Emerging markets
Dick
Armstrong, who shares the consultancy’s role as president, says that some of
the companies resting at or near the bottom of this year’s Top 50 Global 3PLs
and Top 30 Domestic 3PLs are harder to quantify.
“All of
the 3PLs listed have particular strengths in their specific markets,” says the
elder Armstrong. “Obviously, the euro-centric players are going to have a
rougher time of it, given the sad state of their economy. On the other hand we
see opportunity for 3PLs in Latin America, where Brazil is rapidly investing in
its infrastructure.”
But for
those third party players that are not involved in China now, he says that it
may be too late to gain a foothold. “In fact, we feel that more and more
domestic Chinese forwarders will surface to become leading 3PLs in the future.”
Angela
Yang, managing director of the Asia-Pacific Region for Penske Logistics, also
sees China as being key to any 3PL’s global strategy. “With China experiencing
rapid growth in the last 20 years, I would call this market ‘dynamic,’ but not
yet mature,” she says. “As a result, China is a very competitive place and
pricing is key in many industries.”
According
to Yang, China-based manufacturers are constantly seeking low price providers.
Because the logistics business environment is just so fragmented in China, and
with lower prices constantly being offered, it’s vital that 3PLs develop strong
personal relationships with the customer.
Yang
observes that the cost of labor is a relatively small percentage of overall
logistics costs in China. The lion’s share of expense is related to warehouse
leasing, which can run anywhere from 50 percent to 70 percent. Equipment
expenses are also considerable.
“In many
cases, companies would rather hire additional people versus investing in
equipment,” says Yang. “Sourcing is vital to a 3PL’s success in the Chinese
market—leveraging resources, executing a lower total cost solution, and
providing great customer service is critical.”
Encompass
Global Logistics LLC, a fast-growing, privately-held 3PL serving shippers in
North America and China, may well demonstrate how a “smaller player” can
penetrate this burgeoning arena.
“Many
3PL’s complement their ocean freight program with robust airfreight services
and domestic distribution services in China,” says Encompass CEO Asa Cheng.
“The collective service menu puts many ‘smaller players’ on par with those
giant multinationals.”
Secondly,
says Cheng, the smaller player can be more flexible in offering premium service
from the inception of the purchase order to the shipper’s door. He notes that
the 3PL has the ability to negotiate volume across multiple carriers and
utilize those carriers whose services best complement the needs of specific
shippers.
“We can
work the spot market for our accounts, as we are on the forefront of
market-driven rate differentials by lane and by service,” he adds.
Finally,
says Cheng, many of the larger multinationals were kept busy during the
recession, “strafing” clients with selling, general, and administrative
expenses, which is a major non-production cost presented in an income
statement.
“Instead
of concentrating on short-term tactics, we should all be focusing on how to
bundle customer-specific packages that address certain key elements of their
supply chains,” Cheng says.
Growing importance of IT
If any
consensus can be arrived at with this year’s special report on 3PLs, it’s that
all lead logistics providers—especially in emerging markets—should provide
web-based systems that give importers and exporters complete and instant
visibility to their shipments throughout the supply chain.
Penn
State’s John Langley may have summed it best by observing that emerging markets
represent a “blank slate” when it comes to IT infrastructure: “Building
information technology systems can be achieved more easily in a country like
China because it’s being done from scratch.
Rather
than adding on to legacy systems, or tearing one down to build another, 3PLs
can now concentrate on putting the most modern solutions in place from the
start.”
In the
end, the same can be said for airports, seaports, surface transportation
networks, and everything else related to the expanding world of global
logistics management.
1 comment:
Do you have a list of the top Domestic Distribution for 3PL Services?
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