LOGISTICS HUB LUXEMBOURG

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THE EVOLUTION & DEEPENING OF DANIEL LIEBERMANN Director, Directorate Logistics

LOGISTICS: A KEY SECTOR OF THE ECONOMIC DEVELOPMENT POLICY LOGISTICS ACTION PLAN OVERALL OBJECTIVE POSITION AND STRENGTHEN LUXEMBOURG AS AN INTERCONTINENTAL AND MULTIMODAL HUB IN EUROPE FOR ADDED VALUE LOGISTICS ACTIVITIES MULTI-PRODUCT SPECIALIZATION STRATEGY 2 A SECTOR FULLY SUPPORTED BY ALL STAKEHOLDERS (PUBLIC PRIVATE)

LUXEMBOURG - MORE THAN MEETS THE EYE LUXEMBOURG-JAPAN TRADE IN GOODS (x2) EU-JAPAN TRADE IN GOODS JAPAN IS ONE OF THE EU s MAIN TRADING PARTNERS (IN BILLIONS OF EUROS) CONSIDER LUXEMBOURG AS A GATEWAY TO & FROM EUROPE 3

LOGISTICS: A KEY ELEMENT FOR YOUR SUCCESS IN EUROPE «WHEN PLANNING OR DEVELOPING YOUR ACTIVITIES INTO THE EUROPEAN MARKET, YOU MIGHT CONSIDER AT A CERTAIN MOMENT TO SET UP A DISTRIBUTION CENTRE SOMEWHERE IN EUROPE» CHOSING THE RIGHT LOCATION WILL BE KEY TO YOUR SUCESS NEED TO FIND THE RIGHT BALANCE BETWEEN KEY DECISION FACTORS TIME or PROXIMITY TO MARKETS TOTAL COSTS QUALITY OF SERVICES WHAT HAS LUXEMBOURG TO OFFER? 4

FIND THE RIGHT BALANCE BETWEEN THE KEY DECISIONS FACTORS QUALITY COSTS TIME 5

A HIGHLY STRATEGIC POSITION IN EUROPE 60% OF EU GDP WITHIN 700 KM OF LUXEMBOURG 700 km 500 km A GATEWAY TO THE 500 MILLION EU CONSUMER MARKET 6 60 % of the EU GDP 40 % of the EU GDP

A LEADING EUROPEAN FREIGHT AIRPORT CONNECTED TO ALL CONTINENTS PRESENCE OF LEADING AIR CARRIERS OFFERS DIRECT FLIGHTS FROM & TO ALL CONTINENTS FAST, SECURE and EFFICIENT GROUNG HANDLING - HANDLING CAPACITY OF 1 MIO TONNES/YEAR - QUICK TURNAROUND TIME - SUPPORTED BY AN EFFICIENT ROAD FEEDER SERVICE EXPERTISE IN SPECIAL CARGO MULTIPLE DIRECT CARGO FLIGHTS PER WEEK BETWEEN LUXEMBOURG AND JAPAN 7

AN EXTENDED GATEWAY TO MAJOR EUROPEAN SEAPORTS SCHEDULED ROAD, RAIL and BARGE CONNECTIONS COMBINED RAIL CONNECTIONS TO THE PORTS OF THE NORTH SEA, THE BALTIC SEA, THE IBERIAN PENINSULA, THE MEDITERRANEAN SEA AND TURKEY AS WELL AS TO MAJOR EUROPEAN INDUSTRIAL CENTRES SUPPORTED BY MULTIMODAL PLATFORMS NEW INTERMODAL (RAIL/ROAD) TERMINAL Hirsthals Dublin Killingholme London Zeebrugge Rotterdam Antwerpen Poznan Lodz COMBINED (RAIL/ROAD) NETWORK CAPACITY: INLAND RIVER PORT - 300.000 CONTAINERS/YEAR - 300.000 SEMI-TRAILERS/YEAR Irun Aiton Lyon Orbassano Le Boulou Milano Trieste Istanbul 8 Izmir RORO TRANSPORT

IN THE HEART OF AN EFFICIENT ROAD FEEDER NETWORK AT THE JUNCTION OF MAJOR EUROPEAN ROAD CORRIDORS - E25(N-S): ROTTERDAM-...-LUXEMBOURG-...-BASEL-...-GENOVA - E411/15(N-S): ANTWERP-...-LUXEMBOURG-...-LYON-...-BARCELONA - E44 (E-W): LE HAVRE-...-LUXEMBOURG-...-GIESSEN SCHEDULED ROAD CONNECTIONS SHORT LEAD TIMES TO MARKETS TRACK & TRACE SOLUTION 9

EASY AND FAST IMPORT/TRANSIT/EXPORT PROCEDURES A COOPERATIVE and EFFICIENT CUSTOMS ADMINISTRATION A PAPERLESS CUSTOM ENVIRONMENT (E.G. e-customs and IATA e-freight LOCATION) AUTHORIZED ECONOMIC OPERATOR / FISCAL REPRESENTATION A RECOGNIZED CERTFICATION and HOMOLOGATION AGENCY (SNCH) (FOR AUTOMOTIVE AND ELECTRONICS COMPONENTS) 10 Pictures: Cargolux

FIND THE RIGHT BALANCE BETWEEN THE KEY DECISIONS FACTORS QUALITY TIME COSTS 11

WAREHOUSE FACILITIES TAILORED TO YOUR NEEDS IF SELF-MANAGED POSSIBILITY TO BUILD YOUR OWN WAREHOUSE FACILITY IN ONE OF LUXEMBOURG s LOGISTICS PARKS or RENT A WAREHOUSE FACILITY RADIUS OF 25 KM IF OUTSOURCED TO A LOGISTIC SERVICE PROVIDER CAPITALIZE ON THE EXPERIENCE OF A CONTRACT LOGISTICS PLAYER MULTIMODAL TERMINAL CARGO AIRPORT RIVER PORT EUROHUB CENTRE LOGISTICS PARK EUROHUB SOUTH LOGISTICS PARK 12

EUROHUB CENTRE LOGISTICS PARK A1 A1 TO GERMANY LUXAIRCARGO s PHARMA & HEALTHCARE CENTRE LOGISTICS PARK EUROHUB CENTRE A1 TO FRANCE TO BELGIUM 13

EUROHUB SOUTH A NEW MULTIMODAL LOGISTICS PLATFORM NEW INTERMODAL (RAIL/ROAD) TERMINAL PORTS OF THE NORTH SEA LOGISTICS PARK TRANSALLIANCE A3 TO GERMANY TO BELGIUM WDP LUXEMBOURG CFL MULTIMODAL CAPACITY: - 300.000 CONTAINERS/YEAR - 300.000 SEMI-TRAILERS/YEAR A13 TO BELGIUM A13 TO GERMANY 14 PORTS OF THE MEDITERREAN SEA 14 A3 TO FRANCE

OPTIMIZING LABOUR COSTS VERSUS PRODUCTIVE LOW LABOUR TAX and SOCIAL CHARGES FOR EMPLOYERS & EMPLOYEES MAKING TOTAL LABOUR COSTS COMPETITIVE COMPARED TO NEIGHBOURING COUNTRIES HIGHEST LABOUR PRODUCTIVY IN THE EU 175 150 Labour productivity per person employed 2016, EU 28 = base 100 164.4 125 129.2 100 105.5 111.8 114.5 Source: Eurostat STRONG NATIONAL COHESION CONTINUOUS DISCUSSION BETWEEN SOCIAL PARTNERS 15

KEY TAX CONSIDERATIONS WHEN IMPORTING GOODS INTO THE EU IMPORTING GOODS GENERATES FROM THIRD COUNTRIES THE PAYMENT OF CUSTOMS DUTIES THE PREFINANCING OF VALUE ADDED TAX (INDIRECT TAX) THIS HAS A NEGATIVE IMPACT ON TREASURY/CASHFLOW LUXEMBOURG OFFERS SOLUTIONS TO AVOID THIS DRAWBACK THE POSSIBILITY TO STORE THE GOODS IN A BONDED WAREHOUSE UNTIL A SELLING ORDER (WHICH ALLOWS TO POSTPONE THE PAYMENT OF IMPORT DUTIES) AN AUTOMATIC AND UNCONDITIONED VAT DEFERMENT MECHANISM FOR B2B SHIPMENTS (MEANING NO VAT PREFINANCING) 16

B2B - VAT DEFERMENT MECHANISM ( NO VAT PREFINANCING ) JAPAN NO VAT IMPACTING ON A COMPANY s TREASURY 17

B2B - VAT DEFERMENT SUPPLY CHAIN SOLUTIONS OPTION 1: IMPORT BY AIR OPTION 2: IMPORT BY SEA + RAIL/ROAD IN LUXEMBOURG YOU DO NOT NEED TO PREFINANCE VAT Rotterdam IT S AUTOMATIC AND UNCONDITIONED POSTPONE VAT OBLIGATIONS BY USING A TRANSIT REGIME (T1) Antwerpen DELIVERY TO AN EU CLIENT IS VAT-EXEMPT: INVOICE WITHOUT VAT NO VAT PREFINANCING NO VAT PREFINANCING 18

FIND THE RIGHT BALANCE BETWEEN THE KEY DECISIONS FACTORS TIME COSTS QUALITY 19

A STABLE SOCIO-POLITICAL ENVIRONMENT SOUND MACROECONOMIC FUNDAMENTALS (AAA RATED) ACCESSIBLE AND BUSINESS MINDED GOVERNMENT A FAVOURABLE LEGAL AND REGULATORY FRAMEWORK HIGH RESPONSIVENESS TO RELEVANT EU LEGISLATION PRO-BUSINESS LEGAL AND REGULATORY FRAMEWORK A PROACTIVE ACTIVE GOVERNMENT INITIATIVES TO STRENGTHEN THE SECTOR CONTINUOUS STRATEGIC MONITORING ADAPTATION OF THE REGULATORY AND ADMINISTRATIVE FRAMEWORK DEVELOPMENT OF RELATED INFRASTRUCTURES 20

Max 350 metres NEW BUSINESS AND MARKET OPPORTUNITIES (1/2) A FULLY GDP-CERTFIED PHARMA GATEWAY MOST MODERN AIRCRAFT TECHNOLOGY: B 747-8F o ABLE TO MAINTAIN DIFFERENT TEMPERATURE RANGES AT THE SAME TIME +2 C TO + 8 C +15 C TO + 25 C oprequalified TRACKING SENSORS ARE ALLOWED ON BOARD A DEDICATED PHARMA CENTRE AT THE AIRPORT o3.000 M2 WITH TWO DISTINCT STORAGE ZONES: o 1.600 m2 AMBIENT (+15 c to +25 c) o 818 m2 COLD (+2 c to +8 c) TRUCK ARRIVAL NEW PHARMA CENTER COOL CELLS otemperature CONTROLLED BUILD-UP AREAS (+2 c to +25 c) o6 DEDICATED AND TEMPERATURE CONTROLLED TRUCK DOCKS ohotspot SYSTEM FOR TEMPERATURE MONITORING o35 COOL CELLS DEDICATED LSPs OFFERING SECURED E2E SC SOLUTIONS TARMAC otrack & TRACING SOLUTIONS oefficient AND ADAPTED ROAD FEEDER SERVIVES GDP CERTIFIED PLAYERS IN LUXEMBOURG 21 NO WAITING TIME ON TARMAC MAX 350 m TO THE AIRCRAFT

NEW BUSINESS AND MARKET OPPORTUNITIES DEDICATED SOLUTIONS FOR CROSS-BORDER E-COMMERCE KEY FACTS CROSS-BORDER E-COMMERCE IS GROWING AROUND THE WORLD BUT IS NOT YET AT ITS FULL POTENTIAL GOODS DOMINATE CROSS-BORDER E-COMMERCE MOST POPULAR OVERSEAS ONLINE SHOPPING DESTINATION TOP 3 EU MARKETS DIGITALISATION OF SOCIETY AND GLOBALISATION CONSUMERS INCREASINGLY LOOKING ABROAD 22 VARIOUS CROSS-BORDER E-COMMERCE MODELS (EU-FULFILMENT CENTER OR DIRECT SHIPMENT) KEY ELEMENT TO TAKE INTO ACCOUNT WHEN CHOSING ONE OR THE OTHER: - COMPLIANCE WITH NATIONAL LEGISLATION - LEAD TIME TO CUSTOMERS - VAT / IMPORT CUSTOMS IMPLICATIONS

AN ADVANCED ICT ENVIRONMENT FOR SUPPLY CHAIN MANAGEMENT EXCELLENT INTERNATIONAL AND NATIONAL CONNECTIVITY - FIBER OPTIC NETWORKS TO ALL MAJOR EUROPEAN POPs - SATELLITE CONNECTIVITY - INTERNET EXCHANGE POINTS (E.G. LIX, LU-CIX) STATE OF THE ART INFRASTRUCTURES WITH HIGH SECURITY STANDARDS - 23 DATA CENTERS, 8 WITH TIER IV CERTIFICATION - SECURE IT SOLUTIONS (E.G. LUXTRUST SECURED CERTIFICATES) - PRESENCE OF A HIGH PERFORMANCE COMPUTER BY 2018 TOWARDS A FULLY PAPERLESS ENVIRONMENT - SINGLE WINDOW FOR LOGISTICS (ONGOING PROJECT) - E-CMR (PILOT PROJECT FOR ELECTRONIC CONSIGNMENT NOTE) 23

SKILLED AND MULTILINGUAL WORKFORCE DEDICATED TRAINING PROGRAMS AT ALL LEVEL FROM HIGH SCHOOL AND VOCATIONAL TRAINING TO MASTER DEGREE AND EXECUTIVE EDUCATION 2017 - LAUNCHING YEAR OF MASTER DEGREE COMPANIES MANAGING SUPPLY CHAIN ACTIVITIES (TO NAME BUT A FEW) 4PL ACTIVITIES: SUPPLY CHAIN FUNCTIONS: PROCUREMENT ACTIVITIES: (TO NAME BUT A FEW) (TO NAME BUT A FEW) (TO NAME BUT A FEW) 24

QUALITY SERVICES OFFERED BY KEY LOGISTICS SERVICE PROVIDERS (TO NAME BUT A FEW) 25

AS WELL AS INTERNATIONALLY RECOGNISED PLAYERS FOR RELATED SERVICES (TO NAME BUT A FEW) TYVEK AIR CARGO COVERS FOR LIMITING THE EXPOSURE OF TEMPERARTURE SENSITIVE PRODUCTS DURING THEIR SHIPMENT AUTOMATED HEAVY-LOAD SYSTEM SOLUTIONS FOR AIRCRAFT MANUFACTURING AND MAINTENANCE TO AIR CARGO HANDLING PASSING THROUGH HIGH-BAY WAREHOUSING SYSTEMS INTEGRATED IT SOLUTIONS FOR CONNECTING THE AIR CARGO COMMUNITY FOR AIRLINES, FORWARDERS, GROUND HANDLING AGENTS and GROUND SERVICES ADMINISTRATIONS TRUSTED CONFIRMATION OF THE DIGITAL IDENTITY OF THE STAKEHOLDERS WITHIN A LOGISTICS CHAIN ASSURANCE OF DATA INTEGRITY, DATA SOURCE, AND DATA-ENCRYPTION DIRECTLY LINKED TO THE SOURCE AND THE RECIPIENT. LEGALLY BINDING ELECTRONIC SIGNATURE OF LOGISTICS ORDERS 26 CUSTOM MADE PACKAGING FOR AIR, SEA, RAIL AND LAND SHIPMENT INDUSTRIAL PACKAGING, INDUSTRIAL TRANSFER, CONTAINERIZATION, HANDLING OF HEAVY, FRAGILE, BULKY OR HAZARDOUS PRODUCT

SMART AND INNOVATIVE LOGISTICS: LOOKING TOWARDS THE FUTURE NEW TECHNOLOGIES: - ROBOTICS, AUTOMATION & AI - INTERNET OF THINGS - 3D PRINTING - BLOCKCHAIN WILL RESHAPE PROCESSES ALONG THE ENTIRE LOGISTICS VALUE CHAIN TO KEEP PACE WITH TECHNOLOGICAL CHANGES, LOGISTICS SERVICE PROVIDERS WILL NEED TO INVEST IN "INNOVATION OR STARTUPS ". LUXEMBOURG SUPPORTS THE DEVELOPMENT OF INNOVATIVE SOLUTIONS - RESEARCH, DEVELOPMENT AND INNOVATION FINANCIAL SUPPORTING SCHEMES - COLLABORATION OPPORTUNITIES WITH RESEARCH INSTITUTES - JOINT PHD INDUSTRIAL RESEARCH PROJECTS WITH THE LUXEMBOURG CENTER FOR LOGISTICS AND SUPPLY CHAIN - A START-UP ECOSYSTEM IN ORDER TO EASE THE DEVELOPMENT FROM EARLY TO LATE STAGE EXAMPLES OF STARTUPS: 27

LUXEMBOURG RANKS N 2 WORLDWIDE 28 SOURCE: WORLD BANK LOGISTICS PERFORMANCE INDEX (2016)

WHAT MAKES LUXEMBOURG STAND APART IS THE FACT THAT IT MANAGES TO COMBINE A UNIQUE SERIES OF ASSETS