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Despite Met Financial Projections for 2011, Logistics Companies to Forecast Future, Lower Revenue Growth

In spite of a slow economic climate, 74 percent of North American logistics companies surveyed in Penske Logistics’ “19th Annual Survey of Third-Party Logistics Providers” achieved or exceeded revenue projections in 2011. Yet, companies that did not meet their financial projections were up sharply from 14 percent in 2010, to 26 percent in 2011.

The survey was presented earlier this week at the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference by Dr. Robert Lieb, Professor of Supply Chain Management at Northeastern University and author of the survey and Joe Gallick, Senior Vice President of Sales for Penske Logistics. The report was co-authored by Dr. Kristin Lieb, Assistant Professor of Marketing Communications, Emerson College.

The findings analyze responses from 31 large third-party logistics company chief executive officers across North America, Europe and Asia-Pacific whose companies were responsible for generating approximately $45 billion in revenue in 2011.

While some North American companies fell short of revenue projections, none of the companies were unprofitable and none of the chief executive officers surveyed believed the regional third-party logistics industry operated at a loss for the year. Globally, 63 percent of companies either met or exceeded their revenue projections and 71 percent of these logistics companies experienced moderate profitability during 2011. However, Europe continues to struggle, with 25 percent of companies surveyed experiencing unprofitability.

“The difficulties facing the European market today mirror the economic instability North American logistics companies faced a few years ago,” said Dr. Robert Lieb. “Globally, industry growth and company profitability continue to increase but at a much slower rate. As we move forward, CEOs are being cautious, forecasting lower revenue growth projections over the next three years.”

Looking towards growth, many chief executive officers identified the healthcare industry as a strategic target, with 71 percent of the companies surveyed already having clients in the industry. Across all regions, companies are forecasting substantial growth in healthcare business during the next three years.

Within North America, healthcare clients generated six percent of regional revenues in 2011, with predictions showing an 11 percent share of revenue three years from now. Within healthcare, more than half of the CEOs predicted the medical devices segment of the industry will grow fastest during the next three years.

“Our aging population and ongoing technological innovations have led to a proliferation of medical devices and equipment for large and mid-sized distributors,” said Gallick. “As these companies grow, the increasing complexity and higher costs of managing logistics internally make a compelling case for collaborating with a third-party logistics provider, who can help them design and implement more efficient transportation and distribution solutions.”

Additional survey findings for the supply chain and logistics industry report that:

  • Over the next year, all regions are forecasting lower revenue growth than last year.
  • Increasing flexibility will be important as customers look for greater collaboration and integration of supply chain activities within North America
  • In attempts to increase growth, European companies will continue expanding into new industry verticals
  • As domestic consumption rises within Asia, companies are focusing on expanding 4PL offerings in these fragmented emerging markets

 

For a detailed discussion on the survey from Dr. Robert Lieb, visit http://bit.ly/Wuh5Q2.

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