Third Party Logistics Faces Uncertain Future

READING, PA-Third-party logistics providers say they face an uncertain future as a result of the global recession. According to the 16th annual survey of 3PL CEOs by Penske Logistics, the industry faces lower growth projections, further pricing compression and an increase in “reverse globalization.”

“This year’s survey results underscore the caution and anticipation felt by 3PL executives as they wait for signs of a global economic recovery,”says survey author Dr. Robert Lieb, professor of supply chain management at Northeastern University in Boston. “Yet, despite bearish growth projections and acknowledgment that consolidation, pricing pressures and operational reductions were, and may continue to be, necessary adjustments, the opportunities for improved collaboration with customers, expansion into emerging markets and the possible addition of new management talent have many excited about the next several years.”

The survey analyzes responses from 35 3PL company CEOs in North America, Europe and the Asia-Pacific region. Companies surveyed generated approximately $64 billion in revenue in 2008. Results varied significantly by region, but all regions anticipate a worse performance this year than last. For example, one-year company revenue growth projections were 6.9% for North America compared to 12.6% in ’08, -3.3% for Europe compared to 10.8% in ’08) and 12.9% for Asia-Pacific compared to 21.4% in 2008. One-year industry revenue growth projections averaged 3.5% for North America compared to 9% in ’08, -1.4% for Europe compared to 7.3% in ’08) and 10.7% for Asia-Pacific compared to 11.2% in ’08.Respondents, however, projected generally stronger growth for subsequent years. Average three-year growth projections stood at 11.8% for North America and 8.7% for Europe, though only 16.7% for the Asia-Pacific region. Average three-year industry growth projections were 7.9% for North America, 4.9% for Europe and 11.7% for Asia-Pacific.