CISA Presentationsummer

8/2/2019 CISA Presentationsummer

1/19

Third-PartyLogistics

Market Analysis

Presented by:

Richard Armstrong

Armstrong &Associates, Inc.

100 Business Park Circle, Suite 202

Stoughton, WI 53589

Email: [email protected]

Phone: 608-873-8929
mailto:[email protected]:[email protected]


2/19

Transportation TrendsFiscal Year 2004 2nd Half Recovery

Trucking Capacity

Cost Factors

Labor/Driver

Equipment Costs

Price Rises LTL TL

Copyright 2003 Armstrong & Associates, Inc.


3/19

National Diesel Fuel Prices 2004 vs. 2003

Source: U.S. Department of Energy

$1.00

$1.10

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4/19

Monthly Truck Tonnage Index

Source: ATA

120.0

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FEB

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2002 2003 2004


5/19

Top 25 Global 3PLs

2003Rank 3PL

2003 3PLrevenue

($m) Summary

1Exel plcwww.exel.com 7,200

Worlds largest 3PL divides revenues between transportation

management and contract logistics. Emphasis on lead logistics role.

2Kuehne & Nagel International AGwww.kuehne-nagel.com 6,900

Worlds largest ocean freight forwarder, fifth largest air forwarder.

Broadening contract logistics with acquisitions.

3

Schenkerwww.schenkerusa.com 6,400

Key transportation and distribution company in Europe, builds shared

networks globally

4DHL Danzas Air & Oceanwww.dhl.com 5,700

Strong brand in Europe and Asia, building on Airborne acquisition inthe U.S.

5P&O Nedlloydwww.ponl.com 4,800

Focus on global container logistics. Operations in the U.S. mostly inwarehousing

6TPG/TNTwww.tnt.com 4,700

Worlds largest automotive logistics 3PL. Also master of value-addedwarehousing and manufacturing support. Rapid expansion in Asia.

7

Panalpinawww.panalpina.com 4,600

Freight forwarder, mainly airfreight operations but increasing ocean

forwarder and project logistics

8UPS Supply Chain Solutionswww.ups-scs.com 4,100

Largest North American-based 3PL. Revenues evenly dividedbetween U.S. and international operations.

9Nippon Expresswww.nipponexpress.com 4,000

Freight forwarder with procedures and systems for handling globaltransportation


6/19

Top 25 Global 3PLs cont.

10C.H. Robinson Worldwidewww.chrobinson.com 3,600

Multi-faceted 3PL and freight broker with majority of revenues from foodand beverage. Growing transportation operations in Europe and Brazil

11Menlo Worldwidewww.menloworldwide.com 3,100

Solid inbound supply chain management and good finished goodsdistribution management.

12

Expeditors International ofWashingtonwww.expeditors.com 2,600 Freight forwarder with a strong business in China and Asia

13Penske Logisticswww.penskelogistics.com 2,500

Automotive operations are half of the business. Strong dedicatedcontract carriage and transportation routing Usually functions as leadlogistics provider.

14Eagle Global Logisticswww.eaglegl.com 2,200

International forwarding and transportation management with a heavyshipment emphasis.

15NYK Logisticswww.nykline.com 2,200

Put together in 2001 by combining three businesses covering retail,manufacturing and intermodal; added to existing forwarding andwarehousing operations.

16BAX Globalwww.baxglobal.com 2,000

Heavyweight airfreight carrier and forwarder. Also strong crossdock.transportation and value-added warehousing.

17Ryderwww.ryder.com 1,900

Large U.S. dedicated contract carrier. Expanding inbound supply chainmanagement and distribution capabilities.

18Schneider Logisticswww.schneiderlogistics.com 1,900

Premier automotive logistics transportation management 3PL. In U.S.and Europe, Large network of carriers in all modes.

19UTi Worldwidewww.go2uti.com 1,200

Aggressive forwarder, recently acquired value-added warehousingoperation.


7/19

Top 25 Global 3PLs cont.

20Caterpillar Logisticswww.catlogistics.com 1,000

Global transportation, logistics and supply chain systems network builton parent company's capabilities.

21APL Logisticswww.apllogistics.com 990

Strong Asian base. Retail focus and good consolidation/deconsolidationoperations.

22Wilson Logistics Groupwww.wilsonlog.com 860

Swedish forwarder with contract logistics capabilities. Recentexpansions in India, China, Germany and Malaysia.

23FedEx Supply Chain Serviceswww.fedex.com 603

Transportation and supply chain solutions. Relies on operationalcapabilities of other FedEx companies.

24Maersk Logisticswww.maersk-logistics.com 350

Asian retail focus. Majority of business is warehousing and distribution.Also strong ocean forwarding and consolidation capabilities.

25SembCorp Logistics (USA) Inc.www.semblog.com 275

Focus remains in Southeast Asia. Expanding rapidly in India and China.Owns 20% of Kuehne & Nagel.

Total 2003 Logistics Revenue

77,708


8/19

3PL Service Categories (2002)

Transportation Management 21.7%

Warehousing 20.6%

Value-Added 19.3%

International 9.4%

Integrated Solutions 8.5%

Dedicated Contract Carriage 7.4%

Intermodal 4.6%

Lead Logistics 4.0%

Other 2.9%

eFulfillment 1.6%



9/19

3PL Vertical Focus

Retail

Food

Technology

Automotive

Expeditors

APL

Maersk

USFUSCO/K&N

SIRVA

Menlo

Cat Logistics

TNT

SLI

Ryder

Standard/UTi

DSC

Tibbet & Britten

CH Robinson

Exel

Kenco

Landstar

TLC

Americold



10/19

Selected 3PLs Net Revenues by Segment


01000

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7000

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10000

1995 1996 1997 1998 1999 2000 2001 2002 2003

Value-Added Whse/Dist., Asset-Based Transportation, Asset-Based (DCC)

International, Non-Asset Based Domestic, Non-Asset Based


11/19

Trucking Capacity & Seasonality

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20

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J F M A M J J A S O N D

Month

%ofCa

pacity

Capacity

Demand



12/19

Cost Reduction via Mode Shifting

$-

$50

$100

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Packag

eLT

L TL

CostperCWT



13/19

Optimization Process Example

STRIPOUT/FILTER SHIPMENTS

(Rail box cars, UPS, expedited loads, etc.)

RUN CONSOLIDATION ROUTINEPackageto LTL, LTL to TL

(Usingreal rates--mode shifting optimization)

RUN MATHEMATICALNETWORK FLOW

(To isolate TL carriers by available capacity)

EXPORT RESULTS(For logistics engineer review)

RUN MIXEDINTEGER PROGRAM

(To find end-to-end best routes)

ORDER/SHIPMENT INPUT

Daily Transportation Management



14/19

Inventory Diagnostic:Evaluating Two Networks

Current Network Optimal Network

Total Cost: $69,500,000Avg Distance to Customer: 750 Miles

Total Cost: $61,800,000Avg Distance to Customer: 315 Miles

Determine the inventory implications ofhaving extra distribution centers


15/19

Inventory Diagnostic:Inventory Results For Two Networks

Baseline (2 DCs) Optimization (6 DCs) Savings

Warehouse Holding Cost 916,074$ 1,205,149$ -32%

Safety Stock 168,698$ 457,773$ -171%

Cycle Stock 747,376$ 747,376$ 0%

Customer Holding Cost 1,457,246$ 1,326,265$ 9%

Safety Stock 695,126$ 564,146$ 19%Cycle Stock 762,119$ 762,119$ 0%

In-Transit Holding Cost 926,134$ 1,027,266$ -11%

Plant-Warehouse 220,452$ 598,574$ -172%

Warehouse-Customer 705,682$ 428,693$ 39%

Production Holding Cost 106,768$ 106,768$ 0%

TOTAL 6,705,675$ 7,224,129$ -8%

LogicNet Cost 69,500,000$ 64,100,000$ 8%

TOTAL 76,205,675$ 71,324,129$ 6%


16/19

U.S. Warehousing Generalities

Total U.S. warehousing space: 6.2 billion sq. ft.

Total U.S. warehousing cost: $78 billion*

For-hire public/contract warehouse space: 800 million sq. ft.

Total U.S. warehousemen: 800

Total U.S. VAWD 3PLs: 200

Total Public/Contract Revenue: $21-22 billion

*Source: Cass Information Systems, Inc.



17/19

Top 25 Warehousemen

Rank Company Headquarters Total NA 2003 Warehouse Space1 Exel Westerville, OH 73.32 UPS SCS Atlanta, GA 28.63 APL Logistics Oakland, CA 264 AmeriCold Logistics Atlanta, GA 215 Caterpillar Logistics Morton, IL 206 GENCO Distribution Pittsburgh, PA 177 Kenco Logistics Chattanooga, TN 178 TNT Logistics NA Jacksonville, FL 179 EGL, Inc. Houston, TX 1510 Ryder Miami, FL 1511 Kuehne & Nagel NA Hamden, CT 1412 Ozburn-Hessey Logistics Nashville, TN 1413 NFI Industries Vineland, NJ 1414 Menlo Worldwide Redwood City, CA 13.515 DSC Logistics Des Plaines, IL 1316 Standard Corporation Columbia, SC 1117 MBX Logistics Orlando, FL 1018 CCW Group Greensboro, NC 1019 Penske Logistics Reading, PA 9.920 Jacobson Companies Des Moines, IA 921 USF Logistics Oak Brook, IL 8.522 Saddle Creek Corp. Lakeland, FL 6.423 Expeditors Intl of WA Seattle, WA 624 FedEx SCS Hudson, OH 625 Arnold Logistics Camp Hill, PA 5.3


18/19

Warehouse Contract Length

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%ofCases



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Expected and Actual EBITDA

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