensuring necessary
adjustments to market needs
o Regular direct communication between Quality Groups and Managers
3.3 INFORMATION TECHNOLOGY
The Partners agree that information technology plays a key role within the
Partnership based on the mutual understanding that providing information is an
integral part of the joint product. Therefore the Partners agree to link their
IT-systems in an appropriate and efficient manner to reflect the transportation
chain informationwise.
Lufthansa Cargo Business Partnership Program Page 7
<PAGE> 8
The Partners will define data processing standards centrally and coordinate with
each other to improve and secure agreed procedures:
o Barcode labeling (according to IATA resolution 606) and scanning
o Electronic data interchange (EDI) according to IATA-Cargo IMP-standards
o Electronic Air Waybill (FWB) as standard procedure until December 31, 2000
3.4 OPERATIONAL PROCESSES
Lufthansa Cargo and UNION seek to optimize their operational processes in terms
of time, quality and costs by analyzing the complete shipment cycle from
door-to-door instead of looking at their respective sub-processes only. The
Partners will seek to build on the results of the CARGO 2000 initiative of IATA.
The Partners will nominate managers responsible for the redesign of processes.
3.5 SERVICES AND PRICING
Lufthansa Cargo offers a portfolio of the distinct and defined services: td.Pro,
td.X, and td.Flash.
These new services are determined by time-definite transportation times and
other innovative features. The standard-portfolio will be complemented by
"options", which may be offered in combination with the new services of
Lufthansa Cargo to meet special customer requirements.
Within the given price-structure determined by the different services and
options pricing as well as incentives will be agreed upon locally.
UNION will support and market Lufthansa Cargo's new services as an innovative
solution to the shippers' need for time definite logistics.
The Partners will develop joint services and special logistics solutions
including joint presentations to customers. It may also include the definition
of time-definite time-frames for door-to-door transportation. Industry-specific
solutions may thereafter supplement both Partners' service-portfolio.
For marketing purposes a product-brandname for such jointly developed products
may be agreed upon.
3.6 CAPACITY ACCESS
Lufthansa Cargo will give UNION preferential access to capacity on Lufthansa
Cargo's network.
Lufthansa Cargo Business Partnership Program Page 8
<PAGE> 9
This will comprise special terms for GCAs (Guaranteed Capacity Agreements),
preferred treatment of booking requests and automized recognition at our Call
Centers.
3.7 BRANDING AND JOINT LOGO
Each Partner has a strong and well established brand, indicating its capability
to serve the market with high quality services. The Partners believe that a
joint, dedicated logo, as shown in Attachment 3, will improve awareness and
visibility of the Partnership in the market. The use of such a joint logo is in
each case subject to the consent of the Partners and is limited to the duration
of this Agreement.
This joint logo may be used in marketing material (Attachment 4),
advertisements, time-tables, general marketing communication etc. only within
the framework of this Agreement. In no event shall the joint logo be used in
legally binding documents without the prior consent of the other Partner.
Any use of the application of the joint logo has to convey to the Business
Partnership Program Design Guide by Lufthansa Cargo.
Other use of any Partner's logos and brands is subject to the prior written
consent of the other Partner.
3.8 MARKETING/COMMUNICATION
The Partners will jointly develop a "Marketing Masterplan" in order to support
and secure their sales targets. This masterplan will determine all activities as
well as the respective financing.
The Partners agree to include UNION as a Partner in Lufthansa Cargo's Internet
web site with a hyperlink to UNION's web site and vice versa.
UNION agrees to include presentations of Lufthansa Cargo's products and services
in UNION's sales meetings whenever it is appropriate.
3.9 SALES SUPPORT
The Partners will apply joint sales calls towards the shipper /consignee and
tripartite contracts as a common sales tool whenever appropriate (Attachment 6:
Guidelines of Joint Sales). The Partners believe that such a joint sales
approach will strengthen their competitiveness by supporting their credibility
with the shipper/consignee in regard to jointly performed services.
Lufthansa Cargo will support UNION in developing competitive proposals for
tenders.
Lufthansa Cargo Business Partnership Program Page 9
<PAGE> 10
Lufthansa Cargo will provide UNION with standardized marketing/sales material of
Lufthansa Cargo in order to support UNION's sales efforts.
Lufthansa Cargo will support joint sales activities by giving access to reduced
tickets on the network of Lufthansa German Airlines to the extent agreed upon by
both Partners.
Lufthansa Cargo will support joint sales activities by providing travel
privileges with Lufthansa German Airlines in form of status cards to the
top-management of UNION if agreed upon by both Partners.
3.10 GLOBAL RECOGNITION
UNION will enjoy global recognition of being a Global Partner throughout the
organization of Lufthansa Cargo.
This recognition may comprise access to the Lufthansa Cargo incentive scheme
"New Partner PLUS" as well as support for cooperating with other Global Partners
of the Business Partnership Program. Preferential access to capacity will be
granted to UNION on a global scale following the phased introduction of the new
capacity management system.
3.11 HUMAN RESOURCES
Cross-training on the local level will give employees of the Partners a better
understanding of the Partner's specifics in doing business and enable them to
search for pragmatic approaches to optimize interfaces with the Partner within
the area of their responsibility. Such joint trainings shall accomplish that
every employee feels not only responsible for his own company's operation, but
for the success of the whole transportation chain.
Lufthansa Cargo will offer UNION preferential access to training courses being
conducted in the Lufthansa training center at Seeheim at standard prices
(Attachment 5.- Training with Global Partners). The Partners will discuss
inhouse training courses for UNION.
3.12 INVOICING
The Partners aim to reduce the cost and time required for invoicing and to turn
this topic into a competitive advantage of jointly performed services.
Lufthansa Cargo Business Partnership Program Page 10
<PAGE> 11
3.13 ENVIRONMENTAL POLICY
The Partners acknowledge their responsibility to conduct business in a manner
that is balanced with the requirements of our environment. Therefore,
environmental protection is an integral part of quality management.
The Business Partnership Program will help the Partners to minimize the use of
natural resources, since its goal is to eliminate inefficiencies in the
transportation cycle of forwarder and airline.
The Partners will facilitate contacts of their Environmental Managers who will
exchange ideas on how to reduce the impact of their companies on the
environment. They will report annually to the Partnership Managers about the
progress of their work.
3.14 CAPACITY PLANNING
The Partners participate in preparing each other's long-term planning by
exchanging capacity requirements and business ideas. Moreover, the Partners will
try to coordinate their planning processes.
3.15 SALES TARGETS AND GLOBAL INCENTIVE
Lufthansa Cargo and UNION feel that the implementation of the Business
Partnership Agreement will result in an improved value proposition for the
shipper/consignee. Subsequently, both Partners expect to attract more business.
Therefore, Lufthansa Cargo and UNION will determine jointly ambitious sales
targets for their combined services. These targets will be monitored on a
monthly basis by the Partnership Managers. Lufthansa Cargo will offer an annual
global incentive agreement to UNION that will grant UNION benefits depending on
the growth rate of the joint business of UNION and Lufthansa Cargo
3.16 IMPLEMENTATION/PERFORMANCE MONITORING
The Partners Managers will prepare a detailed implementation plan within 90 days
of the conclusion of this agreement, defining working groups, milestones and
targets (Attachment 1). They will then monitor closely the progress of the
implementation of the Business Partnership between UNION and Lufthansa Cargo and
exchange reports between them on a quarterly basis.
4. MISCELLANEOUS
The "Lufthansa Cargo Business Partnership Program" constitutes a new concept of
cooperation. However, the Partnership should by no means be interpreted as a
legal entity or a means of generally procuring special pricing Agreements,
incentives etc.
Lufthansa Cargo Business Partnership Program Page 11
<PAGE> 12
Lufthansa Cargo foresees to enhance this Business Partnership Program by adding
benefits on Lufthansa Cargo's alliance-Partners network. Lufthansa Cargo will
update UNION regularly on these developments.
5. LIABILITY
Lufthansa Cargo shall not be liable for any claims of whatever nature resulting
from any act or omission of Lufthansa Cargo under this Agreement which may arise
against UNION, except if such act or omission is due to wilful misconduct of
Lufthansa Cargo. This Agreement does not constitute any liability, warranty or
any other responsibility of Lufthansa Cargo unless expressively stated herein.
Any carriage of cargo is subject to all applicable laws, government regulations,
orders and requirements as well as the published Lufthansa Cargo tariffs, rules,
general conditions of carriage, conditions of contract and timetables in force
at the time of acceptance. This includes the rules relating to the completion of
the air waybill and other documents and the limitation of carrier' s liability.
Such liability shall not be effected by this Agreement.
6. VALIDITY AND DURATION
This Agreement shall be effective as of November 15th, 1999 and shall be valid
thereafter.
7. GENERAL TERMS
7.1 CONFIDENTIALITY
The parties acknowledge that this Agreement contains commercially sensitive
information and agree to keep the entire contents of this Agreement
confidential. No disclosures to any third Parties shall be made without the
prior written consent of the other Partner unless required by law.
7.2 TERMINATION
Either Partner shall have the right to terminate this Partnership Agreement with
effect for the respective calendar year by serving at least 60 (sixty) days
written notice on the other Partner.
Regardless of the aforestated, either Partner shall at all times have the right
to terminate this Partnership Agreement with immediate effect by serving written
notice on the other Partner within three months of its first becoming aware of
the occurrence and continuation of any of the following events:
Lufthansa Cargo Business Partnership Program Page 12
<PAGE> 13
a) an insolvency event in respect of the other Partner
b) a change of control in respect of the other Partner: Except in case of
public distribution of the other Partner's shares, provided the
distributing Partner has given prior written notice of such intended public
distribution to the other Partner:
or
c) a material breach of obligations hereunder by the other Partner
Upon termination of this Agreement, all confidential information, including any
copies thereof made by the receiving Partner, must be returned to the disclosing
Partner or destroyed.
7.3 SEVERABILITY
In the event that any one or more of the provisions of this Agreement shall be
determined to be invalid, unenforceable or illegal, it shall not affect any
other provision of this Agreement. In such event, the Partners shall seek to
replace the invalid, unenforceable or illegal provision with an effective
provision which comes as close as possible in economic effect to the original
intention of the Partners. The same applies in case of omissions not intended by
the Partners.
7.4 COSTS AND EXPENSES
Unless otherwise stated in this Partnership Agreement, each Partner shall pay
its own costs and expenses in relation to the negotiation, preparation,
execution and carrying into effect of this Partnership Agreement and other
Agreements forming part of the Partnership.
7.5 NOTICES
Addresses
Notices, demands, consents, approvals and any other communication required or
permitted under this Agreement shall be in writing and given to the following
addresses (or such other address as the relevant Partner may notify to the other
Partner in writing for the purposes of this Partnership Agreement):
UNION: LUFTHANSA CARGO:
Peter Thorrington Georg Midunsky
Chief Executive VP USA, Canada and Mexico
19443 Laurel Park Road, Suite 107 3400 Peachtree Road NE
Rancho Dominguez Lenox Towers, Suite 1225
California 90220-6043 Atlanta, Georgia 30326
USA USA
Phone +1 (310) 604-3311-210 Phone +1 (404) -814-5310
Fax +1 (310) 604-8411 Fax +1 (404)-814-5300
E-mail [email protected] E-mail [email protected]
Lufthansa Cargo Business Partnership Program Page 13
<PAGE> 14
7.6 ENTIRE AGREEMENT AND VARIATION
This Partnership Agreement (together with eventually any Implementing
Agreements) constitutes the entire Agreement between the Partners relating to
the Partnership and, save to the extent repeated in or expressly preserved by
this Partnership Agreement, supersedes and excludes any prior drafts,
Agreements, undertakings, representations, warranties and arrangements of any
nature whatsoever, whether or not in writing, relating to the Partnership. Any
Agreement existing between the Partners at the time of this Partnership
Agreement coming into force, shall not be affected unless it is otherwise agreed
in separate writing between the Partners.
Annexes and Attachments to this Agreement are integral parts thereof, and shall
have the same force and effect as if included in the body of the Partnership
Agreement.
Additions, modifications, extensions, prolongations, such as side-letters and
appendices may be attached only if in writing and agreed upon and signed by both
parties. Such amendments will not influence the duration of this Agreement the
Partners.
7.7 DISPUTE RESOLUTION
Any dispute or claim concerning the validity, scope, meaning, composition or
effect of this Agreement or arising therefrom shall be settled between the
Partners by friendly consultation. The Partners shall - if deemed necessary -
involve their respective Chief Executive Officers in the settlement of such
disputes.
7.8 GOVERNMENTAL LAW AND JURISDICTION
This Agreement shall be subject to, and construed exclusively in accordance
with, the existing laws of the Federal Republic of Germany. The only and
exclusive place of jurisdiction for any legal action that should arise out of,
or in connection with this Agreement shall be Frankfurt/Main, Germany.
Lufthansa Cargo Business Partnership Program Page 14
<PAGE> 15
Frankfurt, November 15th, 1999
FOR FOR
LUFTHANSA CARGO AG: UNION - TRANSPORT:
/s/ STEFAN LAUER /s/ PETER THORRINGTON
------------------------------- -------------------------------
Stefan Lauer Peter Thorrington
Member of the Executive Board Chief Executive, Europe
/s/ JOACHIM HAAS /s/ DIETER KRAUS
------------------------------- -------------------------------
Joachim Haas Dieter Kraus
Senior VP partner, Sales & Alliances Executive Vice President
ATTACHMENT 1
IMPLEMENTATION PLAN:
Contents of Implementation Plan (1) To be defined
Area of cooperation o Countries to be focused on in the
first step
1. Geographical scope of agreement o Nominate "Team Captain UNION"
at Lufthansa Cargo
2. Organizational structure o Nominate Regional Partnership
Managers
o Name contact persons for all
involved staff functions
participating in the fields of
cooperation
Lufthansa Cargo Business Partnership Program Page 15
<PAGE> 16
3. Joint sales o Set up global sales target
o Agree on guidelines of joint sales
o Prepare SWOT-Analysis of joint
activities per market
o Define familiarization plan for
sales forces
o Define target number of tripartite
sales calls
o Split global sales target into
country targets
4. Quality Management o Agree on criteria for measuring
quality of combined services (dual
scorecard)
o Agree on target thresholds
o Compare quality philosophies of
Partners and discuss harmonization
5. Information Technology o Define areas of mutual interest
o Work out implementation schedule
for individual areas
6. Operational processes o Define processes/areas to be
analyzed
o Determine study/project milestones
7. Joint services o Gain mutual understanding of
respective range of services
(products)
o Evaluate opportunities for
combining services of UNION and
Lufthansa Cargo into integrated
door-to-door solutions
8. Branding/Marketing o Define areas of usage of joint logo
(Design Guidelines)
o Develop joint Marketing
Masterplan
9. Sales Support o Determine demand of UNION sales
force for Lufthansa Cargo
marketing material
o Facilitate joint sales approaches
and tripartite contracts
Lufthansa Cargo Business Partnership Program Page 16
<PAGE> 17
10. Global Recognition o Define strategic growth markets for
which UNION seeks support from
Lufthansa Cargo
o Identify potential areas of
"Recognition"
o Agree on scope and milestones for
implementation
11. Human resources o Evaluate opportunities for joint
training
o Determine plan for cross-training
of personnel of Partners
12. Invoicing o Prepare situation analysis
o Define areas of potential
improvement
o Set targets and milestones
13. Environmental Policy o Prepare status report of activities
and current goals
o Define joint projects including
milestones
14. Capacity planning o Compare planning processes
o Identify potential interfaces
between planning processes and
determine planning stages at which
information should be exchanged
o Determine participation in
preparation of Lufthansa Cargo's
regional Market Conferences
Lufthansa Cargo Business Partnership Program Page 17
<PAGE> 18
ATTACHMENT 2
JOINT PERFORMANCE MONITORING WITH OUR GLOBAL PARTNERS DUAL SCORECARD - QUALITY
PARAMETERS
All "GP" parameters are meant to indicate the Global Partners' performance and
will be monitored by LH Cargo. On the contrary, all "LH" parameters are meant to
indicate LH Cargo's performance and should be monitored by the Global Partners.
GLOBAL PARTNERS' QUALITY PARAMETERS:
o GP 1: FWB share
DEF.: Percentage of AWBs. sent via Taxon in relation to total number
of AWBs.
o GP 2: BOOKING DATA AVAILABLE AT TIME OF ACCEPTANCE
DEF.: Percentage of local export shipments where a
booking exists for each segment before time of goods
acceptance at LH Cargo
IT WILL BE CHECKED WHETHER A BOOKING FOR ALL LEGS OF A SHIPMENT
EXISTS (YES/NO).
SINCE A LOW PERCENTAGE OF THIS PARAMETER COULD BE CAUSED EITHER BY
LH CARGO OR THE GLOBAL PARTNER, THIS PARAMETER SHOULD BE CONSIDERED
AS A TOOL TO IMPROVE THE PROCESS.
o GP 3: SHIPMENTS READY FOR CARRIAGE.
DEF.: Percentage of shipments "ready for carriage" according to IATA
regulations
THIS PARAMETER COMPRISES PER DEFINITION BARCODE LABELING AS WELL AS CHECKING THE
DIMS, THE VOLUME, NUMBER OF PIECES ETC. THE DIFFERENT ASPECTS OF THIS PARAMETER
ARE CHECKED MANUALLY AS FOLLOWS:
Shipment was ready for carriage and documents correspond to goods
Hand over of shipment in time in accordance with the agreed
acceptance time
Each piece was marked with a barcode label
The booking data corresponds to the actual shipment data
Lufthansa Cargo Business Partnership Program Page 18
<PAGE> 19
Attachment 2 (continued)
LH CARGO'S QUALITY PARAMETERS:
LH 1: td.shipments in-time
DEF.: Percentage of td.shipments ready for delivery within the
promised time frame. This parameter checks to which
extend the Time of Availability is kept. Time of
Availability (TOA) is the time of availability of
shipment and AWB ready for customs clearance at final
destination.
The internal trigger for monitoring is the "Notified Status" in the LH Cargo
Mosaik system. This status is set after the freight forwarder has been notified
by email, fax, telephone call or message in the respective message box.
LH 2: General cargo in-time ("arrived as promised")
DEF.: Percentage of shipments with the last leg "flown as booked" and
arrived within 30 minutes after STA.
LH 3: Quality of Status Messages
Def.: Number of status messages sent by LH Cargo compared to
total number of status messages LH Cargo was supposed to
sent to the Global Partner. According to FG/P the
following status messages are monitored by LH Cargo and
can be provided to the Global Partner:
- RCF check in
- BKD booked
- OFL offloaded
- TFD transferred
- DLV delivered
- DEP departed
FX/A agrees with all Global Partners which status messages should be sent. This
parameter will be defined by the Global Partner "Message Working Group".
1.2 Responsibilities & Timelines
The monitoring will be done on a monthly basis.
LH Cargo provides the data for the "GP quality parameters" until the 15th of
each following month to the central quality department.
The Global Partner provides LH Cargo with the "LH quality parameters" (if
available) until the 15th of each following month.
The central LH Cargo quality department consolidates the data for the 6
parameters into the "Standard Performance Scorecard" until the 30th of each
following month.
If the Global Partner cannot monitor the parameters LH1 and LH 2 currently, LH
Cargo could provide the respective data from their monitoring system.
Lufthansa Cargo Business Partnership Program Page 19
<PAGE> 20
Attachment 3 Joint Logo:
[graphic]
In connection with logo of UNION
[graphic]
Lufthansa Cargo Business Partnership Program Page 20
<PAGE> 21
Attachment 4
Marketing Material with Joint Logo
1. Weatherproof outdoor signs: Approx. 400 DM / pc
100 cm x 100 cm
2. Smaller pins: Approx. 200 DM / pc
70 cm x 100 cm
3. High quality poster (not paper): Approx. 150 DM / pc
70 cm x 100 cm
3. Mugs Approx. 7.50 DM / pc
4. Pins Approx. 2.00 DM / pc
Prices depend on order volume.
Lufthansa Cargo Business Partnership Program Page 21
<PAGE> 22
Attachment 5
Lufthansa Cargo
Business Partnership Program
Training with Global Partners
Business Partnerships will be brought to life by people
The Business Partnership Programd focuses on integrated actions based on trust
in order to fulfil customer needs. A prerequisite for virtually integrated
solutions is that Global Partners and Lufthansa Cargo interweave their
abilities. Thanks to this close co-operation and integration the efficiency of
the entire transport cycle will be improved and ensures convincing benefits for
our joint air freight customers.
Why joint training?
Building a partnership is a process of acting and learning jointly over time. To
learn in a partnership, concerns both: individuals and corporations.
The success of a strategic partnership depends to a large extent on mutual trust
and team building. Effective co-operation across many different cultures as well
as an understanding of the major business functions and their integration at the
partner's corporation are cornerstones of a successful partnership.
Therefore in a world characterised by strategic partnerships and alliances,
employee education and development programmes in collaboration with partners
become a strategic issue.
Joint training portfolio
The basic programme we put together for 1999 emphasises the interdisciplinary
nature of air freight business between Lufthansa Cargo and the Global Partners.
It comprises multiple skills development seminars as well as one to build up
global team-work and trust with the partner.
In collaboration with the Lufthansa Cargo Training Centre, we have selected
training and development programmes for which Lufthansa Cargo has gained a
reputation of outstanding expertise over the time and which will contribute to
streamline the core processes of air freight transportation.
In addition to this basic portfolio we strongly suggest and encourage the
exchange of local staff with Global Partners. Participants will be exposed to
problems outside their own specialised fields and equipped with the knowledge
necessary to play an active role in our partnerships.
The joint training portfolio for Global Partners will be extended continuously
in close collaboration with our Global Partners and will hopefully contain
specialised training programmes of our Global Partners in the next issue as
well.
Hans-Wolfgang Braune Sonja Nitschke
Manager Training Manager Business Partnership
Lufthansa Cargo Business Partnership Program Page 22
<PAGE> 23
Attachment 5 (continued)
SELLING WITH PARTNERS
Target Group:
Management and staff in sales together with their respective counterparts of the
Global Partner.
Aim:
Intensifying the Business Partnership and the partnership philosophy between the
local units of LH Cargo and the Global Partner in order to improve their joint
market approach.
Contents:
- Getting acquainted with their joint global targets and strategic vision
- Checking the mutual perception
- Creating an understanding of each others processes
- Eliminating prejudices and developing trust to regional counterparts
- Conflict management
- Clarifying and defining joint targets
- Developing joint market activities in order to win new customers and/or
new business
- Defining each others roles in tripartite sales
- Developing and using tools and techniques for value selling to joint
customers and prospects
- Preparing joint presentations and value propositions for joint customers
and prospects
Duration & Dates
2 days as requested by Global Partner and LH Cargo
Location:
Locally within the areas
Tuition Fees:
Cost sharing between Global Partner and LH Cargo (local budget). Recommended is
a 50% cost sharing.
Trainer expense: Depending on regional conditions; for Germany e.g. DEM 4000, -
per day (plus VAT, travelling and accommodation expenses)
Travelling and accommodation expenses for participants
Conference facilities ... if required
Next steps:
An agreement between the respective Managers of a Global Partner and LH Cargo to
organize such a workshop; followed by a joint meeting with the trainer to define
specific targets and contents, design of the workshop, number and selection of
participants, as well as preparatory work.
Lufthansa Cargo Training can give assistance with their experience from similar
workshops.
Lufthansa Cargo Business Partnership Program Page 23
<PAGE> 24
Attachment 5 (continued)
BASIC CARGO COURSE
Target Group:
Employees of Global Partners working in the area of air freight sales and
handling.
Aim:
Providing basic knowledge in the field of cargo sales and handling.
Contents:
- ICAO / IATA Organisations
- The Lufthansa Cargo fleet and Unit Load Devices
- Loading of loose cargo
- Tact rules, routings with OAG Passenger and Air Cargo Guide
- Special Loads
- Acceptance of cargo, agent's responsibility
- Air cargo rates, liability, disbursements, charges collect fee
- Air Waybill
- Visit to Lufthansa Cargo Center at Frankfurt Airport
Duration & days:
- 5 days
- Upon request of Global Partner
Maximum Number of Participants:
14. It can be increased to 16 only if previously agreed with the training
department.
Location:
To be defined
Tuition Fees:
1.150 DEM per participant not including accommodation and conference facilities
Travelling expenses for participants
Next steps:
A meeting between Lufthansa Cargo Training, the respective contact persons at
Lufthansa Cargo and the Global Partner to fix date, location and possible
adjustments of contents to specific needs.
Lufthansa Cargo Business Partnership Program Page 24
<PAGE> 25
Attachment 5 (continued)
PALLET BUILD-UP COURSE
Target Group:
Employees of Global Partners engaged in ULD build-Up (BUP) for transport aboard
Lufthansa Cargo and Partner Airlines.
Aim:
To provide detailed knowledge of Lufthansa Cargo standards regarding the Correct
build-up of ULD'S, whereby particular emphasis is focused on safety.
Contents:
- A view of all the aircraft within the Lufthansa Cargo fleet including
cargo-compartments and loading systems
- Unit-load devices in use within the Lufthansa Cargo system
- Serviceability of loading equipment
- How to avoid ULD-damage
- ULD contours loadability
- ULD build-up in general
- Lufthansa Cargo loading principles
- Maximum floor load capacity / How easy it is to exceed ULD limits
- Lashing general principles
- Lashing material, their value
- Double lashing, mixed lashing, lashing of crates
- Dangers of incorrect lashing
- Weighing and tagging of built up ULD's
- ULD-tags
- Hidden horrors, a safety aspect
Duration & Days:
- 3 days
- Upon request of Global Partner
- Upon request the Global Partner can also participate at the regular
Lufthansa Cargo pallet build up-course which takes 5 days and differs
slightly in contents. The participation should be discussed with Mrs Marion
Krami-Dian.
Maximum Number of Participants:
14. It can be increased to 16 only if previously agreed with the training
department.
Location:
To be defined
Tuition Fees:
1.150 DEM per participant not including accommodation and conference facilities
Travelling expenses for participants Next steps:
A meeting between Lufthansa Cargo Training, the respective contact persons at
Lufthansa Cargo and the Global Partner to fix date, location and possible
adjustments of contents to specific needs.
Lufthansa Cargo Business Partnership Program Page 25
<PAGE> 26
Attachment 5 (continued)
IATA COURSE DANGEROUS GOODS
Target Group:
Staff of Global Partners checking Dangerous Goods shipments.
Aim:
Knowing what decisions to make when accepting Dangerous Goods and how to assist
and advise the shipper if problems occur.
Contents:
- Legal aspects
- Responsibilities of shipper/agent and airline
- Definition of hazard classes
- Packing, marking and labeling
- Documentation
- Acceptance, handling, storage and loading
- State and operator variations
- Incidents and accidents
Duration & Days:
- 5 days
- Upon request of Global Partner
- Upon request the Global Partner can also participate at the regular
Lufthansa Cargo Dangerous Goods Course. The participation should be
discussed with Mrs Marion Krami-Dian.
Maximum Number of Participants:
14. It can be increased to 16 only if previously agreed with the training
department.
Location:
To be defined
Tuition Fees:
1.150 DEM per participant not including accommodation and conference facilities
Travelling expenses for participants
Next steps:
A meeting between Lufthansa Cargo Training, the respective contact persons at
Lufthansa Cargo and the Global Partner to fix date, location and possible
adjustments of contents to specific needs.
Lufthansa Cargo Business Partnership Program Page 26
<PAGE> 27
Attachment 5 (continued)
ADDITIONAL INFORMATION & APPLICATION
For additional information and application please contact Mrs Marion Krami-Dian,
Coordinator Partnership Training.
Marion Krami-Dian
Coordinator Partnership Training
Phone: 0049 6257 801760
E-mail: Marion. Krami-Dian@DLH. DE
Hans-Wolfgang Braune
Manager Training
Phone: 0049 6257 801740
E-mail: [email protected]
Lufthansa Cargo AG
Training Centre
Lufthansa Ring 1
D-64342 Seeheirri-Jugenheim
Phone: 0049 6257 801736
Fax: 0049 6257 801340
PRACTICAL INFORMATION
Tuition Fees
The respective tuition fees cover instruction, teaching material and books. The
tuition fees are billed after the courses by the Lufthansa Cargo Training Centre
unless the seminar is held by an external institute. For external institutes a
billing procedure will be agreed upon during a preparatory meeting.
Accommodation & Conference Facilities
Accommodation and conference facilities are not included in the respective
tuition fees.
All programmes can be held in the Lufthansa Training Centre in
Seeheim, nearby Frankfurt. Accommodation would be charged at 143,50 DEM per day
plus VAT including breakfast, lunches and dinner.
Campus life
The Lufthansa Training Centre is located approximately 50 km south of Frankfurt
and surrounded by forest. There is a regular bus shuttle between Frankfurt
Airport and Seeheim making Seeheim a place easy to access.
In order to set oneself free for creative learning and development Seeheim
offers leasure facilities such as jogging tracks, sauna, solarium, indoor pool,
two jogging tracks, an indoor sports hall, internal sports classes (not included
in tuition fee) as well as a bike rental.
Lufthansa Cargo Business Partnership Program Page 27
<PAGE> 28
Attachment 6
Guidelines for joint sales to customers
How do we deal with business cases so as to better serve our customers?
1. What's the Business we are in?
Our service to customers in the global industry and in local markets is part of
the value chain of customers in the industry.
For the success of the strategic intent of the industry to better serve their
customers by optimised supply chain solutions an integrated approach with
partners is key.
Forwarders and airlines are a part of this supply chain and to join forces to
become a value adding partner of the the industry is the common target.
To transform this common objective of competing companies into a joint practise
of real business partners these guidelines of the game are written.
This joint approach within the logistic and transportation industry is an answer
to an urgent requirement of our customers themselves and not a clever idea of
some crazy marketing people.
Gerry Clarke from DELL Computers who revolutioned the supply chain management of
DELL summarizes this:
"Virtual integration means you basically stitch together a business with
partners that are treated as if they're inside the company."
2. General understanding of joint sales to customers and prospects
1. The Business Partners and LHCargo consistently pursue to add value to their
customers' supply chain.
2. The Business Partners and LHCargo want to play an active role in the
customers supply chain.
3. The Business Partners and LHCargo must be aware of the customers' present
and future requirements. This means the Business Partners and LHCargo will
follow any invitation of the customer to participate in negotiations
concerning his supply chain.
4. The Business Partners and LHCargo accept that it is the customer who
decides on the choice of suppliers, including the forwarder and airline.
5. The Business Partners and LHCargo are in business to make money. Both of
them accept that due to their specific way of making money conflicts might
come up within daily business life.
Lufthansa Cargo Business Partnership Program Page 28
<PAGE> 29
Attachment 6 (continued)
The mutual understanding is to solve these conflicts wherever they appear with
the help of some basic guidelines instead of fighting and blaming one another
especially not in the customers' eyes.
6. The Business Partners and LH Cargo will have the freedom to choose
subsuppliers according to the customer's individual requirements.
This also means that in case a particular Business Partner or
Lufthansa Cargo do not suit the customer needs both have the freedom
to either team up with another airline/ forwarder/ logistics provider
or LHCargo will offer separately for the airport-airport portion.
7. Ultimately both partners strive to base their pricing on the value the
services add to their Customers business (and this is valid for integrated
solutions as well as for separate offers made).
Both partners agree in advance on the pricing that is presented to the
customer.
8. Open book policy is applied by both partners wherever it makes sense to
improve our services to our customers (f.e. joint tenders).
9. This is a first draft of the rules for the game -- they will be discussed
and further developed based on the experience in everyday partnership life.
3. To whom do these guidelines apply?
These guidelines are written to have clearly defined rules for joint business
with Business Partners to Customers in the industry.
They will apply to the worldwide sales organisation of the Business Partner and
Lufthansa Cargo, in specific
o the Business Partners' Airfreight Management and
o the Business Partners' Key Account Management
and
o Lufthansa Cargo's worldwide Sales Organisation (WWW G1s),
o Lufthansa Key Account Management lead by FRA FL/X and
o Lufthansa Cargos Business Partnership Management lead by FRA FX/A.
As soon as the Sales Alliances with other airlines will be implemented these
aspects will be added by FRA FX/K (Lufthansa Cargos Sales Alliance team).
Lufthansa Cargo Business Partnership Program Page 29
<PAGE> 30
Attachment 6 (continued)
4. How to become real partners
The principles of starting to approach and working together on customers should
be as follows:
Scenario A) New Customer - New Business
BP/ forwarder approaches us with new or unknown customer business. LHCargo does
not have a well established relationship with the customer yet.
We join forces/resources if size/kind of the business/ customer/ profitability/
strategic importance make it worthwhile pursuing the business. First come, first
go. We jointly develop the new business with the new customer, pursuing jointly
an integrated offering.
If there is more than one Business Partner approaching Lufthansa Cargo
o and just rates and capacities are wanted by the BP - we stay neutral (same
conditions for all BPs).
o and an innovative value added approach -- a quantum leap in idea/ concept)
jointly with us is made by the BP we go with this one exclusively and just
offer neutral rates to the others. We expect our BP to do the same.
Scenario B) Existing Customer - New Business
BP/ forwarder approaches us with now customer business. Established
relationship with customer existing but specific new business not known to us.
If BP/ forwarder just want rates/ capacities see scenario A.
If there is the offer to do valued-added business jointly both partners check
Key Account - Teams. If there is no successful*) partnership already working on
this business we will join forces according to these principles:
1. The customer shows no objections to this cooperation
2. A joint offer LHCargo/ BP increases significantly the value
proposition for the customer. This will be measured in terms of
services, savings, logistical completeness of offer.
3. The joint proposal increases the effect on longterm customer
profitability for the Business Partner and LHCargo.
4. The bidding process will be based preferably on the LHCargo &
Alliance network system.
*) not successful means also: remarkably small LH-share in total
businessvolume
Lufthansa Cargo Business Partnership Program Page 30
<PAGE> 31
Attachment 6 (continued)
Scenario C) Existing Customer - Existing Business - Existing Partners
LHCargo is already involved directly in strategic partnership/ joint tendering
process with a customer and a particular Business Partner/ forwarder. BP
requests to cancel existing successful partnership.
In general no way to crack existing cooperation. This does include new tenders
for an existing business with an existing Business Partner/ forwarder. We will
stick to the existing partnership and expect our partner to do the same.
Exemptions only if quantum leap in idea/concept and only if approved by
customer.
Scenario D) New or Existing Customer - Existing Business of a BP with another
airline
LHCargo is approached by a BP/ forwarder to work on a specific business that is
actually handled by another BP with another airline.
LH Cargo will go for this business.
The final decision will be made by the customer.
Scenario E) Existing Customer - Existing Business - No Partners - a BP
approaches us
LHCargo is already involved directly in strategic partnership/ tendering process
with a Customer. No successful *) partnership with other serviceprovider so far
existing. BP wants us to work on Customer.
The guidelines of scenario B - will be applied. There has to be an added value
in doing the business together with a partner - for the customer and for
Lufthansa Cargo.
*) not successful means also: remarkably small LH-share in total business volume
Scenario F) Existing Customer - Existing Business - No Partners - LH Cargo looks
for a partner
LHCargo is involved directly in strategic partnership/ tendering process with
Customers and looks out for a suitable partner for the total logistics chain.
Lufthansa Cargo Business Partnership Program Page 31
<PAGE> 32
Attachment 6 (continued)
Lufthansa Cargo chooses a Business Partner/ Logistic Service Provider according
to expertise for this particular business.
A tender process is initiated and led by Lufthansa Cargo through a request for
proposal.
5. How to become real partners at one glance
In the following chart you find an overview on the different scenarios so as to
make them easy to understand and easy to remember.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Scenario Customer Business/ Partner for this rates/ innovation/
Tender particular capacity added value/
business tripartite
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A new new new go - neutral go -
- if more exclusively
than 1 BP
---------------------------------------------------------------------------------------------------------------------------------
B existing new new go - neutral go -
- if more exclusively
than 1 BP
---------------------------------------------------------------------------------------------------------------------------------
C existing existing existing no go go - only if
quantum leap
in added value
---------------------------------------------------------------------------------------------------------------------------------
D new/ new new - BP with go for it go for it
existing another airline
---------------------------------------------------------------------------------------------------------------------------------
E existing existing new - BP go - neutral go -
approaches us - if more exclusively
than 1 BP
---------------------------------------------------------------------------------------------------------------------------------
F existing existing new - we look existing choose BP
for a partner depending on
specific
know-how for
specific
business
(RFP)
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Lufthansa Cargo Business Partnership Program Page 32
