3PL Services
Gaining Control—and Confidence—in 3PLs
Even though the vast majority of Fortune 500 companies outsource a growing portion of their logistics to 3PLs, many companies still resist outsourcing because they fear they will lose control. Kathy Krueger, COO of Kenakore Solutions, a Perrysburg, Ohio-based 3PL focusing on supply chain management solution for manufacturers, says that the key to gaining these client trust is to agree on a performance plan with mutually defined metrics that determine the relationship's success.
“The right outsourcing partner will hold itself accountable for measurable results, such as inventory fill rates of 98 percent within 48 hours,” says Krueger, whose company makes this commitment to an automotive supplier.
According to Krueger, another key to establishing a successful outsourcing partnership is finding a partner that can tell you more about your business than you know today. While many manufacturers profile their own inventory, few analyze it to find the product availability rate of their key revenue generating products. The sophisticated 3PL routinely does this when it partners with manufacturers by analyzing order patterns and product in/outflow. At one manufacturer's distribution center, such analysis helped to improve the product availability of its key revenue generating products by 30 percent.
“In today's global manufacturing environment, if you're not considering outsourcing or partnering to leverage your core competency, you're compromising the future of your business,” says Krueger.
http://www.kenakoresolutions.com
The Key to 3PL Success is to Think Like the Customer
More than 60 percent of Fortune 500 companies have at least one contract with a third party logistics company. According to a survey conducted by the event company Eyefortransport.
Third party logistics providers (3pls) that want to win or retain contracts with Fortune 500 companies need to do more than just deliver the goods — they need to take it upon themselves to act as an extension of the client's management team, proactively seeking new ways to reduce the client's logistics costs, improve efficiency and develop new and innovative logistics solutions.
The survey conducted by Eyefortransport last month included responses from 381 logistics professionals, including senior executives of many Fortune 500 companies.
According to the survey, for a 3pl to be a successful player in the hugely competitive logistics business requires going beyond the expected business requirements, it demands a merging of mindsets in the way the client approaches its market.
Half of the survey respondents point to “inefficient management” and one-third of them list “clashing firm cultures” as leading factors in the collapse of logistics contracts. Culture clashes may arise when the logistics companies focus on optimizing their revenue through tried-and-tested procedures, while their clients place greater store in service and want fresh thinking about the optimum way to get their products to the market. The results of the survey have been published in a report: Outsourcing Logistics USA 2006: Best practices for managing 3PLs, which can be downloaded from the following location:
http://www.eyefortransport.com/
DSV and Frans Maas Groep N.V. plan to merge
Danish transportation company DSV plans to acquire Dutch 3pl Frans Maas in an all cash offer of €38.00 per ordinary share of Frans Maas, including any dividend with respect to the financial year 2005.
The merger of DSV and Frans Maas will create a pan-European transport and logistics provider with annual revenues of approximately €4.1 billion, 19,000 employees and operations in more than 50 countries. Continued consolidation in the transport sector is the major catalyst for the companies to merge. DSV and Frans Maas believe a merger of their businesses will create a company that is better positioned to play a leading role in the transport and logistics sector.
http://www.fransmaas.com/
Schneider Logistics Launches New Bidding Tool for Shippers and Carriers
Schneider Logistics has launched the next generation of its transportation bidding tool: BidSmart. The new Web-enabled bidding system optimizes shippers' transportation networks by identifying solutions that lower costs and provide additional capacity, while helping carriers find increased loads for their networks.
Using a web-based bid format, BidSmart enables pre-qualified carriers to view a shipper's transportation requirements and bid on individual lanes, or packages of lanes, that best optimize their assets. In turn, carriers can also enter their rates and service capabilities, create their own packages, review specific freight service requirements and analyze bid results. The added functionality of scenario analysis now enables shippers to perform on-the-fly trade-off analysis for easy comparison.
BidSmart replaces the company's collaborative transportation procurement product, SUMIT CVA, and was developed for the web with Trade Extensions, a leading provider of software for advanced online negotiations based in Upsalla, Sweden.
http://www.schneider.com/
Manipulation of Booking Records Discovered at a Panalpina Subsidiary.
Serious misconduct of a manager at Panalpina Airfreight Management Ltd, Basel has led to losses of some CHF 33mn. Group CEO Bruno Sidler has — as a consequence of this incident — offered his resignation and has left the company. Despite this incident, Panalpina is expecting consolidated net earnings for 2005 that exceed the previous year's result.
The negligent employee in question, who has been with the company for more than 20 years, circumvented internal control mechanisms and managed to hide own incurred losses by manipulating the booking records over a period of 14 months. Following Bruno Sidler's resignation, Chairman Gerhard Fischer has taken over the CEO position on an ad interim basis.
http://www.panalpina.com/
Truck Transportation, Warehousing and Storage Revenues Hit $266 Billion
Truck transportation, courier and messengers, and warehousing and storage revenues reached $266bn in 2004, up from $246 billion the year before, the U.S. Census Bureau reported today. Truck transportation alone reached $186bn in 2004, up 10.4 percent. Courier and messenger revenues grew 4.0 percent to $62bn.
The report, 2004 Service Annual Survey: Truck Transportation, Couriers and Messengers, and Warehousing and Storage, showed the following highlights for employer firms:
1. General freight trucking contributed approximately two-thirds of all trucking revenue, with $125bn in 2004. Trucks transporting specialized freight (requiring equipment such as flatbeds, tankers or refrigerated trailers) accounted for the remainder of revenue, at $61bn.
2. For-hire, local general freight trucking revenues grew 8.0 percent to $20bn.
3. Long-distance general freight revenues increased 10.7 percent to $105bn.
4. Motor carrier revenues were up 10.5 percent to $175bn.
5. Revenue from hazardous materials shipments increased 9.4 percent to $10bn.
Truck transportation excludes private motor carriers that operate as auxiliary establishments of nontransportation companies. Results of the survey also provide estimates for revenue by commodity shipped and inventories of revenue-generating equipment.
http://www.census.gov/
NYK to launch New North Asia to Australia Loops with "K" Line, MOL and COSCON
Nippon Yusen Kaisha (NYK) have agreed to launch the New North Asia to Australia trade together with Kawasaki Kisen Kaisha, Ltd. ("K" Line), Mitsui O.S.K. Lines (MOL), and COSCO Container Lines Co., Ltd. (COSCON).
Three loops are currently being offered from North Asia to Australia - a South China — Australia loop, a North China —- Australia loop, and a Japan — Korea — Australia — South China loop. COSCON operates the first loop, and NYK, "K" Line, MOL, and P&O Nedlloyd operate the second loop and NYK, COSCON, "K" Line, MOL, and P&O Nedlloyd operate the third loop.
All lines have agreed to the suspension of the North China - Australia loop and the addition of new tonnage to the Japan - Korea - Australia - South China loop, rationalizing the calling ports together with COSCON loop when P&O Nedlloyd exits this consortium next February 2006.
The new cooperation will boost service efficiency and ensure a continuity of service that is greatly valued by customers. Real strength and growth is expected to be seen in this trade, which provides an important link between North Asia and Australia.
http://www.nykline.co.jp/
Livingston reaches agreement to acquire PBB Global Logistics
Canadian 3pls, Livingston and PBB Global Logistics, have reached an agreement to recommend that their unitholders accept an enhanced offer from Livingston. The offer must still be approved by PBB unitholders by January 10, 2006.
In November, PBB Global Logistics Income Fund rejected Livingston's $180mn unsolicited takeover bid. According to Livingston president & CEO Peter Luit, the enhanced offer is very attractive to PBB's unitholders, offering them a substantial premium to recent prices for their PBB units as well as allowing them to choose to defer the realisation of any capital gain or loss for Canadian income tax purposes.
Luit added that acquiring PBB is a major step for Livingston, but the value really lies in how well the operations of the two funds can be integrated after January 10 when the offer closes.
“While nothing will change between now and mid-January, we need to start planning now,” said Luit. A consulting firm has been engaged to help develop a solid integration project plan and prioritise activities for the short term.
http://www.livingstonintl.com/
Pacer International Named to Forbes List
Pacer International, the North America logistics and freight transportation provider, has been named for the second consecutive year to the Forbes Platinum 400 list, known as the "Best Big Companies in America."
Forbes Magazine, in its issue dated January 9, 2006, said it screened 26 industries for companies with at least $1 billion in revenues and high rankings for corporate practices as well as for long- and short-term sales and earnings growth and stock market performance. The top 400 companies made the list.
Forbes noted that Pacer achieved an 11.7 percent return on capital for the 12-month period ending Nov. 29, 2005, and that its stock price rose 35.9 percent to $26.59 during that period. Pacer is one of 15 companies in the transportation industry that made the list.
http://phx.corporate-ir.net/
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