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— February 8, 2006

3PLs

Mergers, Consolidation and Sales Continues to be The Top 3PL Story
While mergers and consolidations are nothing new to the 3PL industry, the last few months have been a bonanza for the investment banking community. The deals have been big, and they have been non-stop since the big announcement last year when DHL bought Exel to join two of the largest players in the world. The trend hasn't stopped. A.P. Moller-Maersk Group's acquisition of P&O Nedlloyd was mainly about ocean freight, but P&O's substantial 3PL business came along with the sale making Maersk Logistics a much bigger player in the global 3PL marketplace. And there was the surprise announcement in December that TNT would be selling off its 3PL business. That story has yet to fully play out, while TNT is still closing on 3PL acquisitions it had made before the corporate decision was made. The most recent large 3PL sale to close has been German logistics giant, Deutsche Bahn's purchase of BAX Global. Deutsche Bahn, which has long owned Schenker, bought BAX from its U.S. parent, Brinks Corp., for $1.1bn and closed the sale January 31, 2006. We also have seen smaller, regional deals such as FedEx's buy out of its joint venture partner in China, DTW for $400mn, thereby allowing FedEx to pursue its own agenda in the burgeoning Chinese market.
Where will this all end? Will we have a handful of 3PLs dominating the logistics outsourcing playing field? At the global logistics level, this consolidation has already happened. The resources needed to provide true global logistics services are huge, and there is only room for a few players with the capital and expertise to be both competent and competitive at this level. Acquisition is the only way to reach this goal in today's fast-paced marketplace, so it is likely that the consolidation trend will gain momentum among the big players. Even beyond the ranks of the top handful of 3PLs, we are likely to see more mergers and acquisitions because of the pressure to get big quickly.
http://www.schenkerusa.com/
http://www.dhl.com
http://www.fedex.com
http://www.tnt.com
http://www.maersk.com

Logistics Outsourcing Should Expand in 2006
According to a recent survey of Fortune 500 companies conducted by the event company Eye For Transport, not only do the major of companies outsource some of their logistics operation, but they also intend to outsource more in the near future.
Since the majority of the respondents currently using 3PLs are getting 'good' to 'outstanding' service (81%), it is not surprising that they would 'possibly' (44%) or 'very likely' (34%) increase their reliance on 3PLs. While 19% said they were unlikely to increase their use of 3PL services, 3% said they would definitely not be doing so - because they outsource everything already.
The survey conducted by Eye For Transport last fall included responses from 381 logistics professionals, including senior executives of many Fortune 500 companies. Eye For Transport is holding its second annual Logistics Outsourcing Conference in Atlanta from June 27-28, 2006.
http://www.eyefortransport.com/outsourcing06/

FedEx Express to Buyout its Chinese Partner, DTW Group
FedEx Express is buying out its Chinese joint venture partner, DTW Group's 50 percent share of the FedEx-DTW International Priority express business in China for US$400 million. FedEx and DTW Group entered into a joint venture agreement in 1999. The acquisition will include:
1. DTW Group's 50 percent share in the International Priority express joint venture, converting the joint venture into a wholly FedEx-owned company;
2. The DTW Group assets used to perform International Priority services; and
3. DTW Group domestic express assets from 89 DTW Group locations. Upon closing, FedEx will employ more than 6,000 people in China. The transaction is subject to customary conditions, including government approvals and licensing.
With this acquisition, FedEx will build upon beneficial relations it has established within China. The business experience gained from operating in this dynamic market will allow FedEx to better serve local businesses with an expanded suite of transportation solutions.
For FedEx, the acquisition is part of the Company's strategic investment in the long-term growth of China and improves the Company's access to important markets. Customers will benefit from greater access to key areas worldwide that includes China's second and third tier cities. The DTW Group will continue to operate international freight forwarding, general cargo transport and merchandise distribution activities.
http://home.businesswire.com/

TNT Logistics Wins Contract Renewal With Nissan-Renault Alliance
Nissan, on behalf of the Nissan Renault Alliance, has renewed its UK distribution contract, worth approximately 21mn pounds, for a further three years with TNT Logistics. The contract involves delivering vehicle parts from the national parts distribution center in Leicestershire, to approximately 400 Nissan and Renault dealerships, five nights a week. TNT's IT enhanced offering was one of the key factors in the renewal of the contract.
TNT introduced services that include dealer delivery / returnable asset tracking that monitors the roll cages and tote boxes through the entire dealer distribution network, provides proof of delivery and dealers with a web based enquiry system. Dealer warranty and returns tracking, a web-based dealer warranty and returns tracking system, has also been introduced. Both these new systems work in parallel with TNT's transport management system. TNT Logistics also invested in a new vehicle fleet that is a combination of rigid and articulated vehicles.
Also, TNT and the French cargo transport operator, Malherbe, have concluded the sale of the remaining activities of Logistiques Nicolas, part of the activities of TNT's French subsidiary TNT Logistics Holdings SAS. This transaction, together with the transactions announced in Decemer, represent approximately 95 percent of the TNT Logistics France business. TNT is selling all of its logistics outsourcing businesses, and the French operations have been the first to be sold.
http://www.tntlogistics.com/

Toyota's New Texas Motor Manufacturing Plant Selects Ryder as Its Lead Logistics Manager
Ryder System has been awarded a contract by Toyota Motor Manufacturing North America. Under the contract, Ryder will support Toyota's new assembly plant in San Antonio, Texas, providing lead logistics management and operations services from supplier and network facility locations in the United States, Canada and Mexico. Utilizing logistics planners, 180 drivers and a fleet of nearly 270 vehicles, Ryder will also provide the pick-up of parts from five states in the MidSouth and Southwestern United States and all deliveries to the San Antonio production facility. Production will begin in late 2006 at this facility, which has the capacity to produce 200,000 Tundra pickup trucks.
Ryder was Toyota's first North American logistics provider, selected in 1987 for the Georgetown, Kentucky plant. Today Ryder provides logistics services for Toyota at locations in Kentucky, Michigan, Tennessee, California, West Virginia, Canada, Argentina and Mexico. Ryder also provides in-house logistics design services at Toyota Motor Manufacturing North America's headquarters in Erlanger, Kentucky.
http://phx.corporate-ir.net/

Two 3PLs in Germany Lease Space From ProLogis
The logistics real estate company, ProLogis, signed leases in Germany with two leading logistics companies for more than 500,000 square feet of industrial space. In one transaction, ProLogis will develop a new industrial facility west of Frankfurt to G.L. Kayser Kontrakt Logistik, a private third-party logistics company serving enterprises throughout the country. In the other, ProLogis has leased 222,000 square feet in central Germany to Geodis, a UK-based global provider of transport and logistics services.
G.L. Kayser is a private third-party logistics provider operating a nationwide distribution network for goods of all types. It also collaborates with leading regional transportation partners, and its system of daily, direct deliveries to 40 depots around the country enables efficient service, a high degree of flexibility and competitive pricing.
The company's new distribution center will be located in the city of Bingen am Rhein west of Frankfurt. It will comprise almost 269,000 square feet (25,000 square meters) of industrial space, plus another 40,000 square feet dedicated to offices and assembly. ProLogis expects to complete construction in the second half of 2006. The building will be used to serve two of G.L. Kayser's key accounts, Markwins International and Weber-Stephen Products Co.
Geodis is one of Europe's top transport and logistics companies, with almost 23,000 employees and an international distribution network covering 120 countries. The distribution center newly leased from ProLogis is located in Malsfeld near the city of Kassel. Geodis also leases more than 2 million square feet from ProLogis across multiple markets in Italy, The Netherlands, Hungary, Spain and France.
http://www.prologis.com/

APL Logistics Wins Business of VF Corporation
VF Corporation, the world's largest apparel manufacturer, has selected APL Logistics - a leading provider of global logistics solutions - to deliver ocean freight consolidation and other supply chain services.
The new business adds to APL Logistics' growing base of leading international clients seeking simple, cost-effective ways to source and ship imports from Asia, Latin America and other sources to the U.S. and Europe.
"VF Corporation manages many of the best-known brands in the apparel industry," said Brian Lutt, President of APL Logistics. "That means it's incumbent upon us to support those brands with supply chain solutions that fit with our client's changing needs."
North Carolina-based VF Corporation reaches consumers in 150 countries with such highly recognizable brands as Lee, Wrangler, Vanity Fair, and The North Face.
In addition to consolidation - which involves preparing multiple products from various sources for shipment - APL Logistics will provide VF Corporation with services that include:
1. Supply Chain visibility through See Change, the company's proprietary IT system that integrates supply chain data from any source;
2. Electronic Data Interchange;
3. Bar Code Scanning; and
4. Label Printing.
In addition to APL Logistics' technical capabilities and industry expertise, we're pleased to find a supply chain partner that puts a premium on responsiveness," said Bill Coxwell, Manager of Global Logistics for VF Corporation. "Responding to customers' needs is one of the keys to our success."
http://www.apllogistics.com/


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