3PL news: Volatility likely to create additional challenges for global 3PLs, says DB Schenker exec


Dr. Detlef Trefzger - Member of the Board of Management
for Contract Logistics/SCM

By Jeff Berman, Group News Editor
June 29, 2010 - LM Editorial

While the economy shows some signs of improvement, increased volatility for 3PLs is likely to continue to present a challenge in the form of an increasing span of responsibilities and tasks for global supply chains, according to Dr. Detlef Trefzger, Member of the Board, Contract Logistics/SCM, at DB Schenker.

In his comments at the keynote address at last week’s eyefortransport 3PL Summit in Atlanta, Trefzger identified four new “realities” that will have a long-term impact on supply chain management:

  • tremendous growth in new markets and emerging economies, with these regions, including India and China, expected to have a more significant role in the global economy and result in new opportunities for the logistics sector;
  • strong fluctuations in world trade, on the commodities markets and in production costs, which will lead to fluctuations in global freight flows and demand for warehousing services and less time to plan logistics processes;
  • increased growth in outsourced logistics, with 3PLs taking on more tasks from shippers that require more expertise to deliver expected quality and productivity levels; and
  • strong demand for standardized logistics services on a global scale, which will become a fundamental contract logistics requirement and apply to standardized solutions and customer-specific solutions.

“Global population and the global economy are growing, and that is really the reality for all of us in the future,” said Trefzger. “The good news is the U.S. continues to be the 3PL market leader for at least for the next ten-to-15 years, according to our estimates.”

What’s more, he pointed out that 2010 U.S. GDP growth is expected to be 2.5 percent, whereas China, Russia, and Saudi Arabia expect GDP growth to be in the 8-to-12 percent range. Going forward, he said that global GDP growth will be shaped by economic expansion in India, China and other Asia-Pacific countries and will have to be addressed from a global logistics and 3PL perspective.

And with increased global growth, there is likely to be volatility with radical trend shifts becoming more of a regular thing. Among these shifts in recent years from a U.S. perspective are a struggling housing market, slowly improving consumer sending, and fluctuations in oil and gas prices, according to Trefzger.

“This volatility is going to continue; we are not seeing any continuous or stable development, and that is something each and every 3PL has to cope with,” said Trefzger.

As an example, Trefzger explained how in the past when DB Schenker did analysis of business demand, the worst case scenario was typically not lower than 20 percent. But now it is not uncommon for these analysis to be in the -50 percent to -75 percent ranges. These downward estimates are the effects of a volatile environment and the overall market, he said. And this uncertainty is subsequently forcing 3PLs to become an extension of their customers’ operations.

“We are talking abut 3PLs having to cope with order management, supplier management, invoicing, and customer-specific solutions for certain industries like automotive,” said Trefzger. “This needs to happen regardless of what country a 3PL is doing business in. We have to invest in the skills and know-how to meet these challenges.”

In summing up his comments, Trefzger said that actively driving change, exploiting talent and innovation and ensuring continuity in the provision of services and quality to customers are the new post-crisis requirements for logistics services providers.


About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in October at 135.7 (2000=100) was up 1.9 percent compared to September’s 133.1, and the ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment was 139.8 in October, which was 0.9 percent ahead of September.

The average price per gallon of diesel gasoline fell 3.7 cents to $2.445 per gallon, according to data issued today by the Department of Energy’s Energy Information Administration (EIA). This marks the lowest weekly price for diesel since June 1, 2009, when it was at $2.352 per gallon.

In its report, entitled “Grey is the new Black,” JLL takes a close look at supply chain-related trends that can influence retailers’ approaches to Black Friday.

This year, it's all about the digital supply network. In this virtual conference, we will define the challenges currently facing supply chain organizations and offer solutions designed to transform linear operations into dynamic, automated networks that offer seamless communication, visibility, and the ability to respond and optimize processes at any given time.

In his opening comments assessing the economy at last week’s RailTrends conference hosted by Progressive Railroading magazine and independent railroad analyst Tony Hatch, FTR Senior analyst Larry Gross said the economy continues to slog ahead at a relatively tepid pace, coupled with some volatility in terms of overall GDP growth. And amid that slogging, Gross said there is currently an economic hand-off occurring between the industrial sector and the consumer sector.

Article Topics

News · 3PL · Logistics · All topics

About the Author

Jeff Berman, News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman.


Post a comment
Commenting is not available in this channel entry.

© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA