3PL’s – Beyond Shipping
May 29, 2006 by Splatty
Filed under 3PL, Supply Chain Management
Here’s an excellent article written by Bob Violino on Globalsourcesmedia.com about the different roles that the 3PL’s play in the global marketplace. As supply chain’s become more sophisticated, 3PL’s will contine to be called upon to fill various growing needs because of their unique service offerings. In the article he highlights some of the different roles that 3PL’s play in servicing their customers including:
1. Reverse Logistics
2. Service parts logistics
3. Repair and returns maintenance
4. Inventory management
5. After market services
6. Warehousing
DHL, with it’s recent acqusition of Exel in December of 2005, is now the world’s single largest provider of contract logistics services.
China’s Ports Continue to Increase Throughput
May 25, 2006 by Splatty
Filed under Seafreight
For the first four months of the year China’s ports handled 26.94 million TEU’s. This represents a 22% increase over the same period last year. It’s no surprise that Shanghai port continues to lead the charge after handling 6.37 million TEU’s up 16% over last year. Here are the top three ports in terms of number of TEU’s handled.
1. Shanghai – 6.37 million
2. Shenzhen – 5.33 million
3. Qingdao – 2.36 million
FedEx Watkins Rumor Mill
May 25, 2006 by Splatty
Filed under Integrators
I just read a Reuters report stating that Fedex is rumored to be close to purchasing Florida based LTL carrier Watkins lines for $1 billion. Of course both Fedex and Watkins are taking the no comment stance on the reports. This would be a huge acquisition for Fedex and would signifigantly bolster their LTL network. In my dealings with LTL customers, I have received very favorable comments regarding Watkins reliability and overall service levels. It will be interesting to see how this shakes out over the next couple of weeks.
Analysts estimate Watkins generated just over $1 billion in revenue in 2005. Like FedEx, Watkins is a non-union carrier. As a so-called less-than-truckload (LTL) shipper, it consolidates smaller loads into a single truck shipment.
FedEx already has its own LTL unit, FedEx Freight, which it built out of three trucking company acquisitions between 1998 and 2001. The unit has high margins – 11 percent in fiscal year 2005, compared with 8.4 percent for the whole group – and revenue of $3.2 billion in 2005.
n a research note, BB&T analysts John Barnes and Adam Thalhimer wrote: “While we don’t generally like to comment on speculative events, this particular rumor has been reported in the press in recent days, perhaps supporting its credibility.”
“We like the sound of this potential deal,” they wrote, adding that Watkins’ experience with long-haul LTL service could augment FedEx’s regional LTL business. Source – Reuters
Warehousing in North America – 2006
May 22, 2006 by Splatty
Filed under Contract Logistics, Misc Logistics
Source: Armstrong & Associates, Inc.
STOUGHTON, WI, May 22, 2006 – A major white paper on warehousing has just been released. The report, “Warehousing in North America – 2006,†benchmarks prices and practices. In addition it includes basic industry statistics and major player information.
The author reports that U.S. commercial warehousing revenues are $28.8 billion. “The industry grew 9.5% last year and we forecast another strong year for 2006,†said Richard Armstrong, author of the report.
The report benchmarks contract and public warehousing in separate sections. Contract warehouse relationships are measured by operating margins, EBITDA and EBIT margins. Regional differences are reported for both contract and public operations. Key performance indicators (KPIs) and value-added services frequencies are included.
Lengths of contracts reviewed in the study were from 1-7 years. The study found that most contracts have 3 and 5 year terms.
In the report, components of standard warehouse pricing models are given. The major variables are space utilization, labor, administrative costs and margins. This standard costing methodology is used for both contract and public warehousing. Gain-sharing, single-factor carton pricing and other key pricing elements are explained. Public warehousing pallet handling charges were found to vary regionally from $5.75 to $6.79. Package handling, storage and value-added service charges are detailed in the report.
Expected operating margins and profitability measures are compared to actual results for 3PLs in the study. These relationships are reviewed in detail and in reference to the “Negotiation Zone.†Statistical analyses were performed showing the effects on profitability of open book relationships and leasing versus ownership.
“We undertook this study originally because we had a Japanese consulting client who wanted to know what and how 3PLs and commercial warehouses were charging for their services in the U.S.,†said Armstrong. “There was not a good source available. Our report is the only public explanation of what the real prices are in warehousing in North America.â€
The analysis emphasizes the growth of contract warehousing at the expense of public warehousing. The results indicate however, that profitability is not inherent in either of the models but owes more to company cultures and practices.
The complete study with appendices is available from Armstrong & Associates. It can be purchased by phone at +1-608-873-8929, or online at: www.3plogistics.com.
About Armstrong & Associates: Armstrong & Associates, Inc. is a supply chain management consulting firm specializing in market research, mergers and acquisitions and logistics outsourcing. Armstrong & Associates publishes Who’s Who In Logistics. Recent research papers include: “Is Bigger Better? Third-Party Logistics Financial and Acquisition Results for 2005,†and “Trends in 3PL/Customer Relationships.†In addition, Armstrong & Associates maintains databases of warehousing companies, freight forwarders, third-party logistics providers, and distributors.
For more information, contact: Richard Armstrong (800) 525-3915 or e-mail Armstrong@3PLogistics.com.
Source:
Armstrong & Associates, Inc.
100 Business Park Circle
Suite 202 Stoughton, WI 53589
Phone: (608) 873-8929
Fax: (608) 873-5509
Website: www.3PLogistics.com
