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Third-PartyLogistics
Market Analysis
Presented by:
Richard Armstrong
Armstrong &Associates, Inc.
100 Business Park Circle, Suite 202
Stoughton, WI 53589
Email: [email protected]
Phone: 608-873-8929
mailto:[email protected]:[email protected]8/2/2019 CISA Presentationsummer
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Transportation TrendsFiscal Year 2004 2nd Half Recovery
Trucking Capacity
Cost Factors
Labor/Driver
Equipment Costs
Price Rises LTL TL
Copyright 2003 Armstrong & Associates, Inc.
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National Diesel Fuel Prices 2004 vs. 2003
Source: U.S. Department of Energy
$1.00
$1.10
$1.20
$1.30
$1.40
$1.50
$1.60
$1.70
$1.80
$1.90
Wee
k1
Wee
k4
Wee
k8
Wee
k12
Wee
k16
Wee
k20
Wee
k24
Wee
k28
Wee
k32
Wee
k36
Wee
k40
Wee
k44
Wee
k48
Wee
k52
2003 2004
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Monthly Truck Tonnage Index
Source: ATA
120.0
130.0
140.0
150.0
160.0
170.0
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
2002 2003 2004
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Top 25 Global 3PLs
2003Rank 3PL
2003 3PLrevenue
($m) Summary
1Exel plcwww.exel.com 7,200
Worlds largest 3PL divides revenues between transportation
management and contract logistics. Emphasis on lead logistics role.
2Kuehne & Nagel International AGwww.kuehne-nagel.com 6,900
Worlds largest ocean freight forwarder, fifth largest air forwarder.
Broadening contract logistics with acquisitions.
3
Schenkerwww.schenkerusa.com 6,400
Key transportation and distribution company in Europe, builds shared
networks globally
4DHL Danzas Air & Oceanwww.dhl.com 5,700
Strong brand in Europe and Asia, building on Airborne acquisition inthe U.S.
5P&O Nedlloydwww.ponl.com 4,800
Focus on global container logistics. Operations in the U.S. mostly inwarehousing
6TPG/TNTwww.tnt.com 4,700
Worlds largest automotive logistics 3PL. Also master of value-addedwarehousing and manufacturing support. Rapid expansion in Asia.
7
Panalpinawww.panalpina.com 4,600
Freight forwarder, mainly airfreight operations but increasing ocean
forwarder and project logistics
8UPS Supply Chain Solutionswww.ups-scs.com 4,100
Largest North American-based 3PL. Revenues evenly dividedbetween U.S. and international operations.
9Nippon Expresswww.nipponexpress.com 4,000
Freight forwarder with procedures and systems for handling globaltransportation
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Top 25 Global 3PLs cont.
10C.H. Robinson Worldwidewww.chrobinson.com 3,600
Multi-faceted 3PL and freight broker with majority of revenues from foodand beverage. Growing transportation operations in Europe and Brazil
11Menlo Worldwidewww.menloworldwide.com 3,100
Solid inbound supply chain management and good finished goodsdistribution management.
12
Expeditors International ofWashingtonwww.expeditors.com 2,600 Freight forwarder with a strong business in China and Asia
13Penske Logisticswww.penskelogistics.com 2,500
Automotive operations are half of the business. Strong dedicatedcontract carriage and transportation routing Usually functions as leadlogistics provider.
14Eagle Global Logisticswww.eaglegl.com 2,200
International forwarding and transportation management with a heavyshipment emphasis.
15NYK Logisticswww.nykline.com 2,200
Put together in 2001 by combining three businesses covering retail,manufacturing and intermodal; added to existing forwarding andwarehousing operations.
16BAX Globalwww.baxglobal.com 2,000
Heavyweight airfreight carrier and forwarder. Also strong crossdock.transportation and value-added warehousing.
17Ryderwww.ryder.com 1,900
Large U.S. dedicated contract carrier. Expanding inbound supply chainmanagement and distribution capabilities.
18Schneider Logisticswww.schneiderlogistics.com 1,900
Premier automotive logistics transportation management 3PL. In U.S.and Europe, Large network of carriers in all modes.
19UTi Worldwidewww.go2uti.com 1,200
Aggressive forwarder, recently acquired value-added warehousingoperation.
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Top 25 Global 3PLs cont.
20Caterpillar Logisticswww.catlogistics.com 1,000
Global transportation, logistics and supply chain systems network builton parent company's capabilities.
21APL Logisticswww.apllogistics.com 990
Strong Asian base. Retail focus and good consolidation/deconsolidationoperations.
22Wilson Logistics Groupwww.wilsonlog.com 860
Swedish forwarder with contract logistics capabilities. Recentexpansions in India, China, Germany and Malaysia.
23FedEx Supply Chain Serviceswww.fedex.com 603
Transportation and supply chain solutions. Relies on operationalcapabilities of other FedEx companies.
24Maersk Logisticswww.maersk-logistics.com 350
Asian retail focus. Majority of business is warehousing and distribution.Also strong ocean forwarding and consolidation capabilities.
25SembCorp Logistics (USA) Inc.www.semblog.com 275
Focus remains in Southeast Asia. Expanding rapidly in India and China.Owns 20% of Kuehne & Nagel.
Total 2003 Logistics Revenue
77,708
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3PL Service Categories (2002)
Transportation Management 21.7%
Warehousing 20.6%
Value-Added 19.3%
International 9.4%
Integrated Solutions 8.5%
Dedicated Contract Carriage 7.4%
Intermodal 4.6%
Lead Logistics 4.0%
Other 2.9%
eFulfillment 1.6%
Copyright 2004 Armstrong & Associates, Inc.
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3PL Vertical Focus
Retail
Food
Technology
Automotive
Expeditors
APL
Maersk
USFUSCO/K&N
SIRVA
Menlo
Cat Logistics
TNT
SLI
Ryder
Standard/UTi
DSC
Tibbet & Britten
CH Robinson
Exel
Kenco
Landstar
TLC
Americold
Copyright 2004 Armstrong & Associates, Inc.
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Selected 3PLs Net Revenues by Segment
Copyright 2004 Armstrong & Associates, Inc.
01000
2000
3000
4000
5000
6000
7000
8000
9000
10000
1995 1996 1997 1998 1999 2000 2001 2002 2003
Value-Added Whse/Dist., Asset-Based Transportation, Asset-Based (DCC)
International, Non-Asset Based Domestic, Non-Asset Based
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Trucking Capacity & Seasonality
0
20
40
60
80
100
120140
J F M A M J J A S O N D
Month
%ofCa
pacity
Capacity
Demand
Copyright 2004 Armstrong & Associates, Inc.
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Cost Reduction via Mode Shifting
$-
$50
$100
$150
$200
$250
$300
$350
$400
Packag
eLT
L TL
CostperCWT
Copyright 2004 Armstrong & Associates, Inc.
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Optimization Process Example
STRIPOUT/FILTER SHIPMENTS
(Rail box cars, UPS, expedited loads, etc.)
RUN CONSOLIDATION ROUTINEPackageto LTL, LTL to TL
(Usingreal rates--mode shifting optimization)
RUN MATHEMATICALNETWORK FLOW
(To isolate TL carriers by available capacity)
EXPORT RESULTS(For logistics engineer review)
RUN MIXEDINTEGER PROGRAM
(To find end-to-end best routes)
ORDER/SHIPMENT INPUT
Daily Transportation Management
Copyright 2004 Armstrong & Associates, Inc.
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Inventory Diagnostic:Evaluating Two Networks
Current Network Optimal Network
Total Cost: $69,500,000Avg Distance to Customer: 750 Miles
Total Cost: $61,800,000Avg Distance to Customer: 315 Miles
Determine the inventory implications ofhaving extra distribution centers
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Inventory Diagnostic:Inventory Results For Two Networks
Baseline (2 DCs) Optimization (6 DCs) Savings
Warehouse Holding Cost 916,074$ 1,205,149$ -32%
Safety Stock 168,698$ 457,773$ -171%
Cycle Stock 747,376$ 747,376$ 0%
Customer Holding Cost 1,457,246$ 1,326,265$ 9%
Safety Stock 695,126$ 564,146$ 19%Cycle Stock 762,119$ 762,119$ 0%
In-Transit Holding Cost 926,134$ 1,027,266$ -11%
Plant-Warehouse 220,452$ 598,574$ -172%
Warehouse-Customer 705,682$ 428,693$ 39%
Production Holding Cost 106,768$ 106,768$ 0%
TOTAL 6,705,675$ 7,224,129$ -8%
LogicNet Cost 69,500,000$ 64,100,000$ 8%
TOTAL 76,205,675$ 71,324,129$ 6%
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U.S. Warehousing Generalities
Total U.S. warehousing space: 6.2 billion sq. ft.
Total U.S. warehousing cost: $78 billion*
For-hire public/contract warehouse space: 800 million sq. ft.
Total U.S. warehousemen: 800
Total U.S. VAWD 3PLs: 200
Total Public/Contract Revenue: $21-22 billion
*Source: Cass Information Systems, Inc.
Copyright 2004 Armstrong & Associates, Inc.
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Top 25 Warehousemen
Rank Company Headquarters Total NA 2003 Warehouse Space1 Exel Westerville, OH 73.32 UPS SCS Atlanta, GA 28.63 APL Logistics Oakland, CA 264 AmeriCold Logistics Atlanta, GA 215 Caterpillar Logistics Morton, IL 206 GENCO Distribution Pittsburgh, PA 177 Kenco Logistics Chattanooga, TN 178 TNT Logistics NA Jacksonville, FL 179 EGL, Inc. Houston, TX 1510 Ryder Miami, FL 1511 Kuehne & Nagel NA Hamden, CT 1412 Ozburn-Hessey Logistics Nashville, TN 1413 NFI Industries Vineland, NJ 1414 Menlo Worldwide Redwood City, CA 13.515 DSC Logistics Des Plaines, IL 1316 Standard Corporation Columbia, SC 1117 MBX Logistics Orlando, FL 1018 CCW Group Greensboro, NC 1019 Penske Logistics Reading, PA 9.920 Jacobson Companies Des Moines, IA 921 USF Logistics Oak Brook, IL 8.522 Saddle Creek Corp. Lakeland, FL 6.423 Expeditors Intl of WA Seattle, WA 624 FedEx SCS Hudson, OH 625 Arnold Logistics Camp Hill, PA 5.3
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Warehouse Contract Length
0%5%
10%
15%
20%25%
30%
35%
40%
1 2 3 4 5 6 7
Years
%ofCases
Copyright 2004 Armstrong & Associates, Inc.
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Expected and Actual EBITDA
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
%
ofCase
s
Expected
Actual