Results for supply chain survey by third party logistics providers (3PLs)

October 8, 2008

Results from the "2008 3PL Provider CEO Perspective" surveys were presented recently by Dr. Robert Lieb, Professor of Supply Chain Management at Northeastern University, and Joe Gallick, Senior Vice President of Sales for Penske Logistics, at the Council of Supply Chain Management Professionals Annual Global Conference in Denver.

Incorporating insights from 20 CEOs in North America, 10 in Europe and nine in the Asia-Pacific 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 slow-growth 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 Asia-Pacific 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 Asia-Pacific.
One-year industry revenue projections averaged nine percent in North America, 7.3 percent in Europe and 11.2 percent in Asia-Pacific. The average three-year industry projection for North America is 9.8 percent, 6.5 percent in Europe and 12.9 percent in Asia-Pacific.
Operating revenue in Asia-Pacific 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 Asia-Pacific, with 22 percent of CEOs indicating they believe the industry either broke even or lost money during 2007.