The results of our 17th Annual Survey of 3PL provider CEOs were presented at the annual meeting of the Council of Supply Chain Management Professionals in San Diego. The surveys, sponsored by Penske Logistics, were conducted jointly by me and Dr. Kristin Lieb, Assistant Professor of Marketing Communication at Emerson College.
The surveys queried supply chain leaders from North America, Europe and Asia-Pacific. Contributing their thoughts were 31 third-party logistics company CEOs responsible for generating nearly $37 billion in revenue in 2009.
The CEOs involved in this year's surveys are more optimistic about growth prospects than they were last year, but appear to be more cautious about how growth will be achieved. They are likely to spend more time 'qualifying' new accounts, while devoting more attention to accounts in industries that are less cyclical in nature.
"Many of the CEOs reported adopting new strategies that are more conservative in nature with respect to both market expansion and new service offerings," explained Penske senior vice president Joe Gallick, who co-presented the annual study at the CSCMP conference.
The study offered several observations:
- Signs of resumed growth in all three regions, at very different rates of growth. One year company revenue growth projections were 10.4% for North America, 7.2% for Europe and 22.5% for APAC. Europe was a real eye opener -- last year, respondents predicted -3.3%.
- There is generally a more cautious approach to new initiatives. Eighteen of the companies introduced new risk management programs during the year.
- Increased interest in outsourcing in general may lead to new 3PL initiatives. Industry leaders in each of the three regions noted increased interest in outsourcing in general and 3PL services in particular.
- An increased emphasis on risk sharing and environmental sustainability in new contracts. Despite the aftermath of the recession, these companies are still heavily committed to environmental sustainability issues. Fourteen of the 31 companies began new green initiatives during the year. Twenty-eight of the 31 CEOs reported that their companies have performance based contracts with many of their clients.
- Continued restructuring of the industry. "The last few years have caused global third-party logistics providers to reconsider the structure of their businesses within a shifting industry," Gallick noted.
- Focus on rebuilding the workforce, with more emphasis on part-timers. Twenty-seven CEOs reported taking steps to rebuild their workforces, but many are placing more emphasis on using part-time employees.
- Both North American and European heads listed identical top market dynamics: Those were price compression, the aftermath of the recession and the growing role of procurement in the 3PL selection process. The CEOs in the APAC region also placed price compression atop the list.
The average three-year regional 3PL industry growth projections were 7.8% for North America (same as 2009), 5.4% in Europe (4.9% in 2009) and 12.9% in APAC (11.7% in 2009.)
The 31 CEOs completed the surveys via an Internet-based questionnaire during the summer of 2010. Companies participating included: Cardinal Logistics, DSC Logistics, DHL Exel Supply Chain, Genco Supply Chain Solutions, Kuehne+Nagel Logistics, Landstar, Menlo Logistics, Panalpina, NYK Logistics, Penske Logistics, Ryder Integrated Logistics, Schenker, Schneider Logistics, Transplace, UPS Supply Chain Solutions, UTi Integrated Logistics, Caterpillar Logistics Services, CEVA Logistics and Wincanton.
To view the study click here.
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