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

image

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

Transportation stakeholders reliant on North Carolina’s major seaports are welcoming news this week, which outlines plans to enhance the intermodal and cold chain network in the region.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.9 in February, which was 0.2 percent ahead of January and also 0.1 percent ahead of the 12-month average of 56.8. Economic activity in the non-manufacturing sector has grown for the last 61 months, according to ISM.

Non asset-based third-party logistics (3PL) services and logistics technology services provider Transplace said today that Brooks Bentz has joined the company in a newly-created role as president of Transplace Consulting in conjunction with the launch of the company’s new North American consulting services practice.

The advent of e-commerce continues to grow and gain increased traction over time. The many ways for consumers to order and purchase goods online continues to expand and leads to various subsequent byproducts of online purchases, including shopping through multiple channels, and delivery and payment options, among other things. These types of topics serve as the thesis in the second annual UPS Pulse of the Online Shopper Global Study issued this week by UPS and comScore Inc.

A major highlight of CEVA’s fourth quarter performance was its new business wins, which were up 14 percent for all of 2014, with Freight Management wins up 14 percent, and Ocean Freight and Air Freight wins up 30 percent and 14 percent, respectively, while Contract Logistics wins were up 2 percent.

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.

Comments

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