lq symposium april 20, 2006 where is the logistics service provider (lsp) industry going?
TRANSCRIPT
LQ SymposiumApril 20, 2006
Where is the Logistics Service Provider (LSP)
Industry Going?
Global Logistics Market Trends
Global Logistics Market Value
0
100
200
300
400
500
600
700
800
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year
US
D (
Bil
lio
ns)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
%G
row
th
Actual
Estimate
Source: Datamonitor D A T A M O N I T O R 2005
Logistics market continues to expand rapidly
Market Segmentation 2004
71%
16%
7% 4% 2%
Retail
Automotive
Hi-Tech
Pharmaceutical
ConsumerElectronics
Source: Datamonitor D A T A M O N I T O R 2005
Geographic Share 2004
35%
33%
29%
3%
Asia-Pacif ic
US
Europe
Rest of the World
Source: Datamonitor D A T A M O N I T O R 2005
Market Shared betweenKey regions
Key Drivers for LSPs
• Changes in sourcing behavior – pursuing lower costs with adequate quality– This ‘globalization’ creates logistics complexity
• Changes in outsourcing behavior – – This increase in complexity drives the desire for simplicity
• More and more companies are pursuing business strategies to outsource more and more bundled business processes
Future Industry Trends
• Evolution towards broad supply chain solutions
• Increased outsourcing of transaction based activities
• Enhanced 3PL provider technology capabilities
• Deeper client industry focus and expertise by 3PL providers
• Continued expansion, acquisition and consolidation of 3PL industry
• Expansion into global markets
• Further clarity and usage of 4PL(LLP) solutions
• Enhanced long term relationship management capabilities
Source: CAP Gemini - Findings from the 2004 Ninth Annual Study
Outsourcing Triggers Mean Rating
1.171.191.22
1.45
1.921.972
2.662.73
Approached by an external service firm
Unsuccessful software implementation
Outgrew existing infrastructure
Merger or acquisition
Business transformation
Conducted thorough internal cost analysis
Software upgrade
Hardware/system upgrade or refresh
New management team
Source IDC The New Face of BPO: Customer Adoption Patternsfor Logistics BPO
% Logistics Budget Outsourced
15.1%
10.7%
56.9%$100 - $499 M
$500 - $999 M
$1B +
Co
mp
an
y S
ize
Source IDC The New Face of BPO: Customer Adoption Patternsfor Logistics BPO
Service Provider Rationalization
ProfessionalServices
SingleLogisticsService
Supply ChainSolutions
MultipleLogisticsProducts
No. of Services
Com
plexity of Solution
Bundling
SC Integration
Evo
lut io
n
Integration and Alignment
• Integration – the linking of business processes from previously independent activities
• Collaboration – the ongoing effort of sharing pertinent information to continuously align expectations
Process 1
Process 2
Process 3
Process 1
Process 2
Process 3
Transactional
Commodity Price Interchangeable
Product Highly specified
deliverables
Shared risks & investment
Deeply integrated Mutually
dependent
Some customization
Flexibility/levels of service
Special knowledge
Customized/ individualized
Process & data integration
Solutions oriented Shared rewards
Collaborative
Partnership
Enhanced
Both want the progression but don’t have a framework to manage the journeyLow
ValueHighValue
Source: Mike Nevin Consulting - 5 year cross industry study
Collaboration Trends
Summarizing . . .
• Globalization means more complex supply chains
• Manufacturing costs down but …Logistics complexity & costs up
• Global logistics integration is the challenge
• Maintaining Relationship Alignment is key to successful collaboration which leads to strong partnerships
DB Logistics has four strong business units
Land Operations
Transport & Logistics
Air &Sea Freight
Contract Logistics
Rail Freight Transport
UPS 17.8%
FedEx 16.1%
BAX/Schenker 9.8%
DHL/Exel 2.5%
DHL/Exel 4.7%
TNT 2.4%
KN 1.3%
Ryder 1.0%
Wincanton 0.9%
BAX/Schenker 0.8%
BAX/Schenker 7.0%
DHL/Exel 12.6%
UPS 4.6%
Panalpina 4.5%
KN 3.6%
EGL 3.0%
USA Integrated Heavy Weight
FreightNo. 3
Combined, we hold excellent market positions in global air, sea freight and logistics
Global Contract Logistics
No. 6
Global Air Freight
No. 2
KN 5.5%
DHL/Exel 5.4%
BAX/Schenker 3.2%
Panalpina 2.9%
SDV 1.9%
Expeditors 1.9%
Global Sea Freight
No. 3
BAX/Schenker 2.1%
DHL/Exel 2.0%
DFDS Transport 1.1%
Dachser 1.0%
Geodis 1.0%
ABX 0.7%
European Land Transport
No. 1
BAX and Schenker