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ThinkForward 2011

Freja  ~  Issue 04

Taking transport & logistics one step further 

Making the most of transport and logistics IT

An obsession with quality

Poster perfect paper production

Securing the supply chain

AEO boosts end-to-end security and performance


F e at u r e

AEO gives transport and logistics companies an edge End-to-end supply-chain performance and security is of vital importance to businesses and governments around the world. And now, AEO is key to making that possible.

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October 2010, international cargo was used in a foiled terrorist attack on a US-bound aeroplane. This dramatic event is just one example of why supply-chain security and integrity must stay at the top of the international agenda.

The EU Commission’s answer to this challenge – and the general issue of optimising supply chain performance – is the Authorised Economic Operator (AEO) scheme. Article 5a of the Community Customs Code enables member states to grant AEO status to any economic operator that meets specific standards in: •  Customs compliance •  Appropriate record-keeping •  Financial solvency •  Security and safety The status of authorised economic operator granted by one member state is then recognised by the other member states. Of course, supply-chain security is not only about preventing potential terrorist threats. The AEO concept also:

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•  Prevents unlawful transport of dangerous and illicit material •  Protects critical supply chain elements from disruptions and attacks •  Deploys multi-layered risk management tools to facilitate the smooth flow of legitimate international trade •  Strengthens the supply chain So, where are the immediate benefits for those interested in transport and logistics? Businesses with AEO status are more likely to have easier access to Customs simplifications and be in a better position to comply with new security requirements. For example, under the security framework, which has been in place since 1 July 2009, businesses have to submit pre-arrival and pre-departure information for goods entering or leaving the EU. In this case, holders of AEO certificates stand to benefit from the facilitation of Customs controls or the simplification of Customs rules – or both, depending on the type of certificate.

Think Forward  ~  Issue 04  |  2011


“Going through the process of AEO certification meant we had a chance to re-examine everything we were doing in relation to Customs interactions. We found new opportunities to reduce costs and speed up deliveries – or avoid potential delays – that are really going to make a difference.” Eric Clausen  Quality, Environment & Safety Manager, FREJA

Sound easy? Remember we’re dealing with bureaucracy, so even if a company meets these criteria, it will not automatically benefit from simplifications provided for in the Customs rules of other member states. However, all EU states are encouraged to grant the use of simplifications to AEOs and make processes smoother and quicker for certified transport providers. The drive to make international transport and logistics smoother and more secure is well under way. For example, mutual recognition is now operational for EU/Japan international trade supply chains that involve AEO businesses. And it’s likely that the EU Commission and US Department of Homeland Security will agree on a similar cooperation by the end of 2011. Prior to the AEO initiative, Sweden and Denmark both operated systems that ensured prioritisation for firms who earned credibility over time. In Denmark, the new AEO system will run in parallel with the existing system, while the Swedish authorities have made AEO certification mandatory for transport and logistics companies who want priority treatment, abolishing the prior system (“Servicetrappan”). How can you find out whether your transport and logistics supplier has an AEO certificate? The European Commission has launched an AEO database, which allows anyone with a certificate to check the certificates of other holders, along with the type of certificate, date of issue and the country of origin.  ∑

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AEO-certified Advantages FREJA is one of the first transport and logistics companies to achieve AEO status, which was awarded to our Swedish operation in September 2011 and our Danish company at a ceremony attended by the tax authorities and FREJA’s management on 3 October 2011. The group’s AEO certification is the highest level of three possible certifications, and brings economic, Customs and security advantages for our customers.

5 Key advantages for AEOcertified transporters and their customers* 1. A better-performing supply chain with trusted suppliers 2. Greater end-to-end transport security 3. Fewer physical and document-based controls – an AEO has a lower risk rating and enjoys quicker border transitions 4. AEOs get priority over non-AEOs in Customs deliveries when selected for control 5. The certification process optimises inter nal company cross-border processes *May vary depending on region

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Open to Improvement FREJA founder Jørgen J. Hansen speaks out

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Think Forward  ~  Issue 04  |  2011


Opinion

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ransport and logistics isn’t the Wild West it once was. In fact, the industry’s professional standards have risen a lot over the past decade. But should we be content with what has been achieved? Or is there still room for improvement?

gets interesting. That’s because features like this mean our customers can turn their partnership with FREJA into new competitive capabilities, which is a key driver of long-term business viability.

Through industry groups, and in my role with FREJA, I’ve spent the past twenty years pushing for fundamental changes. And, in that time, I’ve seen a lot of change. Yet in my opinion, there’s plenty of work left to be done.

But why stop there? There’s something else I’d change overnight across the industry if I could. To deliver improved value, we must acknowledge that we and our customers are all part of the same system. And that system needs to be as good as we can make it.

Top of my wish list for change in the industry has long been ‘openness’ – an issue closely related to ‘honesty’. While some – suppliers and customers alike – may see openness as a threat, I’ve always considered it an opportunity. So at FREJA, we’ve been exploring ways to ‘open the books’ for our customers, delivering a level of transparency and cooperation that really shows the FREJA difference. Through our new online booking portal, for example, not only can you see when a load has left the warehouse and its estimated time of arrival, but also exactly where it is on an online map – and even its speed and direction. So there are no phony excuses about trucks being repaired or other such nonsense in an attempt to cover up bad planning or too few resources. Taking things a step further, we’ve even made it possible for our customers’ customers to see what’s going on – if they want to. And this is where all the talk of ‘adding value’ really

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So what makes for a good system? Documented processes, consistency and reliability – the sort of things usually associated with systematic thinking. But in transport and logistics, there’s another essential value-adding component: flexibility. When customers praise FREJA for its flexibility, I take it as a sign that we’ve listened to their needs – seen things from their perspective – rather than adhered to a system designed just to deliver a consistently cost-efficient experience without considering the longer-term business relationship. FREJA’s challenge to its customers, and to the industry as a whole, is this: open up to the idea that your transport and logistics supplier is a strategically important partner. Adding flexibility and effectivity to the mix not only strengthens the supply chain, it could make a world of difference to our customers’ value chain.  ∑

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B u s i n e s s I n s i g h t :   C a s e St u d y

Love & Logistics

An obsession with quality presents its challenges They say love can conquer anything. But sometimes it needs more than a little help from logistics. Few know that better than Italian-style bakery business Il Fornaio.

A star is born There’s love in every product created by Copenhagen-based Il Fornaio. But it’s high-performing logistics that bridge the gap between the company’s passionate craftsmanship and its largest customers – tough, no-nonsense supermarkets. Twenty-five years ago, Italian-born Elvio Milleri came to Copenhagen, Denmark and co-founded what has become one of the country’s longest-running Michelin-starred restaurants, Era Ora. But that success wasn’t enough for Elvio, a man who burns with a passion for fine cuisine. When he couldn’t buy local bread that met his standards, Elvio began to bake his own. His guests loved its taste and airy mouthfeel and were soon asking where to buy it outside the restaurant. From good to great Elvio started a small bakery producing just 15 kilos of bread a day, selling it to other restaurants and high-profile specialist food stores. His list of customers was soon joined by Denmark’s premium supermarkets. Today, Il Fornaio’s breads even grace the sumptuous tables of SAS airline’s business class passengers. Its product range now includes gourmet pesto, olive oils and pasta, all sourced from small, often family-run suppliers in Italy

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and relabelled for the Danish and Swedish markets. And it’s these suppliers, each with a passion for their organically produced wares, that lie at the core of Il Fornaio’s competitive advantage – and its logistics challenge. Significant logistics challenge For Il Fornaio’s managing director and co-owner, Susanne Boye Nielsen, transport and logistics comes in a close second to craftsmanship as a crucial factor for Il Fornaio’s business success. In addition to a selection of Italian delicacies, the bakery imports between 50 to 60 metric tonnes of flour from Italy every month. For the company’s transport supplier, it’s definitely not business as usual. For one thing, small artisan suppliers are a freight forwarding nightmare when it comes to determining exactly when their goods are ready to be picked up or even what type of goods will be ready. Agreements are highly dependent on interpersonal relationships and respect for product quality – both of which often rank higher than production deadlines. Yet Il Fornaio’s business largely depends on meeting the hard-hitting deadlines of big-business supermarkets, and repeatedly delayed deliveries can quickly destroy what has taken years to build.

Think Forward  ~  Issue 04  |  2011


Storage & Distribution FREJA transports Il Fornaio’s flour and other finished goods from Italy, storing the bakery’s delicacies in FREJA warehousing facilities, and distributing products to customers across Denmark and Sweden.

Temperamental Italian craftspeople aren’t the only challenge for transport and logistics, however. To survive the long journey and retain flour quality, transport temperatures have to be carefully monitored – not too humid, not too hot and not too cold. “A curtain-sided truck standing in Verona while its driver is resting can get very hot, causing the flour to go mouldy,” says Susanne. “Then there’re our olive oils, which mustn’t freeze in the winter. So our transport and logistics supplier has to be able to think well ahead, timing drivers’ obligatory rest stops to ensure they don’t coincide with the low temperatures of a high mountain pass.” Enthusiasm appreciated “We deal with small suppliers so there is no guarantee of what we get or when it’s ready to be picked up,” says Susanne. “That requires a lot of enthusiasm and passion from our transport supplier. They have to really know their way around and be able to find alternative ways of doing things. Proactivity is key.”

are well worth paying for. “We work with suppliers who have the same philosophy as ours – really caring about what they do.” Where to now? Two significant developments are about to take Il Fornaio’s transport and logistics needs to the next level. The first is the opening of Il Fornaio Bottega in TorvehallerneKBH, a direct outlet carrying not just today’s range of breads and delicacies, but adding many more small-volume goods, all still sourced from Italy. The second is the fast-growing neighbouring market of Sweden. “It’s early days yet, but we’re getting lots of positive feedback from the Swedes,” says Susanne. “They think our products are fantastic. Within five years, the Swedish market may well be larger than our home market of Denmark.”

“We work with suppliers who have the same philosophy as ours – really caring about what they do.”

Each of these developments will require readdressing how goods are transported and stored for the company as a whole. Once more, love and logistics will be put to the test.  ∑

She is also quick to point out that Il Fornaio is highly cost-conscious. And although transport makes up a large part of its costs, she believes flexibility and service-mindedness

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FREJA IN NUMBERS

8835 Number of active FREJA customers

98%

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FREJA's Quality Objective 98% delivered on-time

Number of different driver nationalities

100

99.5%

„

Actual number of on-time deliveries

DELIVERIES

0

0

8 

17,0

Number of item daily by FREJA Manageme

Think Forward  ~  Issue 04  |  2011


000

7,799,352

Number of pallets handled in the past year by FREJA

370,000,000

Total number of pallets circulating in Europe

50,000,000

Number of new reusable pallets made annually in Europe

6%

Percentage of plastic pallets in Europe

78

Number of nails holding a Europallet together

125,000

Number of FREJA ferry crossings per annum 10,000 0

ƒ

5,000

Number of order lines picked by FREJA daily

20,000

Order Lines

ms processed A's Warehouse ent System

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Just what the Doctor Ordered

Based on research and development, Orion Pharma is a European pharmaceutical company that’s experiencing rapid international growth. The company’s products comprise prescription drugs and diagnostic tests for a wide range of both human and veterinary applications and, more recently, OTC (over-the-counter) remedies and personal care products. Prioritised therapeutic areas include cardiology/ intensive care, CNS, oncology/urology, and HRT. Clearly, it’s a company going places; but it hasn’t always been that way.

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stablished in 1917 as “Orion”, it was first housed in a former butter plant in Helsinki, Finland. Dr. Arvo Ylppö, appointed to Orion’s Management Board in 1925, once commented: “Due to poverty and lack of capital, Orion was forced to operate in a small building that I now wouldn’t hesitate to call a dump.” How times have changed. Today, Orion Pharma is one of the Nordic region’s largest pharmaceutical companies, publicly listed in Helsinki and employing some 3,000 staff in research and development, marketing, sales, production and medical information. In the pharmaceutical industry, getting to this level of success isn’t easy – and staying up there is just as difficult. As with other non-pharmaceutical industries, internationalisation and advances in development methodologies have led to much faster product development. Competition is heating up, and the profitable lifetimes of new pharmaceuticals are getting shorter. To stay ahead of the curve, Orion Pharma takes a broad view of its activities, constantly searching for new efficiencies. Following a path laid out by the company’s three founders, and sharpened by a tough competitive climate, Orion Pharma has inherited a stringent set of values and an attitude of uncompromising excellence. Among these are quality, reliability and safety – values that make themselves felt in the company’s interactions with its transport and logistics suppliers. Orion Pharma’s supply chain begins with the company itself as the pharmaceutical brand owner, continues on to the distributor or wholesaler and finally on to the pharmacy. It’s no ordinary supply chain. Visibility, security, flexible information exchange, real-time data and anti-counterfeit measures are just some of the considerations that protect Orion Pharma’s brand, the overall

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Think Forward  ~  Issue 04  |  2011


B u s i n e s s I n s i g h t :   C a s e St u d y

FREJA's New Warehouse Management System

efficiency of its supply chain and, not least, the safety of consumers. Tracking is maintained at item level for inventory control and easy product authentication at point of sale. Reporting is vital throughout, and it goes without saying that Orion Pharma’s chosen transport and logistics suppliers must have IT systems and working practices that are advanced enough to meet the company’s special needs. But it’s not just Orion Pharma that sets the standard for transport and logistics. Both nationally and internationally, the pharmaceutical industry is heavily regulated. Orion Pharma’s product portfolio comprises around 350 products with over 4,000 SKUs (stock-keeping units) that are marketed in more than 100 countries. In Norway, the vast majority of these products are regulated by the Norwegian Medicines Agency as well as EU directives in GDP (Good Distribution Practice) and GMP (Good Manufacturing Practice).

In the spring of 2011, FREJA’s Norwegian subsidiary entered into a logistics contract with Orion Pharma to warehouse and distribute the company’s products from FREJA’s logistics centre in Oslo. FREJA receives products from Orion Pharma’s factories, storing the company’s products in the FREJA logistics centre in Oslo from where they are distributed to Norwegian pharma wholesalers – all subject to strict quality control and comprehensive reporting. FREJA’s advanced new Warehouse Management System is the high-tech backbone that ensures we can live up to Orion Pharma’s rigorous requirements.

A complex system of workflows and technologies ensures regulatory compliance – and places special requirements on the storage and transport of the company’s products. For example, Orion Pharma produces a variety of morphine products that demand special warehousing security to guard against theft. And careful planning and monitoring is required to keep medicinal products at the appropriate storage temperature.  ∑

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POSTER PERFECT Standing in the cinema queue, you look at the colourful film posters to kill time. Maybe you think about the actors, the titles or the artwork. But I bet you wouldn’t think about how the paper the posters are printed on got to be there. And that’s a shame, because it’s a truly epic journey.

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starts in the dark forests of Sweden. The trees are felled, sawn, crushed to pulp, rolled into sheets, printed on, sliced into posters which are meticulously packed and shipped, and finally, pasted onto the cinema wall where you stand. For the Grycksbo, Sweden-based manufacturer Arctic Paper, every finished poster is the result of careful planning and flawless execution – a story that’s worth telling in its own right.

Arctic Paper not only produces high-quality paper for posters, but also paper for books, magazines and direct mails. And they produce lots of it. More than 265,000 metric tonnes of coated, wood-free (from chemical pulp, rather than mechanical pulp) paper each year. It’s an industry marked by heavy competition and exacting quality standards. For Arctic Paper, time is of the essence. Their paper products feed the busy schedules of commercial printers where downtime is out of the question. Where, for example, would a film premiere be without the enticement of its posters? Vital to Arctic Paper’s business results are Key Performance Indicators (KPIs) such as quality, providing the right product at the right time, and the number of deliveries completed without damage. As a major corporation operating on several continents, many of Artic Paper’s business targets come down to transport and logistics. And, in the paper industry, this is a task that’s more challenging than it seems. Perhaps you wouldn’t expect large rolls of industrial paper to be a delicate product. But looks can deceive. Although a roll of paper may look perfect at first glance, even the slightest blemish can have catastrophic consequences. On a film poster, a tiny scratch can turn into a massive tear; gravel and dirt can mark not just one but many posters in a stack. To minimise such occurrences, each roll is carefully packaged in a thick layer of cardboard with protective coverings at each end, while extra precautions are taken in loading and unloading. But protecting Arctic Paper’s precious wares is just the beginning of the transport and logistics challenges.

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Think Forward  ~  Issue 04  |  2011


B u s i n e s s I n s i g h t :   C a s e St u d y

For truck drivers making the long journey to Grycksbo, lying deep in the forests of mid-Sweden, time is precious. To qualify as a transport and logistics supplier for Arctic Paper, a number of key requirements must be satisfied – and on-time delivery is not negotiable. To meet this requirement, the supplier must have a sufficiently large number of vehicles capable of serving the factory and its customers. Ideally, trucks should be at the factory to receive rolls the moment they’re ready for delivery. With truck capacity in Europe often under pressure, Arctic Paper occasionally deploys “live loading”, requiring goods to be loaded within just a few hours each day – a practice that challenges manpower during on-loading too. In this environment, Arctic Paper’s transport and logistics workers need to think on their feet, quickly identifying situations where extra flexibility is required to come up with workable solutions at times of peak demand. From meticulous care to dynamic availability, Arctic Paper expects no less than 100 percent from its suppliers. After all, the paper industry is about so much more than paper – and maybe you’ll never look at a film poster in quite the same way again.  ∑

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"The ability to deliver on time is not negotiable." Keeping it all in the family Since winning a large freight forwarding tender in early summer 2011, FREJA has been serving Arctic Paper’s Grycksbo factory, adding the plant to the transport and logistics work it already does for another firm in the Arctic Paper group. FREJA’s ability to meet the manufacturer’s performance requirements across Scandinavia was a key factor in the successful tender.

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I n s i d e r E x p e r i e n c e

Making the Most of IT A look at the technologies that help keep FREJA and its customers ahead of the game Lars Bakkegaard, group director of IT and business development for FREJA, may only have been with the company for nine months, but that hasn’t kept him from having a significant impact on the IT systems that underlie and empower the company’s operations. Hired from a CFO position with Finland’s Itella, Lars has had to hit the ground running. On the one hand, he needed to get up to speed on FREJA’s existing IT systems. On the other, he was charged with making the most of these systems as well as developing entirely new features and capabilities group-wide.

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ince his arrival, Lars’ tasks have been far-reaching. The focus of his work has been on commissioning the company’s new Fleet Management System, but he has also found time to fine-tune ISOware quality assurance efforts, and chart new directions for FREJA’s solutions training. “It’s my job to introduce new workflows and processes that accompany new developments,” says Lars Bakkegaard. “I also follow up to see whether new ways of working are being complied with and having the desired effect.” The heart of the business – the TMS At the heart of FREJA’s transport and logistics business is its freight forwarding system. Dubbed “Transport Management System” (TMS in everyday conversations), this vital system is based on the transport and financial modules of Aspect 4, an ERP solution from Scandinavian IT services provider EG A/S. FREJA’s TMS provides full support for workflows from one end of the transport chain to the other. It enables the integration of Internet and EDI-/XML-based services such as booking, track and trace and POD (Proof of Delivery). And it can also handle communication with business partners, authorities, banks and similar. Among its most interesting features are the capabilities offered for data exchange and integration with handheld and mobile equipment such as barcode scanners, laptops, positioning equipment, smartphones, remote control systems for cranes and so on.

Think Forward  ~  Issue 04  |  2011


Lars Bakkegaard has been working to make the most of the TMS’s Internetbased capabilities: “A couple of months ago we introduced a new web solution where customers can make direct bookings and view their shipment and financial data. It’s connected to our TMS, so you can print proof of delivery (POD)/invoices and other relevant documents – even save your own pick up and delivery addresses directly on the web for reuse. This saves time for us and our customers.“ Warehouse management Tightly connected to the TMS is FREJA’s Warehouse Management System (WMS). Such a system needs to be able to handle FREJA’s strict requirements for flexibility, efficiency and functionality when it comes to proper control of medicines, food, spare parts, industrial products or whatever items customers have entrusted to the company. Underlying the WMS is 3PL (third-party logistics) software from Axacon, which offers the rich capabilities needed for data-intensive control. The WMS features validation, which is needed, for example, for handling pharmaceuticals, and was developed in response to documented customer needs. Fleet management The third major component of FREJA’s IT business platform is also the newest: the Fleet Management System, which provides surveillance and mapping of the company’s over 1200 trailers. This advanced system uses a GPS-based system to provide up-tothe-minute data on the status of customer consignments, ensuring timely delivery and improving security. An essential difference So what makes the IT systems developed at FREJA different? And what does that difference mean to its customers? Plenty of freight forwarders have similar stand-alone Fleet Management Systems at their disposal. The crucial difference, however, lies in the two-way integration of the Fleet Management System with FREJA’s Transport Management System. Integrating these systems doesn’t just provide on-demand information about where trailers are at a particular time. In addition, the systems work together to provide greater visibility, with the Fleet Management System auto-transferring data to the main Transport Management System to produce a “green light” when a delivery is

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made. So forwarding staff can quickly and automatically see just how far a customer’s order has come. Detailed, tracking data means FREJA can provide emissions reports directly from the system by looking at how many goods are on each truck as well as the distance travelled, then matching this to emission data on the particular vehicle (Euro3 or Euro5).

ThinkForward Taking transport & logistics one step further 

Issue 04

Quick changes “Capabilities like these are in a constant state of development,” says Lars Bakkegaard. “Unlike many of our larger competitors, FREJA’s size and doctrine of flexibility helps the development process by ensuring a comparatively short distance from decision to effecting a change. The extra speed and flexibility means we can more easily use our IT systems to support and fine-tune our workflows, creating value for FREJA and, most importantly, for our customers.” The right man for the job Lars’ extensive background in IT systems and business processes began with a degree in auditing, majoring in IT at BI Norwegian Business School. His subsequent career as an accountant and auditor with Audinor and Mørch Smith saw him providing IT advice to a wide variety of clients, before taking on management roles at companies including Universal Spedisjon (variously as CIO, CFO and CEO) and Itella Logistics (CFO with IT responsibility). This broad range of roles has equipped Lars with both technical and topdown insights into business needs of FREJA and its clients.  ∑

2011 Group & Publication Director

Jørgen Hansen Head of Production

Mari Linna Text, Photography & production

Eye for Image

Contact us if you wish to receive Think Forward free of charge or for further information on our Group. FREJA Transport & Logistics Denmark

+45 96 70 50 00

Norway

+47 22 07 50 00

Sweden

+46 (0)42 495 00 00

Finland

+358 (0)20 7129 830

www.freja.com General inquiries mari.linna@freja.com

Copyright ©2011 FREJA Transport & Logistics A/S. All rights reserved. This material may be published, broadcasted, rewritten or redistributed in whole or part with the express written permission of FREJA.

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A

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w w w.freja.com FRE J A D e n m a r k

FRE J A N o r way

FRE J A S w e d e n

FRE J A F i n l a n d

+45  96 70 50 00

+47  22 07 50 00

+46  (0)42 495 00 00

+358  (0)20 7129 830


Think Forward, Issue 04 – in English