John Pattullo from CEVA Logistics; ‘Innovation, Acquisitions & the Economic Outlook’
CEVAs Pattullo gives upbeat assessment of logistics market prospects29/Nov/2010 by John Manners-Bell, CEO of Transport Intelligence At Eyefortransports recent 8th European 3PL Summit in Brussels, John Pattullo, CEO of CEVA Logistics spoke on stage with Jon Bumstead of Neutral Consulting about his views on the state of the industry and its prospects for the future. Bumstead opened the interview by asking CEVAs CEO how his business was performing. Pattullo commented that he was very pleased with how things were progressing and pointed torecord profitability in the last quarter – he was certainly happier than a year before. In factoverall Pattullo gave a very upbeat assessment of the market environment. He said theeconomy was no longer in recession although few CEOs or analysts had the courage to speakpositively for fear of talking up companies. He made reference to recent encouragingeconomic data from the United States and highlighted China and Indias role in driving theglobal economy.He went on to say that he anticipated growth in the year ahead for the logistics market, albeitat a steady rather than dramatic rate. In his opinion high levels of debt, which many countrieshad built up, would not inhibit growth, although it would make the global economy morevulnerable to threats posed by crises in markets such as Ireland and Greece.When asked whether general economic development would be sufficient to power growth inhis company, he replied positively. He believes that this growth would be driven bycontinued out-sourcing of logistics services, trade liberalization and global sourcing.However he warned that increasing levels of protectionism in some markets could inhibit thisgrowth.Turning to mergers and acquisitions, he said that he believed that in theory the logisticsindustry should see increased consolidation due to existing high levels of fragmentation.However he commented that many acquisitions in the past had not delivered shareholdervalue, and he thought that as a result there would not be much activity in the next 2-3 years.The exception to this would be the development of Asian companies into global players, ledby Toll, the Australian-based logistics provider followed by Chinese-owned companies.There may also be acquisitions which added real end-to-end supply chain capabilities toexisting logistics products.Turning his attention to the issue of innovation, he admitted that there was a perception thatlogistics providers lacked the ability to develop new ideas which added value to their clientssupply chain operations. He countered that low margins and open book contracts were abarrier to innovation – the latter providing a disincentive to logistics companies as all benefitswere passed on to the client. He also stated that there was a risk that providers could becomecheap labour shops as their services became increasingly commoditised.One way of preventing this would be to encourage a higher caliber of employee to theindustry. Pattullo suggested the creation of a new profession, Supply Chain Engineer, wouldhave a better chance of attracting and keeping top talent. However he commented that it was
easier getting finance for mergers and acquisitions than it was obtaining investment forresearch and development.In conclusion Pattullo stated that he was very upbeat about the prospects not just for his owncompany but also for the sector as a whole.Source: Transport Intelligence, November 29, 2010(c) 2010 TI Briefing. All rights reserved. Republication or redistribution, including byframing or similar means, is expressly prohibited without prior written consent. TI Briefing isa service from Transport Intelligence Ltd. Transport Intelligence shall not be liable forerrors or delays in the content, or for any actions taken in reliance thereon.