Emerging market 3PLs, emerging industry leaders
U.S. and European companies dominate the world's top 10 third-party logistics providers, but an outsourced logistics specialist from an emerging economy will likely join the list within the next decade, John Pattullo, chief executive officer of CEVA Logistics predicted last week.
'As the economy globalizes, it's inevitable that there will be Chinese, Brazilian or Indian 3PLs that become important global providers. It's bound to happen in the next 10 years,' he told AmericanShipper.com, elaborating on a comment he made during a panel discussion at the Council of Supply Chain Management Professionals annual conference in San Diego.
U.K.-headquartered CEVA Logistics is the fifth-largest global 3PL based on 2009 gross revenue ($7.64 billion), according to research and consulting firm Armstrong & Associates.
Pattullo said a company like Anji Logistics in China, with which CEVA has a joint venture relationship, or one of the top five Brazilian logistics service providers are candidates to burst into the top tier. An Asian or South American 3PL will probably move from its home base through acquisitions, he added.
The emergence of competitors from other parts of the world is a healthy development, Pattullo said, 'because it will bring more diversity of approach to the market. It helps you raise your own performance.'
DHL Supply Chain and Global Forwarding is the largest 3PL with $32.5 billion in gross revenue last year. In 2008, the top 10 3PLs were all from the United States and Europe, except for 10th-place Kuwait-based Agility Logistics. Last year, Nippon Express Co. Ltd. ranked among the largest 3PLs, but the company is not considered a truly global actor. It is Japan's largest domestic transportation company and 87 percent of its revenue is from domestic Japanese operations, according to Armstrong's Who's Who in Logistics guide.
Swiss-based logistics provider Panalpina would be in the top 10 if Nippon Express is excluded.
The emergence of a 3PL power from another part of the world is not guaranteed because most large corporations still want to do business with a western 3PL, said Tom Escott, former president of Schneider Logistics, in an interview.
'They will only emerge if companies that are native to China, India and Brazil are large enough global players to then drive the growth of a native 3PL to that scale. I believe western multinationals will by far prefer western multinational 3PLs and they have choices like DHL, Maersk (Damco), UPS and FedEx. And in the near term I don't see them placing (much) business with a Chinese or Brazilian 3PL because if you need help in China you've got choices of people who truly understand western approaches to quality, lean, customer service and totally above board business dealings,' said Escott, who now runs his own consulting firm, Hudson Logistics in Suamico, Wis.
'And as long as those choices are available, the western multinationals will always go that route.' ' Eric Kulisch