Incorporating insights from 20 CEOs in North America, 10 in Europe and nine in the AsiaPacific
region, this year's research showed some of the lowest industry revenue projections ever seen in the
history of the surveys. Sponsored by Penske Logistics, the surveys found the "greening" of supply
chains and the 3PL industry, as well as continued pricing pressures among the top industry trends,
and cited rising fuel prices and a slowgrowth
economy as key challenges facing the industry. A trend
toward reverse globalization was also noted.
"While nearly one-fourth
of CEOs said that their organizations failed to meet 2007 revenue projections,
almost 90 percent reported profitability last year," said Lieb. "Despite rising prices at the pump and a
stagnating economy, these numbers indicate that global 3PL efforts to reduce costs, optimize
networks through technological advances, and intensify the focus on customer selectivity are
working - we will definitely see a continued focus in these areas well into 2009."
"These are certainly exciting, yet challenging, times for third party logistics providers as we attempt to
predict, analyze and adapt to the various forces that will affect our customers' supply chains in years
to come," said Gallick. "The results of the 2008 survey shed an interesting light on the continued
maturing of the 3PL industry while touching upon the new supply chain influences that were barely
visible only a year ago."
Further insight into this year's research findings is outlined in more detail below:
Softer revenue projections
Though CEOs continue to be bullish about revenue growth prospects for their companies and the
industry as a whole, projections have become increasingly conservative during the past several years,
particularly in Europe.
- One-year
revenue projections for North American companies were reported to be 12.6
percent; in Europe 10.8 percent; and in the AsiaPacific
region, 21.4 percent. The three-year
company revenue projections are 13.4 percent in North America, 10 percent in Europe and
23.1 percent in AsiaPacific.
more
- One-year
industry revenue projections averaged nine percent in North America, 7.3 percent in
Europe and 11.2 percent in AsiaPacific.
The average three-year
industry projection for North
America is 9.8 percent, 6.5 percent in Europe and 12.9 percent in AsiaPacific.
- Operating revenue in AsiaPacific
continued to grow in 2007. However, approximately 25
percent of North American and 30 percent of European companies surveyed did not meet
revenue growth targets.
- In North America, 19 of 20 companies reported profitability in 2007, while only two European
companies reported they either broke even or were unprofitable.
- There are mixed perspectives about the profitability of the industry in AsiaPacific,
with 22
percent of CEOs indicating they believe the industry either broke even or lost money during
2007.
Reverse globalization
Due to rising costs of labor, the impact of high fuel prices on shipping costs, and continued concern
around government regulations in Asia, 16 of the 39 CEOs involved in the surveys indicate some of
their customers are changing their sourcing and manufacturing strategies and are moving operations
away from Asia and "closer to home."
- 11 of 20 North American executives reported seeing a shift in customers pulling manufacturing
back from Asia to North or Central America In Europe, 20 percent of CEOs reported that
some customers have moved operations from Asia to Eastern Europe. Similarly, in AsiaPacific,
one-third
indicated that a number of customers have shifted manufacturing out of the
region.
Expansion in developing markets
Hand-in-hand
with reverse globalization, 3PLs and customers are gravitating toward expanding into
nearby emerging markets where the cost of labor, shipping and land is less expensive.
- North American logistics providers are increasingly turning to Mexico and Latin America.
- In Europe, CEOs are focusing on expanding services into Eastern Europe and Russia.
- Though limited by infrastructure challenges, CEOs reported 2007 revenue growth in India of
48 percent, with a projected growth rate of 31 percent for the next three years.
- Growth opportunities are emerging in other AsiaPacific
countries such as Japan, Thailand,
Cambodia and Vietnam.
"Greening" of the supply chain
The 3PL industry has made significant strides in establishing environmental responsibility as part of
broader corporate visions, with companies reporting numerous internal changes in response to these
concerns. However, to date, the CEOs involved in the surveys believe these "green" capabilities are
relatively insignificant in winning new business or retaining existing customers.
- "Green" initiatives and environmental sustainability are considered unimportant when it comes
to attracting or keeping 3PL customers. In Europe, 100 percent of respondents said "green" efforts are insignificant in winning and keeping business; in North America, 95 percent; and in
the AsiaPacific
region, 89 percent.
- Most CEOs indicated they are increasing spending on "green" initiatives primarily as a
corporate social responsibility initiative as opposed to customer demand.
- Though 79 percent of all companies surveyed have a formal sustainability program, 87
percent have a formal sustainability statement and 74 percent have appointed a formal leader
of sustainability, less than three percent of customers globally have performance metrics for
their 3PLs that track the 3PL's ability to help customers achieve its "green" goals.
Downward pricing pressure
As commoditization pressures mount in the 3PL industry, the role of procurement in contract
negotiations continues to rise, and fuel costs increase, the companies surveyed cited downward
pricing pressures as a continuous, major concern for the industry and noted a growing trend in
branding as a way to differentiate.
- 12 CEOs in North America, six in Europe and five in AsiaPacific
cited downward pricing
pressures as one of the top three problems faced by 3PLs.
- 92 percent of companies involved in the three surveys reported pursuing branding initiatives in
the past year to help differentiate their companies from the competition.
Survey Design
CEOs completed 39 surveys via an Internetbased
questionnaire during the summer of 2008.
Companies participating in the annual survey included: Cardinal Logistics, Caterpillar Logistics
Services, CEVA, DSC Logistics, DHL Exel Supply Chain, Genco, Kuehne & Nagel Logistics, Landstar,
Menlo Logistics, NYK Logistics, Panalpina, Penske Logistics, Pittsburgh Logistics, Ryder, Schenker,
Schneider Logistics, Transplace.com, UPS Supply Chain Solutions, UTi, Wincanton and YRC
Logistics. In total, these companies are responsible for generating approximately $60 billion in
revenue.
In addition to those highlighted above, the survey identified other trends, including industry
consolidation, opportunities and challenges in the 3PL industry, and the major changes expected in
each of the three geographies examined during the next three years. For access to the full Executive
Summary please visit www.gopenske.com/newsroom/.
About Northeastern University's College of Business Administration
Northeastern University College of Business Administration, 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 College credits its success to
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The College is highly ranked by several prestigious publications. BusinessWeek ranks the College
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information about Northeastern University's College of Business Administration, visit
http://www.cba.neu.edu
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 throughout the world. Penske Logistics delivers value through design, planning and execution in transportation, warehousing, international
freight forwarding and carrier
management. Visit www.PenskeLogistics.com to learn more.