This post is from a press release sent to us regarding the recent survey of the 3PL industry. This survey continues to point towards the success 3PLs are having for their clients. As you know, the word 3PL conjures up over 50 shades of grey in the types of answers you will receive. For Cerasis, a 3PL is any company that provides technology or services to carry out any of the functions of the supply chain. There are some 3PLs who perform niche tasks, like Cerasis does with transportation management for over the road modes like LTL, Truckload, and small package. Then there are other types of 3PLs, like service supply chain solutions from our friends at Flash Global who serve the high technology sector for after sales service. Then there are some large 3PLs who do the full boat of services in the supply chain from fulfillment, technology, to customer satisfaction and everything in between.
No matter what type of 3PL there is, each brings value to their customers. In short, this survey is saying, among many other studies and reports, that those shippers who partner/outsource to a 3PL are staying competitive because the shipper is able to bring on immediate expertise through the use of a 3PL and the shipper then is able to compete and stay on top of all the latest changes in logistics capability. If you are still managing functions like transportation management in house, it may be time to start looking towards a 3PL in order to continue to scale your company without adding unnecessary costs as you grow.
Today, the 22nd Annual Surveys of Third Party Logistics Provider (3PL) CEOs, sponsored by Penske Logistics, revealed that 3PL CEOs are confident about the current state and future revenue growth potential of both their companies and the regional 3PL industries.
The annual surveys, which this year included the CEOs of 30 of the world’s largest 3PLs, found that more than 80 percent of the companies surveyed were profitable in 2014. CEOs from North America and Asia-Pacific forecasted three-year revenue growth averages for their companies of 7.86 percent and 11.50 percent, respectively. European CEOs forecasted 5.33 percent growth over the same period.
CEOs across North America, Asia-Pacific and Europe were also asked to project regional industry revenue growth rates for the next three years in each of their regions. North American CEOs projected average industry revenue growth rates of 5.92 percent; European CEOs projected average industry revenue growth rates of 4 percent; and CEOs in the Asia-Pacific region projected average industry revenue growth rates of 5.75 percent.
The surveys are being presented today at the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference by their 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 Global Sales for Penske Logistics. The findings analyze responses from 30 major 3PL CEOs across North America, Europe and Asia-Pacific whose companies generated more than $40 billion in revenue in 2014. 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.
“Last year, the logistics industry experienced one if its best years in many years and 2015 is on-track to be a good year as well,” said Marc Althen, President of Penske Logistics. “The 3PL industry continues to deliver value, savings and efficiencies by collaborating closely with customers and adjusting to rapidly changing economic conditions, business challenges such as capacity and talent shortages, as well as consumer online shopping needs that demand new and agile supply chain and fulfillment models.”
An encapsulation of key survey findings follows.
Only seven of the 30 CEOs reported significant M&A activity by their companies during the past year. Following the onset of the global recession in 2008 there were relatively few large –scale acquisitions in the 3PL industry. That has changed dramatically since early 2014. Since that time there have been ten major acquisitions by 3PLs totaling $18 billion. This is leading to a significant restructuring of the industry in many markets, and will require substantial effort on behalf of those 3PLs to integrate those operations post-acquisition. It will also result in significant brand confusion in the marketplace that will have to be addressed by those companies. Many of the CEOs involved in this year’s surveys believe this recent wave of M&A will lead to defensive acquisitions by other 3PLs.
CEOs across North America, Europe and Asia-Pacific agree that the need for M&A stems from four key factors: 3PLs experiencing market pressure to expand service offerings; an increased desire to offer one-stop solutions to customers; the need to drive scale in specific markets; and a desire to expand their geographic footprint. North American CEOs predicted that 6.54 percent of their revenue growth over the next three years will come from M&A activity. European CEOs projected that figure at 3.67 percent while CEOs from the Asia-Pacific region predicted that 4 percent of their revenue growth during that period would be M&A related.
Survey respondents cited significant changes in the e-commerce marketplace in the past year, referencing strong growth, an increased focus on next-day delivery and rapid expansion of international e-commerce.
In both North America and Europe, CEOs reported that Amazon had a particularly significant impact on supply chains and the e-commerce industry in their regions, highlighting the company’s focus on same-day delivery and its developing relationships with 3PL companies for last-mile delivery. On average, e-commerce now accounts for an average of 11.85 percent North American 3PLs’ revenue, and CEOs predict it will increase to 20.85 percent in three years. On average e-commerce revenues now account for 5.33 percent of European respondent revenues, and that percentage has been projected to grow to 9 percent in three years. Growth inAsia-Pacific’s e-commerce market was aided by the region’s massive e-commerce provider, Alibaba – a company Asian-Pacific CEOs believe might become a significant competitor for 3PL business in the region. For all three regions surveyed, CEOs said that the expansion of 3PL technology support for e-commerce was critical for the industry’s ongoing success.
“Amazon’s recent actions are impacting e-commerce in a major way,” said Dr. Robert Lieb, Professor of Supply Chain Management atNortheastern University’s D’Amore-McKim School of Business. “The company’s market dominance and huge popularity with customers creates a great opportunity for 3PLs to assist Amazon, and ensure customers get the goods they need – especially during peak e-commerce seasons.”
Thirty 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 2015. Companies participating in the annual survey included: Agility Logistics, CEVA Logistics, Cardinal Logistics, Coyote Logistics, Genco, DHL Excel Supply Chain, DSC Logistics, Kuehne + Nagel Logistics, Inc., Menlo Logistics, MIQ Logistics, Nippon Express, Panalpina, Penske Logistics, Rhenus Contract Logistics, Transplace, UPS Supply Chain Solutions, UTi Integrated Logistics and Werner Logistics.
What are your thoughts on the growing 3PL industry and the use of 3PLs by shippers? Let us know in the comments below!
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