Penske Presents: Surveys Finds 3PLs Hitting Stride Amid Economic Uncertainty

SAN ANTONIO, Sept. 22, 2014 – Today, the 21st Annual Surveys of Third-Party Logistics Provider CEOs, sponsored by Penske Logistics, revealed that 3PL CEOs are confident about the current state and future revenue growth of their companies and the regional 3PL industries. The annual surveys, which this year included the CEOs of 27 of the world's largest 3PLs, found that approximately 75 percent of the companies involved in the surveys were profitable in 2013. North American and Asian-Pacific CEOs forecasted three-year company growth of 10.77 percent and 16.2 percent, respectively. European CEOs forecasted 8.33 percent growth over the same period.

The CEOs were also asked to project regional 3PL industry revenue growth rates for the next three years in all three regions. North American CEOs projected average revenue growth rates of 6.54 percent; European CEOs projected average revenue growth rates of 4.17 percent; and CEOs in the Asia-Pacific region projected average revenue growth rates of 10.4 percent.

The surveys are being presented today at the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference by surveys author, Dr. Robert Lieb, Professor of Supply Chain Management at Northeastern University's D'Amore-McKim School of Business, and Joe Carlier, Senior Vice President of Sales for Penske Logistics. The findings analyze responses from 27 major third-party logistics company CEOs across North America, Europe and Asia-Pacific whose companies generated approximately $46 billion in revenue in 2013. The report was co-authored with Dr. Kristin Lieb, Associate Professor of Marketing Communications, Emerson College. The survey is underwritten by Penske Logistics, a leading provider of third-party logistics services.

An encapsulation of key survey findings are as follows.

3PL Revenue Growth Projections
Nearly three quarters of these companies either met or exceeded their regional revenue projections in 2013. That represented a major improvement over their performance in 2012.

Near-Shoring Trend Continues
In the North American region, the survey revealed that near-shoring activities -- e.g., customers shifting manufacturing activities from China to Mexico -- is growing, with over 75 percent of North American CEOs reporting that some of their customers have shifted some of their operations from China to Mexico. This is impacting the revenue streams of 3PLs with nearly one-third of North American respondents reporting increased volume and revenues as a result of near-shoring. Rising Chinese wages, the benefits of a shorter supply chain from Mexico to the U.S., and increasing transportation costs have driven this near-shoring trend. In addition, several CEOs also remarked that Mexican government incentives have contributed to the movement.

“Near-shoring manufacturing operations to Mexico are often mirrored by an increased 3PL presence,” stated Carlier. “Penske Logistics, which has operated in Mexico for nearly 20 years, employs more than 1,300 associates in the country. Companies will look to 3PLs to optimize their services from warehousing to cross-border shipping in Mexico; those that have in-market experience navigating the nuances and complexities of the region will reap the most benefits.”

E-Commerce Growth
CEOs in all three regions noted not only the substantial growth in e-commerce over the past year, but also the long-term growth potential of that marketplace and the opportunities that growth might provide 3PLs. Nearly all of the 3PLs already support some e-commerce customers with services ranging from warehousing through fulfillment and reverse logistics.

“The 3PL industry has real opportunities to participate in the growth of both B2B and B2C commerce,” said Dr. Robert Lieb. “However, to do so on a much larger scale will involve substantial investments on behalf of those companies. The e-commerce marketplace is very competitive and companies such as Amazon have also moved aggressively in providing logistics services for companies selling their products online. There is also an element of risk in that marketplace due to the prevalence of small online retailers and their financial vulnerability.”

Supply Chain and Logistics Industry Trends and Insights

  • Capacity Issues in North America: Nearly 70 percent of North American 3PL CEOs reported capacity shortages across modes, including: truckload, LTL, intermodal and rail. The capacity crunch has led to higher rates and longer transit times with 3PLs struggling to meet on-time service goals and cost targets.
  • Mergers and Acquisitions: These companies project relatively little revenue growth related to mergers and acquisitions during the next three years. The primary reasons cited by CEOs for this are a dearth of attractive candidates, economic uncertainty and integration issues experienced during prior acquisitions.
  • Sustainability: Companies remain committed to environmental and sustainability issues, but the emphasis has shifted to maintaining and expanding existing sustainability programs (55 percent) over launching new programs (29.6 percent).
  • Growth in Eastern Europe: Five of the eight European CEOs surveyed operate in Russia, and they cited growing opportunities to support healthcare and retail industries there. However, political turmoil could limit 3PL investment and growth.
  • Amazon and the 3PL Industry: The 3PL CEOs acknowledged the impact that Amazon has had on the field of supply chain management, particularly in terms of raising customer service level expectations and focusing on shipment visibility. Many of the CEOs noted that in a number of markets Amazon is not only a customer of theirs, but also a competitor in the market for logistics services. They also suggested that Amazon might become a more significant competitor because of scale of the logistics infrastructure the company has built.

Survey Design
Twenty-seven CEOs of large third-party logistics companies across North America, Europe and Asia-Pacific completed surveys via an Internet-based questionnaire during the summer of 2014. Companies participating in the annual survey included: Agility Logistics, Cardinal Logistics, DB Schenker, DHL Excel Supply Chain, DSC Logistics, Kuehne + Nagel Logistics, Inc., Menlo Logistics, MIQ Logistics, Neovia Logistics, Penske Logistics, Rhenus Contract Logistics, Transplace, UPS Supply Chain Solutions, UTi Integrated Logistics and Werner Logistics.

About Penske Logistics
Penske Logistics is a wholly owned subsidiary of Penske Truck Leasing. With operations in North America, South America, Europe and Asia, Penske Logistics provides supply chain management and logistics services to leading companies around the world. Penske Logistics delivers value through its design, planning and execution in transportation, warehousing and freight management. To learn more visit www.PenskeLogistics.com. Penske Logistics on social media: Move Ahead Blog, Facebook, Twitter, LinkedIn, Google+ and YouTube.

About D'Amore-McKim School of Business
Northeastern University's D'Amore-McKim School of Business, established in 1922, provides its students--undergraduate, graduate and executive--with the education, tools, and experience necessary to launch and accelerate successful business careers. The school credits its success to expert faculty, close partnerships with the business community, and its emphasis on rigorous academics combined with experiential learning. The school is nationally ranked by several prestigious publications. Most recently, Bloomberg Businessweek ranked the school's undergrad business program at #25 in the U.S. and #1 for internships for the eighth consecutive year. Bloomberg Businessweek also ranks the full-time MBA program #51 in the nation's top U.S. MBA programs. The school's undergraduate supply chain management program is ranked seventh in the country by Gartner with respect to Value to Industry, and fifteenth in terms of overall program. For more information about the D'Amore-McKim School of Business, visit its award-winning website at http://damore-mckim.northeastern.edu/.