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  • The North American Third-Party Logistics Industry in 2011:The Provider CEO Perspective
  • Dr. Robert C. Lieb and Dr. Kristin J. Lieb

Introduction

The global marketplace for third-party logistics (3PL) services stabilized somewhat during 2010, reflecting improving economic conditions. Larger 3PLs again focused on servicing an expanding market, while their financial situation generally improved. Service offerings expanded, many of those companies began experimenting with the use of social media tools, and it appeared that a period of business as usual had begun.

But then the Japanese earthquakes and tsunami interrupted this business-as-usual activity, stalling supply chains around the world. That disaster not only impacted the customer base of many of the largest 3PLs in the industry, but also the logistics service providers themselves.

This article, which is based on a survey of the CEOs of twenty large 3PLs serving North America, was conducted in mid-2011 and focused on the state of the North American marketplace for 3PL services at that time. It is the eighteenth iteration of this annual survey. The authors also conduct similar annual surveys in Europe and the Asia-Pacific region.

The 2011 survey focused on a variety of issues, including the key marketplace dynamics in the North American 3PL industry, the industry's [End Page 353] response to the earthquake/tsunami in Japan, the industry's commitment to environmental sustainability, its expanded use of social media tools, and a wide range of other aspects of the industry's current status and future prospects in the region.

The CEO of each of the companies included in the survey was contacted by telephone or email and asked to participate in a web-based survey. An initial target group of twenty of the fifty largest 3PLs in North America was contacted, and the CEOs of all twenty companies agreed to participate. However, only seventeen CEOs subsequently completed the survey online. The following companies participated in the 2011 North American survey:

  • Agility Logistics

  • Cardinal Logistics

  • CAT Logistics

  • DSC Logistics

  • DHL Exel Supply Chain

  • Genco

  • Kuehne + Nagel Logistics

  • Menlo Worldwide Logistics

  • MIQ Logistics

  • Yusen Logistics

  • Penske Logistics

  • Schenker

  • Schneider Logistics

  • Transplace

  • UPS Supply Chain Solutions

  • UTi

  • Werner Logistics

Some questions were not answered by all CEOs due to individual company policies concerning financial disclosure. Further, in a number of instances, average industry data are presented, but there is often substantial variability around those averages. That variability reflects a number of factors, including differences in company strategies, operating policies, and market segments served.

Results

Revenues and Profitability

The 2011 North American survey addressed several 3PL provider revenue and profitability issues, and each is discussed below. [End Page 354]

Annual Revenues

Seventeen companies reported revenue data in responding to the survey. Collectively, these companies generated revenues of approximately $19 billion in North America during 2010, with four companies reporting 2010 revenues in excess of $1 billion. The annual revenues for 2011 survey participants averaged $1.114 billion.

Success in Meeting Growth Projections

The CEOs were asked about the success of their companies in meeting their North American revenue growth projections during 2010. Three CEOs reported their companies exceeded company revenue growth projections for the year, twelve indicated that their companies met their projections, and two reported their companies failed to meet their projections. Reflecting improved economic conditions, these results were quite different than those reported in the 2010 survey in which nine of the sixteen companies reported that they failed to meet their projections during 2009.

Company and Industry Profitability

The CEOs were next asked to categorize the profitability of their companies' North American business units during 2010. Three CEOs said their companies had been very profitable, twelve said marginally profitable, and one reported his company had broken even. None reported their companies had been unprofitable.

CEO views were also solicited concerning the profitability of the North American 3PL industry as a whole in 2010. Thirteen believed the industry was marginally profitable, and four believed the industry had broken even for the year. In contrast, in the 2010 survey, seven of the sixteen respondents categorized the industry as marginally unprofitable during 2009.

Mergers and Acquisitions

While there has been a worldwide consolidation movement in the 3PL industry in recent...

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