U.K. survey questions logistics consolidation benefits
A United Kingdom-based consultant says a recent survey finds disagreement between logistics companies and their customers over the benefits of consolidation.
“The belief that the major logistics companies are meeting their customers’ needs by the recent spate of mergers to form mega-logistics service providers is not shared by the customers they serve,” says SCALA Supply Chain and Logistics Consulting, which undertook a survey in conjunction with a recent conference.
“The significant finding is that logistics companies see benefits in growth through being able to provide a wider range of services; a more integrated service with further benefits from increased synergy; and operational cost benefits,” said John Perry, managing director of SCALA. “Unfortunately a large proportion of their customers do not see it that way.”
Though major logistics companies are growing, he said 91 percent of the customers responding used more than one logistics company. The three main reasons they gave for this were: no one company could provide the full range of services; different companies were better in different aspects or geographical areas; and from a strategic business perspective they would not want to move to a single company.
Perry said logistics providers and customers broadly agreed that future choice would be reduced as a result of the mergers and that there will be more cost pressure on the smaller contractors.
Just over two thirds of all companies had direct experience of the impact of the consolidation taking place in the marketplace. But while 97 percent of logistics companies said there had been client synergy benefits and 83 percent said this had resulted in operational cost reductions, only 24 percent of customers said they had seen synergy benefits and 28 percent said there were cost benefits.
“One of the main arguments for these mergers has been to bring about significant cost and service benefits for customers,” said Perry. “Why have they not materialized?”