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Global Third-Party Logistics Market Trends & Analysis

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Presentation on theme: "Global Third-Party Logistics Market Trends & Analysis"— Presentation transcript:

1 Global Third-Party Logistics Market Trends & Analysis
Updated Website: ©Copyright Armstrong & Associates, Inc. 1

2 About Armstrong & Associates, Inc.
Founded in 1980 Supply Chain Market Research and Consulting Services Over 19,400 Newsletter Subscribers Current Market Research: Who's Who in Logistics and Supply Chain Management – Americas Who's Who in Logistics and Supply Chain Management – International Over 350 Detailed 3PL Profiles; 6,000+ 3PL Customer Relationships “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” Targeted in-depth market research papers Articles & Press Coverage: American Shipper, Global Logistics & Supply Chain Strategies, Journal of Commerce, Logistics Management, Logistics Quarterly, Modern Materials Handling, Traffic World, Transport Topics, Wall Street Journal Consulting Services: Logistics Outsourcing, Benchmarking, Supply Chain Evaluation & Redesign, Strategic Planning, Mergers & Acquisitions, Expert Witness, Systems Evaluation & Selection Global Resources: U.S. Organization; Eric Xiang, Shanghai China; Latin America, Japan and South Korea Alliance Partners 3PLs – Updated 2 2

3 Updated A&A has reviewed over 100 distinct 3PL operations, some multiple times. 3 ©Copyright Armstrong & Associates, Inc. 3

4 Provider profile information and 3PL customer reviews
Updated Provider profile information and 3PL customer reviews 4 ©Copyright Armstrong & Associates, Inc. 4

5 Domestic and International Providers Connect the Global Supply Chain
“Connectivity” Manufacturing Ports Suppliers Sourcing Distribution Centers Carriers Customers Customs Repair Center MAYBE Eliminate 5 5

6 Top Global Fortune 500 Buyers of 3PL Services
49 53 51 42 42 41 Updated 39 35 36 32 31 30 30 29 6 6

7 Global 3PL Market Trends by Major Geographic Region
US$ Billions Updated Region / Year 2006 2007 2008 2009 2010 2011 CAGR North America $ 131.5 $ 142.9 $ 148.1 $ 128.1 $ 150.5 $ 159.9 4.0% Europe $ 143.6 $ 170.1 $ 171.3 $ 162.3 $ 145.7 $ 160.4 2.2% Asia Pacific $ $ 112.5 $ 117.9 $ 146.4 $ 165.7 $ 191.1 15.2% South America $ $ $ $ $ $ 30.6% Remaining Countries $ $ $ $ $ $ 11.8% 7 7 7

8 2011 Global Logistics Costs & 3PL Revenue (US$ Billions)
Region Country 2011 GDP¹ Logistics (GDP %) 2011 Logistics Cost 3PL Revenue % 3PL Revenue North America Canada 1,759.0 9.9% 174.2 8.4% 14.6 Mexico 1,185.0 14.9% 176.6 6.5% 11.5 United States 15,060.0 8.3% 1,249.8 10.7% 133.8 18,004.0 8.9% 1,600.6 10.0% 159.9 Europe France 2,808.0 9.2% 258.3 10.1% 26.1 Germany 3,629.0 301.1 30.4 Italy 2,246.0 9.4% 211.2 10.6% 22.4 Netherlands 858.3 8.1% 69.5 14.2% 9.9 Spain 1,537.0 144.4 13.6 United Kingdom 2,481.0 8.5% 210.9 21.1 Others 4,130.7 9.0% 371.8 36.9 17,690.0 1,567.2 10.2% 160.4 Asia Pacific Australia 1,507.0 10.5% 158.2 15.6 China 6,989.0 18.1% 1,265.0 7.0% 88.6 Hong Kong 242.4 21.9 11.4% 2.5 India 1,843.0 13.0% 239.5 5.7% 13.7 Japan 5,855.0 8.7% 509.6 8.8% 44.9 Singapore 266.5 23.9 11.7% 2.8 South Korea 1,164.0 104.7 11.1% 11.6 Taiwan 504.6 45.5 11.0% 5.0 836.1 89.4 7.2% 6.4 19,207.6 12.8% 2,457.7 7.8% 191.1 South America Argentina 435.2 12.6% 54.9 6.0% 3.3 Brazil 2,518.0 11.6% 292.1 8.2% 24.0 Venezuela 315.0 11.9% 37.5 5.9% 2.2 909.5 129.1 7.7% 10.0 4,177.7 12.3% 513.6 39.5 Remaining Regions/Countries 11,080.7 15.9% 1,761.8 3.7% 65.2 Total 70,160.0 11.3% 7,900.9 616.1 Adjusted for currency fluctuations, the global 3PL market grew by 4.9% from 2010 to 2011. Most global 3PL activity is within developed and developing geographic regions where services can be readily contracted for with providers. Physical infrastructure (roads, rail networks, shipping ports) and governmental regulation impact the logistics costs as a percent of overall economic activity in each country and region. Those countries with better infrastructure and fewer regulatory barriers have the lowest logistics costs as a percent of overall GDP. Updated 8 ¹CIA official exchange rate GDPs 8 8

9 Third-Party Logistics Provider (3PL) Gross Logistics Revenue
Top 25 Global 3PLs – 2011 2011 Rank Third-Party Logistics Provider (3PL) Gross Logistics Revenue (US$ Millions)* 1 DHL Supply Chain & Global Forwarding 32,160 2 Kuehne + Nagel 22,181 3 DB Schenker Logistics 20,704 4 Nippon Express 20,313 5 C.H. Robinson Worldwide 10,336 6 CEVA Logistics 9,602 7 UPS Supply Chain Solutions 8,923 8 Hyundai GLOVIS 8,588 9 DSV 8,170 10 Panalpina 7,358 11 SDV/Bolloré Logistics 6,785 12 Sinotrans 6,769 13 Toll Holdings 6,432 14 Expeditors International of Washington 6,150 15 DACHSER 5,925 16 Geodis 5,890 17 GEFCO 5,267 18 Norbert Dentressangle 4,980 19 UTi Worldwide 4,914 20 Hellmann Worldwide Logistics 4,687 21 Agility 4,410 22 Yusen Logistics 3,881 23 Wincanton 3,507 24 Caterpillar Logistics Services 3,465 25 GENCO ATC 3,372 3PL has been dominated by large European and U.S.-based 3PLs. Growing Asia-Pacific 3PLs, like Toll Holdings are experiencing above average recent growth. Updated The largest global 3PLs have operations in geographies representing over 90% of the world’s GDP. *Revenues are company reported or A&A estimates and have been converted to US$ using the average exchange rate in order to make non-currency related growth comparisons. 9 9 9

10 Top 25 Global ITM/Freight Forwarders – 2011
A&A Rank Provider Gross Revenue (US$ Millions) Ocean TEUs Airfreight Metric Tons 1 DHL Supply Chain & Global Forwarding 32,160 2,724,000 2,447,000 2 Kuehne + Nagel 22,181 3,274,000 1,073,000 3 DB Schenker Logistics 20,704 1,763,000 1,149,000 4 Panalpina 7,358 1,310,000 848,000 5 CEVA Logistics 9,602 783,378 550,000 6 Nippon Express 20,313 706,441 656,797 7 Sinotrans 6,769 7,979,000 397,200 8 Expeditors International 6,150 892,682 786,620 9 SDV/Bolloré Logistics 6,785 750,000 520,000 10 UPS Supply Chain Solutions 8,923 500,000 862,000 11 DSV A/S 8,170 727,861 262,362 12 Kintetsu World Express 3,321 550,377 1,131,444 13 Agility 4,410 490,000 14 Hellmann Worldwide Logistics 3,593 672,569 439,720 15 Pantos Logistics 2,412 1,625,098 216,653 16 UTi Worldwide 4,914 484,000 410,000 17 Toll Global Forwarding 6,432 145,000 18 Damco International 2,752 110,000 19 Yusen Logistics 3,881 450,000 337,130 20 Geodis 5,890 420,000 210,000 21 C.H. Robinson Worldwide 10,336 262,117 50,000 22 Hyundai GLOVIS 8,588 466,318 17,408 23 Kerry Logistics 2,060 620,000 173,000 24 Sankyu 2,689 710,000 18,060 25 DACHSER 5,925 321,000 Updated *Revenues are company reported or Armstrong & Associates, Inc. estimates and have been converted to US$ using the average exchange rate. Freight forwarders are ranked using a combined overall average based upon individual rankings for gross revenue, ocean TEUs and airfreight metric tons. 10 10 10

11 Transportation and Warehousing Services Dominate Demand
Updated Primary 3PL services provided are led by transportation management (23.7%), warehousing (19.4%) and value-added services (18.7%). 11 ©Copyright Armstrong & Associates, Inc. ©Copyright Armstrong & Associates, Inc. 11 11

12 3PL Gross Revenue by Industry 2005-2012E – Fortune 1000 (US$B)
Updated 9August2012 Major Industry Growth Automotive Consumer Goods Elements Food, Groceries Healthcare Industrial Retailing Technological Other CAGR 0.9% 4.7% 4.1% 6.5% 8.5% 7.1% 5.2% 5.3% 2.5% E CAGR 1.8% 4.6% 6.3% 8.4% 8.0% 5.1% 2.9% 12 12 12 12

13 U.S. 3PL Market 1996 – 2012E (US$ Billions)
1996 – 2011 CAGR = 10.3% Updated The U.S. 3PL industry has experienced a strong rebound from the economic downturn in For 2011, 3PL growth has been three times the growth in U.S. gross domestic product (GDP). With Asia cooling and Europe in decline, estimated growth for 2011 is 5.1% and 6.3% for 2012. 13 13

14 Trends in 3PL/Customer Relationships
% of Domestic Fortune 500 Companies using 3PLs Updated 14 14 14

15 Growth by 3PL Market Segment
2011 Gross Revenue (US$ Billions) Net Revenue CAGR % Change 2012E vs. 2011 Domestic Transportation Management 41.3 6.3 11.6% 10.0% International Transportation Management 46.1 17.7 15.0% 3.0% Dedicated Contract Carriage 11.1 10.9 7.5% 4.0% Value-Added Warehousing & Distribution 34.0 26.6 14.3% 6.0% Total 130.8 61.0 12.3% 5.8% Net Revenue Growth by 3PL Segment ITM has been the Highest Growth Segment, but has cooled. Updated (US$ Millions) VAWD is Maturing. DCC is Mature. 15 15

16 After-Tax Net Income Margin Trends by 3PL Market Segment
2011 , 17.4% 7.3% 4.5% 3.0% Updated 16 16

17 U.S. DTM Network Transportation Managers
Robust TMS for network transportation planning and execution Heavy EDI/electronic systems interfaces Some Buy/Sell side arrangements with a lot of Freight Under Management FUM = Freight Under Management, Managed Transportation Shipper may hold contracts with core carriers Shipper contracts with a 3PL which gets a management fee (5-7% GM) Added , CHRW TMC FUM = $1.3 B, Menlo $1.2B, Transplace $3B, Ryder over $2B, Penske $2 B 17 ©Copyright 2011 Armstrong & Associates, Inc. 17

18 Top 30 DTM/Freight Brokers Ranked by 2011 Net Revenue
8,740 CHRW is 40% of the total top 30 net revenue. CHRW’s Net Revenue is 46% of the top 30. RA 18 ©Copyright Armstrong & Associates, Inc. 18

19 3PLs – Expanding Oil & Natural Gas Business in the Bakken Formation
Bakken Formation, a Significant New Domestic Source of Oil and Natural Gas: According to the 2008 United States Geological Survey, the Bakken Formation of the Williston Basin Province in Montana and North Dakota has estimated average undiscovered volumes of: 3.65 billion barrels of technically recoverable oil, 1.85 trillion cubic feet of associated/dissolved natural gas, and 148 million barrels of natural gas liquids. According to OilShaleGas.com, there are now over 6,000 active oil wells in the Bakken Formation with most activity in Montana and North Dakota. Updated Source:  USGS 19 19

20 3PLs – Expanding Oil & Natural Gas Business in the Bakken Formation
BNSF Logistics Bakken Operations Logistics Support Case Study Example: BNSFL manages up to 10 to 15 oil rig moves per month for multiple oil & gas exploration companies including Continental Resources and Brigham Oil. Each move requires approximately 30 days to relocate a rig from one location to another. To assemble a rig, 20 to 30 truckloads of materials and components are needed. Overhead cranes are required to unload larger rig components. To locally coordinate the oil rig moves, BNSFL opened an office in Williston, North Dakota last year. To support natural gas fracking operations, BNSFL manages inbound transportation for multiple exploration/drilling companies to the drilling sites. Inbound materials include drilling pipe, pumping units, frac sand, and fracking chemicals. The frac sand is sourced domestically from mines in Illinois and Wisconsin and a small amount of “ceramic” sand is imported via ocean containers from China and Brazil. BNSFL supports frac sand moves with door-to-door ocean import services, rail to truck transload services and intermodal rail-truck deliveries. In 2011, BNSFL transloaded sand from 528 rail hopper cars to trucks for final delivery to drilling sites. BNSFL’s parent BNSF Railway delivered over 25,000 railcars of frac sand into the Bakken last year. Updated 20 20

21 Select 3PL Acquisitions
Target Buyer Year Purchase Price ($M) Multiple Jacobson Companies Oak Hill Capital 2007 500 11** EGL Apollo Management/CEVA 2,200 14.5** Chic Holdings Ltd. Menlo Worldwide Logistics 60 9* Christian Salvesen Norbert Dentressangle 519.4 6.7** Geodis SNCF 2008 1,735 9.6* ABX Logistics DSV A/S 1,160 8.5* IBM (internal global logistics ops.) 2009 423 6.6** YRC Dedicated Contract Carriage Greatwide Logistics 34 13.6** Summit Logistics International Toll Holdings 2010 70.3 9.3** ATC Technology Corporation GENCO 512.6 Total Logistic Control Ryder 200 7** TDG 2011 320 5.8** Exel Transportation Services (Mode) Hub Group 83 20.8* Phoenix International C.H. Robinson Worldwide 2012 635 12.5** EBIT* or EBITDA** Multiple Source: Primary, Company Information; Secondary, A&A Estimates Updated 21 21 21

22 Top 20 Dedicated Contract Carriage Providers – 2011
Rank DCC Provider Power Units 1 J.B. Hunt Dedicated Contract Services 4,639 2 Ryder Supply Chain Solutions 4,217 3 Greatwide Logistics Services 4,016 4 Swift Transportation 4,000 5 Schneider National 3,950 6 Werner Enterprises 3,400 7 Ruan Transport 3,309 8 Penske Logistics 2,600 9 NFI Transportation 1,770 10 U.S. Xpress Enterprises 1,750 11 Cardinal Logistics Management 1,620 12 UPS Freight Truckload 1,440 13 3PD 1,214 14 Exel (DHL Supply Chain - Americas) 1,100 15 C.R. England 852 16 Averitt Express 824 17 LINC Logistics 673 18 Landair 550 19 Aim Integrated Logistics 500 20 CRST Dedicated Services Updated 22 22

23 Top North American Warehousing 3PLs by Millions Sq.Ft.
Rank Third-Party Logistics Provider (3PL) Warehouse Space (in MMSF) 1 Exel (DHL Supply Chain - Americas) 95.0 2 GENCO ATC 37.0 3 Jacobson Companies 35.0 4 Americold 34.5 5 CEVA Logistics (The Americas) 33.0 6 OHL 30.1 7 Ryder Supply Chain Solutions 30.0 8 Caterpillar Logistics Services 29.0 9 Kenco Logistic Services 25.0 10 UTi Worldwide 23.7 11 UPS Supply Chain Solutions 20.0 12 NFI Logistics 19.0 13 Menlo Worldwide Logistics 18.0 14 DSC Logistics 17.0 15 APL Logistics (North America) 15.3 16 Kuehne + Nagel (The Americas) 15.1 17 Penske Logistics 14.9 18 WSI 14.0 19 Warehouse Services 20 Saddle Creek 21 DB Schenker Americas 12.6 22 syncreon 12.0 23 New Breed Logistics 10.2 24 Schneider Logistics 10.0 25 Kane Is Able 8.5 Most major North American value-added warehousing and distribution (VAWD) 3PLs have national warehousing networks. Updated 4-12 23 23 23 23

24 Types of Warehouses Based on Use Profile
Added Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” 24 24 24

25 Warehousing Contract Lengths
Updated RA Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” Contract lengths tend to be longer for larger 3PLs. Three smaller companies reported over a third of their warehousing contracts had one year terms. For the other participants, 12.1% of contracts were one year, 57.6% were for three years, 25.3% were for five years and 5% had other terms. 25 25

26 Contract Warehouses by Size (n = 511)
Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” 26 26

27 Value-Added Warehousing Services
Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” 27 27 27

28 Annual Revenue from Contract Warehousing Customers
Yearly Contract Value Range % of Total < $100K 1.1% $100K - $499K 12.2% $500K - $999K 12.5% $1M - $4.9M 49.1% $5M - $9.9M 11.1% $10M - $14.9M 6.8% $15M - $19.9M 1.8% $20M or > 5.4% RA (Sample, n = 302) Source: Armstrong & Associates, Inc. “The Business of Warehousing in North America – 2012 Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices” Customer Contract Highlights: Customers have one to twenty-three locations. 25% of customers have contracts involving multiple locations. The average (mean) customer utilizes 384,000 square feet of warehouse space. The average (mean) revenue is $4.9M and the median is $2.4M (from $37,000 to $47M per year.). 28 28 28

29 Top 25 Mexican Motor Carriers – 2011
Rank Motor Carrier Gross Revenue (US$ Millions) 1 Autotransportes de Carga Tres Guerras S.A. de C.V. 220 2 Transportes Castores de Baja California S.A. de C.V. 210 3 Auto Líneas América S.A. de C.V. 172 4 Transportes Julián de Obregón S.A. de C.V. 165 5 Transportistas Unidos Mexicanos Div. Nte. 143 6 Transportadora Nacional S.A. de C.V. 138 7 Transportes Cuauhtémoc S.A. de C.V. 129 8 Frialsa Logística S.A. de C.V. 9 Auto Líneas Regiomontanas, S.A. de C.V. 99 10 Servicio de Transportacion Jaguar 90 11 Grupo TMM / Lacto Comercial Organizada S.A. de C.V. 87 12 Grupo Transportes 86 13 Transportes Pitic, S.A. de C.V. 80 14 Express Tres Fronteras S.A. de C.V. 72 15 Transportes Quintanilla S.A. de C.V. 66 16 Grupo MG 65 17 Transportadora Egoba S.A. de C.V. 63 18 Transportes Especializados Antonio de la Torre e Hijos, S.A. de C.V. 62 19 Transportes Comandos del Norte S.A. de C.V. 60 20 Transportes de Nuevo Laredo S.A. de C.V. 59 21 Transportes Lar-Mex, S.A. de C.V. 54 22 Transportes Auto Tanques Ochoa S.A. de C.V. 23 Transportes Fema S.A. de C.V. 53 24 Fletes Internacionales Coss S.A. de C.V. 52 25 Express Anáhuac S.A. de C.V. 49 New RA 29 29

30 Thank You! Milwaukee Wisconsin Office Evan Armstrong
Armstrong & Associates, Inc. 10401 West Lincoln Avenue Suite 207 West Allis, WI USA Stoughton Wisconsin Office Richard Armstrong Armstrong & Associates, Inc. 100 Business Park Circle Suite 202 Stoughton, WI USA 30


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