BOSTON—The third-party logistics (3PL) industry has continued to globalize as users broaden the geographies they use for sourcing, manufacturing, and distributing their products. Studies of both users and providers of third-party logistics services, conducted last year by Dr. Robert C. Lieb, professor of supply chain management at Northeastern University, and Brooks A. Bentz, associate partner at the consulting firm Accenture, quantified the extent of those trends.

Approximately 80 percent of the 3PL users in last year's survey of Fortune 500 manufacturers indicated that they now use 3PL services in their international operations. In response to the changing demands of their customer base, many major 3PL providers now offer services in North America, Western Europe, Eastern Europe, and Asia. Many are also initiating service offerings in South and Central America.

This year the researchers extended their survey of CEOs of third-party providers, which has been conducted for 11 years in North America, to the European and Asia-Pacific 3PL markets. In total, 46 CEOs participated in those surveys (22 in North America, 13 in Europe, and 11 in Asia-Pacific).

In a number of instances, the CEOs of the companies serving the European and Asia-Pacific markets reported the same trends as their North American counterparts. These included an increasing focus on a limited number of industry verticals, growing customer selectivity, aggressive selling of services along the supply chains of their major customers, and providers' preparation for adoption of RFID technology by their existing and prospective customers. Providers in all regions reported significant problems with downward pressure on prices, as well as the high cost and low rate of return on IT investments.

In the European provider survey, on average the CEOs reported that 94 percent of their 2003 revenues came from EU member countries. Clearly, that percentage will increase now that the membership of the EU has expanded to 25 countries. Nearly all of the CEOs viewed that expansion as significant to their companies. Twelve of the 13 CEOs indicated that their companies are likely to follow existing customers into the new EU member countries; 10 are likely to make significant investments in those countries; 12 are likely to develop alliances with 3PL providers already servicing those countries; and eight said it was likely that they would acquire 3PLs that currently serve those countries.

While the EU expansion was clearly the most significant market opportunity for the European respondents, the most significant market dynamic mentioned was continued downward pressure on pricing, followed by the consolidation of major 3PL providers. The most notable of those transactions involved last year's acquisition of Tibbett & Britten by Exel. When asked to identify the most important change they expect to see over the next three years, the CEOs said continued consolidation.

The responses to the Asia-Pacific CEO survey showed the dominance of China in the region. On average, the companies surveyed now generate 40 percent of their regional revenues in China. Although they forecast growth in China to continue during the next three years, they predicted that percentage will decline due to a combination of other emerging opportunities in the region and infrastructure limitations in China.

When asked to identify the greatest opportunities that exist in the Asia-Pacific region, the CEOs said they believe those opportunities are still dominated by China, but they also see growth potential in Japan, Thailand, Cambodia, and Vietnam.

In terms of problems facing 3PLs in the region, the CEOs identified continuing downward pressure on pricing and coping with cultural diversity as being most important. They gave a wide range of responses to questions concerning the major changes they expect to occur in the regional industry over the next three years. Their responses highlighted such potential developments as increased foreign ownership in China, further consolidation of the 3PL providers serving the region, and the growth of strategic alliances between providers.