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Kn World Trade Global 3 Pl 0902 Reprint
Kn World Trade Global 3 Pl 0902 Reprint
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Kn World Trade Global 3 Pl 0902 Reprint


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  • 1. SEARCHING FOR A Global 3PL L broader coverage with a mix of package ooking for a one-stop global and logistics solutions. These larger logistics service? Is there one freight forwarding 3PLs are migrating available? While there is no quickly to software solutions like G-Log one company for Wal-Mart, with universal track-andtrace plus there are global solutions. It’s a ques- strong event management. The overall tion of size. There are global solutions visibility of these Web-based solutions for smaller companies and small gives the 3PL the ability to see every- shipments. For companies with cus- BY RICHARD ARMSTRONG thing and manage exceptions. tomers in Europe and a few major of value-added services goes on. A third group of companies includes Asian nations, there are individual The major shortcoming of this high those built primarily in the United 3PLs who can supply a complete solu- quality service is that it normally stops States as 3PLs who are expanding to tion. For package shippers there are at 108 inches and 70 pounds. Less- meet the European and Asian needs of true global solutions. their customers. Companies like FedEx and UPS now serve 99 percent than-truckload, less-than-container Ryder, Menlo and CH Robinson have of the global GDP DHL has nearly the . load and full load shipments don’t get enough overseas locations to handle same reach. In short, the major pack- the same service. The lower hundred- the needs of North American compa- age integrators cover the globe. Key ele- weight costs of larger shipments have nies operating in a smaller global ments of these services include a wide not traditionally allowed room for all range. Many of these companies fall range of value-added services for those of the value-added activities that pack- outside of the Fortune 200. Their total who need more than transportation age shipments receive. Nor have trans- number of shipments per day is in the (see Table 1 on page 30). Most impor- portation consumers demanded them. hundreds or at most a few thousand. tant of these services is the ability to But the demand for services glob- Optimizing transportation networks of function as a lead logistics provider or ally on larger shipments continues to this size is a standard process for the 4PL and have very good information intensify. 3PLs in this group. technology solutions. The major pack- Major players like Danzas/AEI, TPG, The software threshold for most of age integrators make global tracking Exel, and Kuehne & Nagel have moved these companies is i2’s suite of trans- and tracing, customs clearance and beyond freight forwarding to acquire portation management modules. Ryder, returns easy. They will warehouse and more supply chain management capa- Penske, and northAmerican Logistics control inventory. UPS Capital has a bilities to cover global networks. Exel have built strong transportation net- major service offering for which it will serves 90 percent of the world’s GDP. work capabilities around i2’s offerings. buy and finance inventory. And the list Danzas/AEI and TPG have even WORLD TRADE MAGAZINE, SEPTEMBER 2002 WWW.WORLDTRADEMAG.COM
  • 2. Global 3PL logistics operations have TABLE 2. TABLE 1. Profitability and Revenue for their own profitability. 3PL Value-Added Services 12 Major Logistics Companies CH Robinson has better - 4PL/Lead Logistics Provider financial results than any NET REVENUE - Consulting PROFITABILITY ($ BILLIONS) other 3PL. CHR has oper- - Information Technology CH Robinson 19% .5 ations in Europe but - Inventory/Vendor Management Expeditors Int. 16% .6 needs to make a move in - Manufacturing and Support UPS 10% 30 international freight for- - Transportation Planning Kuehne & Nagel 9% 1.5 warding. Like Expeditors, Deutsche Post 5% 31 it does what it does very - Transportation Execution TPG 5% 10 well, but will that be - Carrier Management Penske 5% 1.2 enough in 5 years. - Customs Brokerage DHL 4% 6 Nippon Express’ results - Kitting/Pick & Pack FedEx 3% 21 are indicative of the gen- - Call Centers Exel 2% 6.5 eral problems with the - Reverse Logistics Nippon Express -2% 14 Japanese economy. - Installation/Removal Ryder -2% 1 Nippon needs to be more - Special Commodities Handling APL -3% .5 global and open. Nippon has the additional problem be necessary to make DPWN a con- of being a major midsized logistics These companies are using the i2 appli- tinuing long-term global threat to its company. Midsized companies need to cations for Europe as well. Menlo has get bigger or smaller. They do not sur- competitors. developed its own solution—LMS. Exel also continues to emphasize its vive as markets grow and become more In searching for a global provider, a turnover as revenue. The revenue figure unforgiving. major consideration is its financial sta- The global market is evolving. As in Table 2 is inflated by more than $2 bility. Strong profitability is a good billion in purchased transportation this quick look at service offerings indicator of quality logistics opera- costs. Exel does not report its net rev- shows, there are choices available tions. The financial results for the enues. As a result, Exel looks larger and now based on size considerations. global 3PLs mentioned above are very The financial results indicate that a less profitable than it really is. mixed (see Table 2). How well off these The strongest financial results few have a much better chance than companies are now is an important come from UPS, Expeditors, CH most of developing into the one-stop indicator of their suitability as partners Robinson and Kuehne & Nagel. UPS global providers many companies are going forward. Several of the players makes its money in the package busi- looking for. WT need to show marked improvement. ness. Its logistics operation is nearly Danzas/AEI is part of Deutsche $2 billion in net revenues but unprof- Richard Armstrong is a transportation consul- Post World Net. DPWN has had diffi- itable. However, UPS has a history of tant who specializes in supply chain evaluation culty in finding the formula for pro- making good on its acquisitions. We and outsourcing. He is the publisher of, “Who's ducing profits outside of its mail expect UPS Logistics to follow the Who in Logistics?—Armstrong’s Guide to Global monopoly in Europe. It has subsi- same path with Fritz and other logis- Supply Chain Management.” He has more than dized its European package opera- tics purchasers. But, Expeditors and 20 years’ experience as an educator, analyst and tions from its mail profits and is being Kuehne & Nagel are better operations motor carrier executive.Dick serves on the boards forced to change this practice by the at this time. European Union. The pieces of the of several companies including the Institute of Kuehne & Nagel has made three Logistical Management. He is licensed to prac- Danzas/AEI merger are now inte- important moves over the last two tice before FMCSA and FMC. His publications grated. The whole needs to restore the years. It acquired important access in cover logistics, transportation operating effi- profitability that existed in the parts the Asian market by selling 20 percent ciency and DOT regulations. before they were combined. of its stock to SembCorp based in Sin- DHL reports only turnover in its gapore. It then purchased USCO, financial results. If purchased trans- which was one of the most profitable portation were eliminated, DHL would and well run U.S. warehouse-based be about half the size it reports. DPWN 3PLs. Finally, it became Nortel’s global has acquired about 75 percent of DHL. lead logistics provider this spring. Visibility into DHL’s actual financial TPG has also done well with its picture may improve as a result. DHL’s acquisitions. CTI brings decent mar- lack of financial clarity should be an In North America: 888-848-USCO gins and a strong background in issue for U.S. companies used to the automotive logistics, a TPG global financial visibility of UPS and FedEx. Outside North America: +41-1-7869-638 specialization. TPG’s postal opera- Over the next one to three years, Or visit us at tions are still the cornerstone, but its success by Danzas/AEI and DHL will