The Top 25 Global 3PLs: Is Bigger Really Better?

By: Thomas A. Foster and Richard Armstrong |
Mergers drive rapid expansion among the world's largest logistics service providers, but organic growth is what produces financial success.

Burgeoning global commerce, ever-expanding supply chains and a deeper corporate reliance on outsourced logistics raised the 2005 gross revenues for the Top 25 Global 3PLs to $110bn, an increase of 12.8 percent over 2004 (Table Two PDF). In the U.S., gross revenues for the 3PL market hit $103.7bn, a 16 percent increase over 2004.

But unprecedented organic growth of third-party logistics reveals only part of the story. Not only is the industry growing at a rapid rate, it is becoming more sophisticated and more concentrated at the top. Merger and acquisitions activity among the world's leading 3PLs in 2004 amounted to $9bn. This activity in the 3PL industry has been gaining momentum over the last few years. Since 1999, it has amounted to more than $14.5bn. We can expect the pace to stay hot for two to three more years.

While the 3PL industry is a magnet for M&A activity, a more important question for the customers of these emerging giants becomes, is bigger better? Do global reach, expanded IT capabilities and standardized processes provide the best solutions for customers? Is controlled organic growth better than mega-deals? Do individual customers loose clout with mega-3PLs? The answers to these questions are closely related.

To start, let's look at how some of the Global 25 are getting bigger. Deutsche Post's $6.6bn purchase of Exel will more than double the size of DHL's revenues when the operations are consolidated. Schenker's $1.2bn purchase of BAX significantly increased the German forwarder's inroads into the U.S. and Asian markets. Maersk Logistics, with just a few hundred million in revenue, more than doubled when its parent purchased the shipping and much smaller logistics operations of P&O Nedlloyd. Note that BAX and Exel remain on our Top 25 list because the sales happened late in the year and these entities continue to operate under their own brands in the U.S., at least for the time being.

SembCorp Logistics is included again on the Top 25 list, but this year it has a new owner. The former Singapore-based 3PL was bought by Toll Holdings, which owns the largest trucking and distribution company in Australia.

A new addition to this year's list is Public Warehouse Corporation of Kuwait, which nearly doubled its size last year when it bought GeoLogistics. PWC is now a $4.5bn company with $1bn in cash that it can invest in acquisitions or internal growth. PWC has grown rapidly since 2002, primarily because of its defense-related business with the U.S. government in the Gulf region. Besides this defense business, PWC has strong operations and increasing global coverage.

New Money Drives Market
Acquisitions have taken on a new momentum in the past year, not only because large 3PLs are strategically buying other 3PLs, but also because the investment world has discovered them. Financial companies like Bison Capital, EVE Partners, New Market Capital and many similar providers of private capital have dramatically increased the amount of money available to invest in third-party logistics. There are many more buyers than sellers. As a result, prices and multiples keep increasing well beyond what has been normal.

Companies like those mentioned above often invest without taking majority ownership. They will take a minority interest in a 3PL with a five-year deal, then provide the owners with capital to move to the next level. 3PL investments tend to be with good performers who can grow quickly beyond their current revenues, usually in the range of $100m to $150m. At the end of five years, the 3PL has to pay the investor back with accrued interest, be sold privately or go through an initial public offering. This type of investment gives the up-and-coming 3PL a chance to grow dramatically. Given the dynamic nature of the 3PL market, five years is plenty of time to move a company substantially.

Although there is a lot of buzz about the mega-deals, most of the activity has been with small to medium-sized operations with less than $150m in annual gross revenues. The acquisition emphasis also seems focused on non-asset businesses such as freight brokerage, freight forwarding and niche logistics. There are not a lot of investors interested in buying pure warehousing businesses. Companies like Ozburn-Hessey, TLC and Jacobsen that have warehousing services also provide integrated services through large transportation and distribution operations. Such combinations allow for faster growth, greater margins and high investor interest.

The next big 3PL deal will be the much-heralded sale of TNT Logistics, being handled by the financial firm Goldman Sachs. The purchase could well be announced by the end of June and the price will be about $1.5bn. If a 3PL strategic buyer acquires TNT Logistics, this huge acquisition will take some time to digest. If a financial purchaser acquires it, the results could be different.

C.H. Robinson Leads All Top 3PLs in Profits and Growth

In the dog-eat-dog world of third-party logistics, successful 3PLs have to produce both high profits and high growth. Too often, these goals are at odds. Fast growth, especially through acquisition, can hurt profits. Focusing on profitability can mean avoiding the risk of growing new markets and services.

C.H. Robinson Worldwide achieved the highest results of any of the global top 25 3PLs in 2005 for both annual growth and net income. Since the company went public in 1997, both growth and profits have consistently been in the high teens. According to CEO John Wiehoff, the key to success for the Eden Prairie, Minn.-based company has been a combination of organic market share growth in its core businesses supported by a limited number of acquisitions to broaden the companies geographic coverage and offerings of services.

Since the IPO in 1997, Robinson's net revenue growth rate has been 17 to 18 percent. Only two percent of that growth has been from acquisitions, so Robinson is clearly an organic growth company. Its largest acquisition was American Backhaulers late in 1999. Not only did this purchase allow Robinson to capture the business from the second-largest provider of truckload services in North America, the company gained leading edge technology and operating system.

"It was a great opportunity," says Wiehoff. "They were doing things we needed in order to grow. As with any acquisition we do, we looked at the caliber of the people, the systems and the customer and carrier relationships. Everything was right."

Acquisitions have also allowed C.H. Robinson to enter two new regions of the world, and they have helped the company become a player in modes of transportation other than truck much faster than would otherwise been possible. But while Robinson has become a global player with operations in Europe and Asia, its North American business, which includes Canada and Mexico, produces 90 percent of its gross revenue. In the near future, the largest revenue growth will continue to be in the truckload, less-than-truckload and intermodal where the upside potential remains huge. Robinson's core industry focus has always been in the food and beverage sector, and it remains more than 42 percent of its total revenue. Over the last decade Robinson has diversified heavily into manufacturing and retail.

Its international business is now 10 percent of the total business, and Robinson is growing it carefully. Its international acquisitions have been smaller and very strategic to allow Robinson to enter new foreign markets. It has partnered with its agents in Asia to open additional offices. Last year, Robinson acquired a business in Germany with five or six offices and only about 100 employees.

"These acquisitions have been small, but very meaningful to us in establishing a new presence in parts of the world where we were not doing business in our own name," says Wiehoff.

There are two pieces to Robinson's international business. More than a third is European truckload services. The rest is a broad mix of ocean and air forwarding and customs brokerage.

"Internationally, we have gone from zero to about 10 percent of our business during the past 10 years while the organization has grown rapidly, so it has been meaningful. Over the next five to 10 years we hope to have a greater mix of international business. Acquisitions will be the wild card in that growth."

Part of the organic growth strategy is to develop new services for existing customers, including consolidating freight, load building, multi-modal service offerings, network analysis and complete supply chain management with end-to-end visibility, communications and inventory management. In the perishable sector, Robinson is managing entire replenishment programs and category management for customers.

"We work with our larger accounts to understand their evolving supply chain strategies," says Wiehoff. "We see how we can help them with services, people and technology that provide a competitive advantage."

Going forward, expect to see much the same strategy that has put C.H. Robinson Worldwide at the top of the list for both profit and growth: market share expansion, new services and global expansions, all with a bias on organic growth.


Is Bigger Better?
Large global corporations are ambivalent about what they want from their 3PLs. On one hand, some say they want a one-stop 3PL that can provide all the services and geographic coverage that their customers need. No doubt this supposed preference has helped to encourage mergers, so larger 3PLs can provide more services and cover the globe. UPS and DHL are pursuing this strategy. Yet, most large customers are afraid to put all of their eggs in one basket. They don't want to risk their entire supply chains on one or two 3PL partners, nor do they want to limit their negotiating potential. For the most part, the result is that the global corporations are reducing the number of 3PLs that they use to those that offer a wide assortment of integrated services.

Another feature of market consolidation and mega-3PLs is that we are seeing greater effects from brand names. The tier-one global 3PLs, such as DHL, UPS and TNT, are included in the request for proposal (RFP) process by large customers. The second- and third-tier 3PLs with less well-established brand names are seeing fewer bid opportunities.

In addition, larger players are increasing the probability of success by using more direct sales rather than waiting for the RFPs to come in. Brand name recognition opens doors for those direct sales efforts. Direct sales are designed to avoid going through a bidding process and increase the probability of securing business. Occasionally, sales approaches may include joint proposals from two or three 3PLs that form ad hoc partnerships to meet specific customers' service and coverage requirements. These joint approaches can meet with success, especially where the customer faces a capacity crunch. If a 3PL can reliably promise the container, rail, truck or air capacity that the customer needs at competitive prices, that ability will capture large pieces of business.

How Size Matters
Small 3PLs under $250m in net revenues generally have a competitive advantage with strong customer relations because their scale allows them to have close communications. As a result, they can be more flexible and adjust faster to market needs than their larger competitors. These smaller 3PLs also tend to have better operating margins than many of the very large 3PLs because their overheads are lower. The problem they face is that they do not have global scale, so their sales and growth prospects are limited to customers looking for a North American or other single market solution. Solutions, usually tactical, are offered to small and medium-sized companies, which is turning out to be a good strategy. 3PL penetration has doubled since 2001 with small to medium-sized customers to the point that over half of these companies now use 3PLs. The largest companies have long used 3PLs. Kenco and Landstar Global are good examples of expanding companies in this smaller 3PL niche. Kenco is a solid warehousing company expanding into transportation management. Landstar is especially well suited to serve small to medium-sized companies needing integrated services. Both companies are growing organically and rapidly.

The 3PLs between $250m to $500m are having the most difficult time competing. They need to expand beyond a regional or functional focus to grow, but the larger players are crowding them out of many large contracts. Many of the players in this group are functionally specialized and asset-oriented. This asset focus normally lessens their operating margins, earnings and returns. While there are exceptions in this group, many will have to be acquired to survive.

The most successful 3PLs are in the group from $500m to $1bn. They have enough critical mass to provide a variety of integrated services. They are international operators often serving Europe, North America and maybe Mexico and Brazil. They have enough scale and density of network so that they can standardize operations supported by good IT. They have good services and a good customer following that allows them to have profit margins that are a few points higher than most other 3PLs. Most of the players in this group have grown organically.

For example, C.H. Robinson has grown at between 20 and 25 percent a year almost entirely through organic expansion without having to deal with difficult purchase integrations. Their growth has been steady and controlled. On the other hand, UTi and EGL have also grown quickly through acquisition. UTi has been particularly adept at acquiring companies, integrating them and improving their profitability.

Also included in the global $500m to $1bn category are SembCorp and FedEx Trade Networks/SCS. In the domestic arena, strong players include J.B. Hunt Dedicated and Werner's 3PL/Dedicated operations.

Beyond $1bn, there are only a few 3PLs that have both good financial results and thoroughly integrated operations. Most of the players above $1bn do not enjoy high profitability in their logistics operations. They may have very strong transportation or express services, but the pure logistics parts of their operations lag financially. For example, both Ryder SCS and UPS SCS earn only 2 to 2.5 percent after tax on their logistics business, while other transportation operations under the corporate umbrella produce much higher profits. Very large 3PLs with over $1bn can have very large problems integrating large purchases. Rebuilding a single, smooth running operation that can capitalize on their scale and scope can take a long time. For example, DHL has now begun to see good financial results from the logistics and forwarding operations that it built on its purchases of Danzas and AEI years ago. Such slow absorption is going to be the case with all of the big acquisitions that are unfolding. The profit leaders with over $1bn in net revenue-Expeditors, Caterpillar and PWC-have primarily grown organically. They have not been slowed down with acquisition absorption. It will be interesting to see how quickly PWC can absorb GeoLogistics.

Another important variable with regard to profit margin is the interest of large parent companies. According to Bob Stoffel, senior vice president of UPS SCS, his operation feeds UPS Package Services a billion dollars per year in package business. A skeptic might surmise that this makes UPS corporate more accepting of SCS's modest profitability.

Similarly, FedEx makes no bones about its single-minded focus on growing its core transportation businesses. Chairman Fred Smith has stated that he has little interest in owning warehouses. The role of the supply chain warehouse business that it acquired from Caliber Logistics is to feed the FedEx transportation businesses. The freight forwarding and customer brokerage businesses that constitute FedEx Trade Network are similarly constrained. As a result, these logistics operations are not carrier-neutral, which is a problem with many 3PL customers. FedEx is unapologetic about its strategy.

Despite any concerns about third-party logistics growing too fast, acquisitions are not going to slow down. There are many capitalists who see the logistics industry as a good opportunity to make money. Many 3PLs believe they need to acquire to grow fast enough to keep up with the market. There is always the hope that third-party logistics might be a better business if you pick the right company to buy.

Who's Going to Buy TNT Logistics?

TNT Logistics is currently the world's eighth-largest 3PL with $4.2bn in revenues, but next year don't look for this Netherlands-based company on the GL&SCS Global Top 25 list, at least under this name. The parent company, TNT N.V. is in the process of selling off its logistics division. According to TNT Group Managing Director of Logistics David Kulik, the division will be sold in its entirety, either to another large logistics company or to a financial buyer looking for a good investment.

The sale should bring a good price because of the work Kulik and others have done over the past three years to transform TNT Logistics from a collection of single-nation-focused operations all over the world into an integrated global 3PL.

"We had some big business units that were under-performing and that did not fit into our new global strategy," says Kulik.

For example, TNT Logistics recently shed generic trucking and warehousing businesses in France as well as some $200m in under-performing contracts. More important, TNT Logistics has standardized its remaining operations across all business units to build an integrated global model.

So if TNT Logistics is now doing so well, why is the parent company selling it?

It's all about corporate strategy and capital. TNT N.V. is made up of three divisions: mail, express and logistics. TNT operates the second-largest express company in Europe and the most efficient post office business on the Continent. To capture more postal business in Europe's rapidly privatizing industry, and to gain market share for its international express business, TNT needs capital.

According to Kulik, who is a corporate board member, the logistics division is competing with mail and express for that capital based on which division will produce the quickest and best return. Although TNT Logistics has one of the highest margins in the 3PL industry, its return on sales lags the other two TNT divisions. Mail margins are about 16 percent, express is about 8.5 percent and logistics is between four and five percent.

"Mail is strategic to TNT and the express business is gaining momentum," says Kulik. "We just invested in a Chinese network of more than a thousand depots. This network is connected to Europe with two new 747 freighters."

With the need for capital for the mail and express divisions, and the logistics division fixed, Kulik says that there is no better time to sell. TNT Logistics has become largely asset-free, so its four to five percent margins are a good return on invested capital for a potential financial buyer.

"Such a buyer will look at the relatively low need for invested capital, but they will also look at our ability to generate earnings and free cash flow," says Kulik.

A strategic buyer in the logistics industry would become a major global player in one acquisition and gain a full range of logistics services, as well as a leading position with several large customer sectors. Nearly 40 percent of TNT's business is automotive, which includes just-in-time inbound delivery of parts and subassemblies to manufacturing plants, automotive spare parts and finished vehicle delivery. Fast moving consumer goods is the second-largest sector with high-tech close behind.

"Our concentration on business development is toward FMCG and high-tech," says Kulik. "We are broadening our portfolio of customers."

The investment banking firm of Goldman Sachs is handling the sale and reports that the process is moving quickly.

"The sale will happen well before the end of 2006," says Kulik. "The time is right for TNT Logistics to exploit its potential in a different corporate environment. That is best for TNT shareholders and best for its employees and its customers."


Verticals Matter
Several vertical markets dominate 3PL activity today in terms of revenue. Automotive logistics is the largest single vertical for many of the top 3PLs. For example, TNT, Ryder and Penske earn half of their revenues from automotive logistics. Revenues there exceed $400m for each of these 3PLs. No other vertical creates that kind of revenue for individual 3PLs. All of the big players are involved in automotive logistics, and it continues to grow. Those with heavy involvement with GM and Ford have to be concerned.

Ryder is the 3PL at two of GM's most modern plants near Lansing, Mich. These operations involve JIT, kanban, lean inventory and space minimization. GM has pushed set-up, sequencing and subassembly back to Ryder. These two new GM plants will be unionized, with UAW white paper. Workers are paid less on a per-hour basis than in the assembly plants. Lower labor costs will make GM more competitive. Ryder's support facility involves more tier-one activity, more milk runs and more transportation management.

There are only a few 3PLs with enough scale to have a heavy automotive focus. Ryder, Penske and TNT are the biggest. Others majors include Menlo and Caterpillar. In Europe, TNT and Exel are the dominant automotive logistics players. The smaller automotive 3PLs such as Linc and Menlo's Vector are not gaining significant new business. The big guys with scale will continue to dominate automobile assembly. It is common for the major automotive logistics providers to work together to solve GM, Ford or other auto manufacturer problems. They do not make huge profits on this business, but they make four or five percent after tax and it has big volumes.

The automotive market for 3PLs also takes in the aftermarket and spare parts business. Schneider Logistics, for example, does about $50m for GM and Ford. Schneider Logistics is one of FedEx's largest customers because of the huge volumes of parts shipments that it moves for its automotive customers. But the big automotive business for 3PLs is supporting manufacturing operations. The aftermarket is just nice business.

High-tech is another important vertical. Leading 3PLs in this space are involved in planning activities throughout the supply chain, but especially in Asia where most of the products are made. 3PLs also play important parts in configuration/postponement activities close to the end user. From a transportation standpoint, all of this requires heavy involvement in airfreight. Shipping by air is a major requirement for internet-based supply chain management from Asia to final consumers in North America, Europe and Japan.

As an example, BAX (now part of Schenker) manages Apple's iPod supply chain from manufacturer to delivery throughout Japan. BAX Asia Pacific does a lot of end-to-end supply chain management. But high-tech is a volatile business. Contracts tend to be shorter, mainly because the product life cycles are short and the suppliers are always in flux. The customer focus is on velocity, tight inventory control and efficient long distance logistics. 3PLs in this sector must have sophisticated internet and supply chain management capabilities. They must be flexible enough to handle rapidly changing supply, assembly and configuration requirements.

The third-largest vertical for global 3PLs is retail/consumer goods. Retail supply chains focus on moving goods, and information, from plants in Asia and other low-cost areas to markets in North America and Europe. Besides the ocean container activity, there is a need for tremendous distribution capabilities to move large volumes of these goods from West Coast ports throughout the U.S. Furniture, clothing, footwear and other consumer goods dominate this segment.

In the North American retail market, there has been an important shift that has impacted 3PLs with traditionally strong freight forwarder activity. Just a few years ago, freight forwarders controlled the vast majority of ocean container traffic around the world. While that is still the case in most parts of the world, it is no longer true from Asia to the U.S. Freight forwarders and non-vessel operating common carriers (NVOCCs) in this lane now control only about 38 percent of the container traffic. The other two-thirds is handled direct by the large retailers such as Wal-Mart and Target. These major shippers have more clout with carriers. The traffic that the forwarders and NVOCCs handle on their own bills of lading is often for smaller accounts, less-than-container load quantities or multiple customer consolidations.

Many retailers are often using the same 3PL/freight forwarder, but for product handling and consolidation, not traditional freight forwarding origin to destination service. Some retailers have contracts that cover support activity, but not the movement on a freight forwarder relationship. When the containers hit the U.S., similar 3PL contracts may only cover container stripping, cross-docking and reloading. Major retailers are using 3PLs tactically, not strategically.

Well-IS Bigger Better?
When Armstrong & Associates puts its Top 25 Global 3PL list together, it is done primarily based on the companies' turnover (gross revenue). Turnover includes purchased transportation. It can be argued that the process is biased against warehousing-based companies short of global reach. Among the Top 25, only Exel, TNT Logistics, PWC, Caterpillar, Menlo, APL, Maersk Logistics and SembCorp derive most of their revenues from value-added warehousing.

There are, of course, other high-quality, value-added warehousemen, particularly in North America and Hong Kong that should be mentioned. They are listed in the Warehousing-Based 3PL table (Table One PDF).

And there are transportation management 3PLs like Hub Group (U.S.), Landstar Logistics, BNSF Logistics and Cargo Master that are growing quickly. Armstrong & Associates's experience in dealing with these companies and the warehousing companies in Table One is that most of their operations are very good. Individual customers tend to be more important to them. While they may lack global scale, they do provide high-level service for functions they have. (For more detailed information about the companies mentioned above, please consult Who's Who In Logistics databases at www.3PLogistics.com).

This year's Top 25 Global 3PLs list does not include any of the large Chinese governmental operation such as Sinotrans. While this 3PL does have $3bn in revenues, it is not a global player, nor one that competes on a level playing field. It operates almost exclusively in China, and it does not compete in the same way that all the other market-driven 3PLs in the world have to operate.

Emerging 3PL Trends
Security concerns involving import containers, air transportation and illegal aliens will continue to be major for years to come in all of the modern, westernized countries. Major international players like DHL, FedEx, UPS, Schenker, Kuehne + Nagel, Expeditors, UTi and TNT have long histories of getting the job done the right way while carefully controlling the cargoes they handle. They are very capable with C-TPAT, FAST, AES, SAFE and other government-related security programs. A major challenge for international supply chain logistics companies and their customers is to keep the uninformed, raging with ethnocentrism, and inside-the-beltway special deals from producing processes that are too expensive or otherwise not in the public interest. The DP World/P&O fiasco is a case in point.

A global issue that will affect 3PLs significantly in the next 10 years will be balancing multinational corporate interests with those of individual countries. Most 3PL CEOs are educated, international, culturally flexible and willing to do business. Several countries that are having trouble modernizing or are out of the economic mainstream of the global economy are increasingly difficult to service. Iran, Venezuela, Nigeria and Pakistan are examples. Occurring more often now for modern, westernized countries are questions about how to balance the interest of their citizens with those of multinationals whose revenues are global. 3PLs will, at times, be snared in these problems.

For users, investors and researchers, gaining better transparency into the finances and operations of major 3PLs will be important, especially when achieving good logistics operating results remains difficult. Fortunately, some major logistics providers are moving to make certain board governance practices are more public. Other 3PLs and their parents' logistics corporate communications operations regrettably remain less candid. As third-party logistics experts, Armstrong & Associates usually find it easier to get straight answers from small to medium-sized companies than the large ones. Among the Top Five, only Kuehne + Nagel provides real transparency into its business and operations. In the U.S., obfuscation and spin still rule.

At the same time, there is no question that the technical supply chain management capabilities of 3PLs will continue to improve. The levels of service to customers are much better today than a decade ago.

Third-party logistics will expand faster in China, India and Southeast Asia. English will continue to be the lingua franca of international commerce. The Chinese are conquering it. The Indians have it and use it fervently for telemarketing. Even the Japanese are now emphasizing it as a necessary part of basic education.

Change is difficult but good, we think.



Top 25 3PLs

1.

Exel plc Berkshire, UK, London: EXL
Exel Americas Westerville, OH, 614-865-8500, Bruce Edwards, COO
www.exel.com

3PL Revenue: $13.4bn Parent Revenue: $70bn (DPWN)

Coverage: GGlobal (Service to over 95% of World GDP)

3PL Assets: 111,000 employees; 1,600 warehouses; 5923 tractors, 7544 trailers

Information Systems: Very good, TMS - i2, Red Prairie G-Log; WMS - HK Systems, Topex, Insight, Red Prairie

Services: Warehousing and distribution (contract logistics), air and ocean freight forwarding, supply chain consulting, customs brokerage, transportation management, returns management, home delivery

Industry Focus: Consumer goods, retail, computers and electronics, automotive, chemical, healthcare

Key Customers: Adolph Coors Co., Apple Computer, Compaq, Ford Motor Co., Hewlett-Packard, Home Depot, Honda, Intel, International Paper, Kodak, Maxtor, Miller Brewing, Mitsubishi Corp., Motorola, Nissan, Owens Corning, Pepsi Americas, PPG, Procter & Gamble, SC Johnson, Shell, Sony, Sun Microsystems, Unilever, Wal-Mart, Xerox

Armstrong & Associates' Evaluation: Deutsche Post/DHL purchased Exel in December 2005. Separate financial reports were made at year-end for the two companies. Exel Contract Logistics had $9bn in revenue at the time of purchase. American revenues were $4.1bn at the time of purchase with $2.6bn in contract logistics. The new company, DHL Contract Logistics, will be run by John Allen, who was Exel's CEO. Danzas Solutions has been rolled into Allen's operations. It had $2.2bn in revenues, 88% of which were in Europe. Contract logistics/warehousing customers should expect little change. Freight forwarding operations however, are being transferred to DHL Global Forwarding. Most U.S. customers should see improved operations by year-end. (See DHL Global Forwarding below.)

2.

Kuehne + Nagel International AG Schindellegi, Switzerland, SWX: KNIN
Kuehne & Nagel, Rolf Altorfer, President & CEO,
800-755-9493
www.kuehne-nagel.com

3PL Revenue: $10.7bn

Coverage: Global (Service to over 85% of World GDP)

3PL Assets: 40,000 employees, 400 warehouses

Information Systems: Very good; TMS - CIEL 4000, KN Road, i2; WMS - EXCEED

Services: Ocean and airfreight forwarding, contract logistics, value-added warehousing and distribution, transportation management, customs brokerage, insurance services, supply chain management

Industry Focus: Automotive, industrial, healthcare, high-tech, retail/consumer products

Key Customers: Dana, Dupont, Harman, Memorex, Nortel, Siemens

Armstrong & Associates' Evaluation: Kuehne + Nagel has large ocean freight forwarding operations handling over 1.6 m containers per year. It is also the fifth largest airfreight forwarder. Contract logistics operations grew 13% in 2005 and is now 31% of net revenues. Americas business for Kuehne + Nagel is 26% of net revenues. U.S. net revenue was $341 m in 2005 with 52% from freight forwarding. Americas CEO, Altorfer is a hard driving operations man who runs a tight ship.

3.

Schenker Essen, Germany; (U.S.) Freeport, NY, 516-377-3000
Heiner Muhrmann, CEO
www.schenkerusa.com

3PL Revenue: $10.7bn Parent Revenue: $30bn

Coverage: Europe, Asia, South America, Africa, North America

3PL Assets: 39,000 employees, 405 warehouses

Information Systems: Good; TMS - SWORD, Procars, ILS; WMS - HTS, SAP R/3, SoLiNET

Services: Air and ocean freight forwarding, customs brokerage, warehousing and distribution, transportation management

Industry Focus: Automotive, computers and electronics, consumer goods, healthcare

Key Customers: BMW, DaimlerChrysler, IBM, Intel, Procter & Gamble, Subaru

Armstrong & Associates' Evaluation: Schenker made a significant move to expand its previously limited U.S. presence by acquiring BAX Global Logistics earlier this year. Its parent, Deutsche Bahn AG, needs to find significant growth and profit opportunities outside of "old Europe." Schenker's contract logistics and forwarding operations in Canada are good. South American and Mexican operations are respectable. European trucking operations account for half of revenues. Contract logistics is 10% of business. Deutsche Bahn's rail operations were profitable for 2005. Schenker handled 900,000 TEUs in 2005. BAX adds significant new airfreight forwarding with good Asia-Pacific and North American operations (See BAX profile below.)

4.

DHL Global Forwarding Basel, Switzerland, Deutsche Post World Net
(U.S.) Plantation, FL, 954-888-7000, Hans Toggweiler, President & CEO
www.us.danzas.com

3PL Revenue: $9.5bn Parent Revenue: $55.9bn

Coverage: Global (Service to 99% of World GDP)

3PL Assets: 13,000 employees

Information Systems: Very Good; TMS - LOGIS, proprietary; WMS - ELIS

Services: Air and ocean freight forwarding, customs brokerage, transportation management, warehousing and distribution, supply chain consulting

Industry Focus: Electronics, automotive, consumer products, chemicals, industrial

Key Customers: Bell & Howell, Caterpillar, Cole Vision, Gatorade, IBM, John Deere, Rodenstock Lens, Satis Vacuum, Xerox

Armstrong & Associates' Evaluation: DHL Express will continue to struggle in North America. However, DHL Global Forwarding is operating well and has finally gotten the Danzas and AEI purchases integrated and running smoothly. Danzas had been the global brand leader in forwarding for most markets, including Asia. The Exel operations should be largely absorbed by year-end. Deutsche Post expects to save about $300m in synergies. DHL Global Forwarding should continue to be an industry leader with very good operations. Combined ocean operations should exceed $1.8m TEUs this year.

5.

UPS Supply Chain Solutions Atlanta, GA, NYSE: UPS, (United Parcel Service)
Bob Stoffel, President
800-742-5727
www.UPS-SCS.com

3PL Revenue: $7.7bn Parent Revenue: $42.5bn

Coverage: Global (Service to 99% of World GDP)

3PL Assets: 22,000 employees, 550 warehouses, 1100 tractors, 2425 trailers

Information Systems: Excellent; TMS - i2, Roadnet; WMS - operates all major systems

Services: Air and ocean freight forwarding, customs brokerage, transportation management, warehousing and distribution, supply chain consulting, dedicated contract carriage, trade finance and insurance, equipment leasing, mail services

Industry Focus: Computers and electronics, telecommunications, healthcare, automotive, retail, consumer goods

Key Customers: Alcatel, Adidas, Cisco, Daimler/Chrysler, Fabricut, General Motors, Honeywell, Hitachi, Kingsdown, Nikon

Armstrong & Associates' Evaluation: UPS SCS grew 11% in 2005. It has become the most well known U.S. brand name. Revenues for contract warehousing were $1.2bn in 2005. Freight forwarding net revenues were $3.3bn. EBIT margin was 3%. UPS SCS' target is 8%, but it may take two to three more years. In the meantime, it contributes $1bn per year in package business to its big brother. UPS handles 660,000 TEUs per year as a freight forwarder. UPS Capital Freight and Consulting continue to be important contributors.

6.

Panalpina Basel, Switzerland
(U.S.) Redwood Shores, CA, 650-226-1600, Peter Merath, Regional CEO
www.panalpina.com

3PL Revenue: $6.3bn

Coverage: Europe, Asia, Americas, Africa

3PL Assets: 13,500 employees, 240 warehouses

Information Systems: Good; Emphasis is on internet native SCM

Services: Air and ocean freight forwarding, transportation management, warehousing and distribution, oil and gas services

Industry Focus: Automotive, computers and electronics, oil and gas, consumer goods, beverages, apparel, healthcare

Key Customers: Chevron, Delphi, Hewlett-Packard, IBM, Philips Electronics, Robert Bosch, Shell Chemical, Sun Microsystems

Armstrong & Associates' Evaluation: Panalpina is a top ten freight forwarder. About 10% of its revenues are derived from supply chain management. It handles 830,000 TEUs per year, 750,000 tons of airfreight, 240 warehouses and is consistently profitable. EBITDA margins run 16%. About 15% of its revenues involve Asia-North America operations. Its primary emphasis is still Europe. In 2005, Panalpina underwent an IPO that was successful. Panalpina operates in 140 countries with 13,000 employees. Panalpina has turned over several executive personnel over the last few years. Early in January group CEO Bruno Sidler left because of improper accounting practices that occurred on his watch.

7.

C.H. Robinson Worldwide Eden Prairie, MN; Nasdaq: CHRW
John Wiehoff, CEO, 952-937-8500
www.chrobinson.com

3PL Revenue: $5.7bn Parent Revenue: 4.3bn

Coverage: North America, Europe, Brazil

3PL Assets: 5,700 employees, 100 warehouses and cross-dock affiliates

Information Systems: Very Good; TMS - Express; WMS - High Jump

Services: Freight brokerage, air and ocean freight forwarding, transportation management, warehousing, print logistics

Industry Focus: Technology, food and beverage, retail, paper products and printed materials, agriculture, consumer goods

Key Customers: Anheuser-Busch, AOL, Best Buy, Clorox, Dana Corp, International Paper, Wal-Mart

Armstrong & Associates' Evaluation: C.H. Robinson continues to be the most profitable 3PL. John Wiehoff and his cohort of young execs continue to refine the excellent business model put in place by the founders. While most of Robinson's revenues are transportation management related, it has solid domestic intermodal, international ocean, food sourcing, truck fueling and supply chain management. Employees are highly incented to take care of customers. European and Asian operations continue to grow. C.H. Robinson has made careful purchases of companies with specializations and has the free cash flow to make more.

8.

TNT Logistics Hoolddorp, Netherlands
David Kulik, Group Managing Director,
+31 20 500 6000
www.tntlogistics.com

3PL Revenue: $4.2bn Parent Revenue: $16.3bn

Coverage: Europe, Americas, Asia

3PL Assets: 36,000 employees, 545 warehouses

Information Systems: Very good; TMS - Matrix, i2; WMS - RedPrairie, Manhattan Associates

Services: Manufacturing support and subassembly, transportation management, supply chain consulting, dedicated contract carriage, warehousing and distribution, returns management

Industry Focus: Automotive, tires, consumer goods, industrial, utilities, heavy machinery

Key Customers: Alcatel, B&Q, Black & Decker, Case New Holland, Fiat, Ford, General Motors, Hewlett-Packard, Honda, John Deere, News International, Pirelli, Telecom Italia, Volkswagen

Armstrong & Associates' Evaluation: As of this writing, TNT Logistics is for sale. Final negotiations for the purchase should be completed by the third quarter of 2006. TNT Logistics is the world's largest automotive 3PL and has a heavy emphasis on manufacturing. Kulik's North American operations (19%) have been consistently profitable, but European difficulties, especially in France, caused TNT group to give up most operations. TNT Logistics operates in 28 countries with 1,350 customers. The TNT operations we have visited get top marks.

9.

Expeditors International of Washington Seattle, WA; Nasdaq: EXPD
Peter Rose, CEO & Chairman, 206-674-3400
www.expeditors.com

3PL Revenue: $3.9bn

Coverage: Asia, Americas, Europe

3PL Assets: 10,566 employees, 110 warehouses

Information Systems: Good; TMS - Tradeflow, SNEP, Exp.0

Services: Airfreight forwarding, customs brokerage, transportation management, warehousing and distribution, supply chain consulting

Industry Focus: Automotive, electronics, retail, chemicals, healthcare

Key Customers: Ace Hardware, Cisco, General Motors, Merck, Motorola, Philips, Toyota, Trane

Armstrong & Associates' Evaluation: Expeditors continued its strong organic growth in 2005. Net revenues reached $1.06bn and produced a 27.2% gross margin. Net revenues are 38% air freight forwarding, 38% customs brokerage and 24% ocean freight forwarding. U.S. and Asia business account for 70% of revenues. Expeditors is the largest forwarder/NVOCC in the Asia/U.S. lane. It handles 350,000 TEUs per year with a 4:1 imbalance. 210,000 TEUs are from China to the U.S. Expeditors' European operations are primarily in airfreight and constitute 16% of revenues, growing 4% in 2005. Expeditors continues to be one of the best run freight forwarding operations.

10.

Schneider Logistics Green Bay, WI
Tom Escott, President, 800-525-9358
www.schneiderlogistics.com

3PL Revenue: $3.9bn Parent Revenue: $5.3bn

Coverage: North America, Europe

3PL Assets: 1,300 employees, 8,750 tractors, 17,450 trailers

Information Systems: Very Good; TMS - SUMIT

Services: Transportation management, supply chain consulting, dedicated contract carriage, freight payment and auditing

Industry Focus: Consumer products and retail, automotive, heavy equipment, computers and electronics, food and beverage, chemicals, healthcare, paper

Key Customers: Delco Remy Electronics, Dow Chemical, Ford, General Motors, Honeywell, Kimberly-Clark, Miller Brewing, PolyOne, Quaker Oats, Shell Oil, Thomson Multimedia

Armstrong & Associates' Evaluation: Schneider Logistics' major vertical emphasis continues to be in automotive spare parts for U.S.-based auto manufacturers. However, it has significantly expanded its freight brokerage operations. This expansion has improved profitability and revenues which grew 30% last year. Schneider also acquired a transloading/deconsolidation operation in Savannah, Georgia. Schneider's dedicated contract carriage operations are among the largest in North America and continue to expand. Schneider Logistics' freight payment services handle $7bn per year.

11.

NYK Logistics Tokyo, Japan; Tokyo: 9101
(U.S.) Secaucus, NJ, 866-695-5763
Saburo Yamagata, CEO & President
www.nyklogistics.com

3PL Revenue: $3.6bn Parent Revenue: $16.1bn

Coverage: Japan, China, Southeast Asia, Americas, Europe

3PL Assets: 17,000 employees, 50 warehouses, 350 vehicles (Europe)

Information Systems: Good; TMS - Via View (Provia, Cargo Information System; WMS - Provia, SCM

Services: Freight forwarding, customs brokerage, intermodal transportation, value-added warehousing

Industry Focus: Food and beverage, retail, consumer goods, automotive, high-tech, chemicals, healthcare

Key Customers: Cadbury, Clark Shoes, Casio, Hitachi, Johnson & Johnson, Isuzu, Johnson Controls, Sony, Spontex, TESCO, UK Paper, Yamaha

Armstrong & Associates' Evaluation: NYK does not have the kind of strong domestic base in Japan that characterizes Nippon and others. It has to grow international markets. NYK Logistics started in 2001 by combining purchases and adding intermodal to expanding contract logistics and airfreight operations. Contract logistics and distribution are strong in Europe. Automotive, industrial and retail verticals are emphasized. Its automotive logistics includes roll-on/roll-off, JIT and parts distribution. Sister company, Yusen Air & Sea, is a major airfreight operation, particularly within Asia. NYK's overall net profit margin is 5.3%.

12.

Penske Logistics Reading, PA
Vince Hartnett, President
610-775-8285
www.penskelogistics.com

3PL Revenue: $3.2bn Parent Revenue: $4.8bn

Coverage: North America, Europe, Brazil

3PL Assets: 9,125 employees, 135 warehouses, 2,693 tractors, 5,033 trailers

Information Systems: Very Good; TMS - LMS, i2, proprietary; WMS - EXE, RT Systems, MARC, proprietary

Services: Dedicated contract carriage, transportation management, supply chain consulting, warehousing and distribution, equipment leasing

Industry Focus: Automotive, retail, food, appliances, Industrial

Key Customers: DaimlerChrysler, Delphi Corp, Eaton, Ford, General Electric, General Motors, International Truck and Engine, Mission Foods, Pepsi, Samsung, Steelcase, Whirlpool Corp.

Armstrong & Associates' Evaluation: Penske Logistics is a major automotive logistics player. It is Ford's lead logistics provider and provides significant services for General Motors, DaimlerChrysler and tier-one suppliers. Penske is one of five major automotive 3PLs with over $400m per year in revenues in this segment. Penske is a master of inbound supply chain management, cross-docking, sequencing, dedicated contract carriage and just-in-time support. Penske continues to expand its activities in other verticals. Mexican and Brazilian operations are particularly strong. European business continues to grow and gain in a much tougher market.

13.

EGL Eagle Global Logistics Houston, TX; Nasdaq: EAGL,
Jim Crane, President & CEO, 800-888-4949
www.eaglegl.com

3PL Revenue: $3.1bn

Coverage: Asia, United States, Europe

3PL Assets: 10,500 employees, 88 warehouses, 400 service centers

Information Systems: Good; TMS - proprietary; WMS - proprietary

Services: Air and ocean freight forwarding, transportation management, warehousing and distribution, customs brokerage, expedited, project management

Industry Focus: Automotive, aerospace, heavy equipment, retail, trade shows, telecommunications, computers and electronics, pharmaceuticals, printed materials, oil and gas, apparel and entertainment equipment, government and military

Key Customers: Amdahl, Compaq, Neiman Marcus, U.S. Military Traffic Management Command, Visteon Corp.

Armstrong & Associates' Evaluation: Eagle's 2005 was a year of major improvement. Its integration with Circle took years but is completed. Net revenues grew 10% and net income margin was 5.8%. Eagle has had major success as a logistics provider for U.S. Iraq operations using 40-ton Antonov aircraft. Its market and sales have strengthened and EGL had a significant increase in RFP opportunities. Airfreight forwarding is 66% of business and customs brokerage is 20%. Europe continues to be a challenge.

14.

NNippon Express Tokyo, Japan, Tokyo: 9062
Nippon Express U.S.A., Inc. New York, NY, 800-896-9633
Masanori Kawai, President & CEO
www.nipponexpress.com

3PL Revenue: $3bn Parent Revenue: $14.9bn

Coverage: Global (except Africa)

3PL Assets: 60,000 logistics employees, 150 warehouses

Information Systems: Good; TMS -NEWINS; WMS - NEWINS, Rewards

Services: Air, ocean and rail freight forwarding, warehousing and distribution, transportation management, supply chain consulting, customs brokerage

Industry Focus: Automotive, computers and electronics, industrial

Key Customers: DaimlerChrysler, Honda, IBM, Mitsubishi, Toyota

Armstrong & Associates' Evaluation: Nippon Express covers Japan. Its Pelican Express operation is the largest package operation in Japan. Ninety percent of Nippon revenues are from domestic Japanese operations. Its international operations in forwarding and contract logistics are tied to its Japanese base. In addition to being Japan's largest package operation, Nippon provides warehousing, harbor and ship transportation, airfreight forwarding and trucking. The major question for Nippon is how much it will grow internationally?

15.

PWC Logistics Sulaibiya, Kuwait, Tarek Sultan, Chairman
GeoLogistics Santa Ana, CA, William Flynn, President, 714-513-3000
www.geo-logistics.com
www.pwclogistics.com

3PL Revenue: $3bn

Coverage: Global

3PL Assets: 17,000 employees, 200 warehouses, 3,500 Tractors, 3,500 trucks

Information Systems: Very Good; TMS -- G-Log; WMS -- Exceed

Services: Warehousing & distribution, freight forwarding, supply chain management, project forwarding, exhibition logistics, asset-based transport

Industry Focus: Defense, retail, food & beverages, chemicals, telecommunications, exhibitions

Key Customers: BOC, BP, Dow Chemical, Fluor Corp., Samsonite, Shell, Wal-Mart, Western Digital

Armstrong & Associates' Evaluation: PWC bought GeoLogistics in September 2005 as a platform for building a global supply chain manager. PWC has expanded its highly profitable business dramatically over the last five years from its warehousing base in Kuwait. PWC has done a lot of work for the U.S. Army and Defense Logistics Agency in support of the Iraq war. GeoLogistics had gained under CEO Flynn and returned to profitability before the purchase. PWC is well run and moving fast.

16.

BAX Global Irvine, CA
NYSE: BCO (The Brink's Company)
Joseph L. Carnes, President
678-724-4800
www.baxglobal.com

3PL Revenue: $2.9bn Parent Revenue: $30bn (Deutsche Bahn)

Coverage: Asia, North America, United Kingdom

3PL Assets: 12,000 employees, 58 warehouses, 35 aircraft

Information Systems: Excellent; TMS - CAPS, i2; WMS - EXE, Ultramain

Services: Airfreight forwarding, transportation management, warehousing and distribution, supply chain consulting, freight payment and auditing, customs brokerage

Industry Focus: Computers and electronics, automotive, aerospace, airlines, healthcare, retail

Key Customers: Airbus, Bombardier, Boeing, Epson, GE Medical Systems, Microsoft, NEC, Philips Consumer Electronics, Subaru

Armstrong & Associates' Evaluation: BAX Global will remain a separate brand name through 2006 while it is being integrated into Schenker. BAX adds over $2bn in heavy airfreight to Schenker, significantly expanding Schenker's airfreight forwarding. BAX Supply Chain Solutions adds good Asia-Pacific and U.S. operations to Schenker's strong ocean forwarding activities. Joey Carnes led BAX back to profitability and had BAX on the right track before the Deutsche Bahn purchase.

17.

UTi Worldwide Rancho Dominguez, CA; Nasdaq: UTIW
Roger MacFarlane, CEO, 310-604-3311
www.go2uti.com

3PL Revenue: $2.8bn

Coverage: Europe, Africa, Asia, North America

3PL Assets: 16,800 employees, 130 warehouses and logistics centers, 856 tractors, 1,334 trailers

Information Systems: Good; TMS - empower; WMS - eMpower

Services: Air and ocean freight forwarding, customs brokerage, warehousing and distribution

Industry Focus: Chemicals, health and beauty products, apparel, automotive, computers and electronics

Key Customers: Case New Holland, Dell Computer, Dow Corning, Gap, Home Depot, International Paper, Wal-Mart

Armstrong & Associates' Evaluation: UTi net revenues increased 25% last year through acquisitions and strong organic growth. UTI's contract logistics operations are now 38% of net revenues. UTi'sUTi's purchase of Standard Corporation is the most successful contract logistics acquisition we have seen. Airfreight forwarding, ocean forwarding and customs are the other major functions. A major success was winning the contract for Wal-Mart's 8 million-square-foot distribution center near Houston, Texas. The contract is worth about $75m per year. UTi is particularly strong in the British Commonwealth countries. CEO Roger MacFarlane has been masterful at moving UTi forward rapidly using a tight core of executives. One of his best, Alan Draper, President Asia/Pacific, is retiring and may be hard to replace.

18.

Ryder Miami, FL; NYSE: R
Gregory Swienton President & CEO, 888-887-9337
www.ryder.com

3PL Revenue: $2.1bn Parent Revenue: $5.7bn

Coverage: North America

3PL Assets: 15,625 employees, 180 warehouses, 52,992 tractors, 48,012 trailers

Information Systems: Very Good; TMS - i2, proprietary; WMS - OPTUM, V3, PkMS

Services: Supply chain consulting, transportation management, warehousing and distribution, dedicated contract carriage, air and ocean freight forwarding, equipment leasing, returns management, freight payment and auditing, insurance

Industry Focus: Automotive, industrial, computers and electronics, food and beverage, building materials, utilities, consumer products and retail

Key Customers: Applied Materials, Carrier, Coca-Cola, CVS, DaimlerChrysler, John Deere, General Motors, Hewlett-Packard, Lucent Technologies, Nestle, USPS, Whirlpool, Xerox

Armstrong & Associates' Evaluation: Ryder, one of the most recognizable 3PL brand names, is a big-5 automotive logistics 3PL. It has a new, state-of-the-art logistics optimization center near Lansing, Michigan to serve General Motors' new style plants. Ryder is a lead logistics provider for most GM plants, and services DaimlerChrysler, Saturn, Toyota and Honda plus a multitude of tier-one suppliers. Ryder runs top-notch inbound supply chain management, sequencing centers, just-in-time and dedicated contract carriage. Non-automotive, outbound operations are through the Dallas-Ft. Worth TMC, which continues to expand. Vicki O'Meara, president of SCS, will push this expansion and margin improvement. O'Meara has a new team of core managers for the challenge.

19.

Caterpillar Logistics Morton, IL
NYSE: CAT, (Caterpillar Inc.)
Mary Bell, CEO
800-240-2126
www.catlogistics.com

3PL Revenue: $2.1bn Parent Revenue: $36.3bn

Coverage: 160 countries

3PL Assets: 11,680 employees, 105 warehouses

Information Systems: Excellent; TMS - CAT TIS, i2; WMS - CLSS, SAP, Facility Logistics, ProAct

Services: Warehousing and distribution, transportation management, logistics consulting

Industry Focus: Automotive, industrial, aerospace, manufacturing, technology, consumer goods

Key Customers: BMW, Bombardier, DaimlerChrysler, Delphi, Kodak, Harley-Davidson, Hewlett-Packard

Armstrong & Associates' Evaluation: Caterpillar Logistics has heavy U.S. and European operations with a growing presence in South America and Asia, distributing to more than 160 countries from over 50 facilities. It continues to expand its automotive logistics business in Europe and the U.S. Caterpillar Logistics is a 3PL which has completely integrated warehousing and manufacturing supply chain software. Visibility is very good. Demand and supply forecasting and material planning is based on proprietary probability models. Caterpillar Logistics focuses on customers with high-value durable goods. It uses a combination of brokers and forwarders for selected customs functions. A major initiative involves automotive logistics for China.

20.

Kintetsu World Express Tokyo, Japan; Tokyo: KWE
(U.S.) New York, NY, Hiroka Zatsujimoto, President & COO
800-275-4045
www.kwe.com

3PL Revenue: $2.0bn Parent Revenue: $9.4bn

Coverage: Asia, North America, Europe

3PL Assets: 6,769 employees, 210, trucks, 20 trailers, 139 warehouses

Information Systems: Good; TMS - CSS; WMS - KWE WMS

Services: Airfreight forwarding, warehousing and distribution, transportation management, customs brokerage

Industry Focus: Automotive, high-tech, medical

Key Customers: Daewoo, Dong Yang Mechatronics, Manco

Armstrong & Associates' Evaluation: Kintetsu's largest operations are in Japan and China. Seventy-seven percent of its business is airfreight-based. Ocean and logistics business accounts for 23%. KWE has a host of joint ventures and affiliated companies. Its verticals are high-tech, automotive, medical and other. It has 120 logistics warehouses outside Japan, with 3.4 million square feet. Thirty-five of these are in China. It handles 2.3 million TEUs per year between China and Japan. KWE handles 100,000 airfreight tons per year between Japan and China. The balance is 2/1 outbound from China. KWE's total airfreight tonnage is 150,000 tons. KWE listens to the "Voice of the Customer." It's a quality management success story.

21.

Menlo Worldwide Redwood City, CA
Robert Bianco, President & CEO; NYSE: CNF
650-596-4000
www.menloworldwide.com

3PL Revenue: $1.3bn Parent Revenue: $3.7bn

Coverage: Americas, Asia, Europe

3PL Assets: 4,300 employees, 80 warehouses, 34 tractors, 165 trailers

Information Systems: Excellent; TMS -TTMS, LMS; WMS - WMS (Provia-modified)

Services: Transportation management, warehousing and distribution, airfreight forwarding, customs brokerage, supply chain consulting, returns management and expedited

Industry Focus: Automotive, computers and electronics, chemicals, consumer goods, retail, beverage

Key Customers: 3M, AO Smith, Dow Chemical, Cisco, DaimlerChrysler, Delphi, Dow Chemical, Electrolux, General Motors

Armstrong & Associates' Evaluation: Menlo has been one of the leading U.S.-based 3PLs. It has solid inbound supply chain management, good automotive logistics and finished goods distribution. Menlo's LMS provides good technology and SCM solutions. Recently, the company redesigned itself to accommodate the sale of its red-ink-laden freight forwarding affiliate. Parent CNF has a set of strong, profitable, less-than-truckload operations plus Con-Way Integrated Logistics. Menlo has some significant challenges this year. Former Menlo execs have formed a competitive 3PL with private equity. Vector, its GM LLP, is a $20m operation and with Menlo Forwarding gone, how will it expand globally?

22.

APL Logistics Oakland, CA
Singapore: NOL (Neptune Orient Lines Ltd.)
Brian Lutt, President; 800-331-4289
www.apllogistics.com

3PL Revenue: $1.3bn Parent Revenue: $7.3bn

Coverage: Asia, North America, Europe

3PL Assets: 5,000 employees, 162 warehouses, 99 tractors, 251 trailers

Information Systems: Very Good; TMS - i2, proprietary; WMS - Irista, PkMS, proprietary

Services: Ocean and airfreight forwarding, warehousing and distribution, transportation management, dedicated contract carriage, customs brokerage

Industry Focus: Automotive, Industrial, technology, apparel, consumer goods, healthcare, retail

Key Customers: 3M, Birds-Eye, Bobcat, Colgate-Palmolive, Dell Computer, General Motors, Newell Rubbermaid, Nike, Procter & Gamble

Armstrong & Associates' Evaluation: APL Logistics's strengths have been its Asian base and the automotive retail verticals. Two-thirds of revenues are from contract logistics. One-third is from freight forwarding. Over 70% of its revenues are American-based. 33% of revenues are automotive/industrial, 27% retail, 14% consumer goods and 10% electronics and high-tech. APL has an automotive joint venture in China. APL Logistics's CEO is based in Singapore. Forwarding is closely linked to ocean container operations.

23.

Maersk Logistics Copenhagen, Denmark;
Copenhagen: Maersk A / Maersk B (A. P. Moller-Maersk A/S)
Maersk Logistics USA Inc. Madison, NJ,
Tony Chiarello, President, 973-574-5000
www.maersk-logistics.com

3PL Revenue: $800m Parent Revenue: $35bn

Coverage: Asia, Europe, North America

3PL Assets: 5,900 employees, 23 warehouses

Information Systems: Very Good; TMS - proprietary; WMS - proprietary

Services: Ocean and airfreight forwarding, warehousing and distribution, customs brokerage, supply chain consulting

Industry Focus: Consumer products, retail, sporting goods, apparel and garments, cosmetics and personal care, electronics

Key Customers: Adidas, Federated Stores, Footstar Inc., Home Depot, Hudson's Bay Co., IKEA, Liz Claiborne, Nike, Reebok, Target Corp., Wal-Mart

Armstrong & Associates' Evaluation: Maersk is the world's largest container line. It and parent A.P. Moeller are financially strong, aggressive and successful. Maersk Logistics is an ancillary business that functions primarily in connection with container operations. Over half of its business is warehousing and distribution; about one-fifth is forwarding and consolidation. SCM, airfreight forwarding and customs brokerage account for the rest. The majority of revenues are between Asia and North America. About one-third is in Asia-European traffic. The recent acquisition of P&O Nedloyd by its parent, adds more apparel and retail capacity through Gilbert's operations, which are primarily in consolidation/deconsolidation and garment-on-hangers.

24.

SembCorp Logistics Singapore; Singapore Stock Exchange
SembCorp Logistics (USA) Inc. Inglewood, CA,
K. K. Chan, Sr. Vice President, Americas
310-215-3725
www.semblog.com

3PL Revenue: $713m Parent Revenue: $3.5bn

Coverage: Asia

3PL Assets: 2,700 employees, 101 warehouses

Information Systems: Good; TMS - Route Pro, Maxload; OMS - ELIMS

Services: Warehousing and distribution, air and ocean shipping, supply chain management, dangerous goods management, offshore logistics

Industry Focus: Automotive, consumer goods, computers and electronics, healthcare, oil, food and groceries

Key Customers: Abbott Labs, Apple Computer, Bridgestone/Firestone, Colgate-Palmolive, Exxon, Gillette Co., Nestle, Pepsi

Armstrong & Associates' Evaluation: SembCorp is one of the largest logistics providers in Asia. 60% of SembCorp is being acquired by Toll Holdings, which owns Australia's largest trucking and distribution operations. SembCorp has extensive Asian operations (15 countries) and a sizeable joint venture (St. Anda) in China. Its largest contract is with Singapore's military, but it has operations in all major civilian verticals. It serves 300 multinational companies through two divisions-Supply Chain Management and Offshore Logistics (oil and gas). Revenues are split as follows: North Asia, 53%; Southeast Asia, 41%; others, 6%. Toll's operations are largely complimentary.

25.

FedEx Trade Networks/Supply Chain Services Buffalo, NY;
NYSE: FDX, (FedEx Corporation)
Ed Clark, President, 800-249-2953
www.fedex.com

3PL Revenue: $672m Parent Revenue: $29.5bn

Coverage: Global (Service to 99% of World GDP)

3PL Assets: 2,000 employees, 35 warehouses, 298 tractors, 1094 trailers

Information Systems: Excellent; TMS - Optum: SCE Transportation i2; WMS - EXCEED 4000

Services: Domestic and international transportation management, customs brokerage and freight forwarding, supply chain consulting, warehousing and distribution services

Industry Focus: Apparel, automotive, healthcare, computers and electronics, industrial, retail

Key Customers: DaimlerChrysler, DirecTV, Ford Motor Co., GM PowerTrain, Hewlett Packard, Mitsubishi, Philips Semiconductor

Armstrong & Associates' Evaluation: Contract logistics, freight forwarding and customs brokerage at FedEx are service businesses whose role is to support FedEx transportation manager. FedEx SCS has lost key business and is no longer a significant third-party logistics competitor. For FedEx, SCM is a value-added part of express, package, less-than-truckload and other operations.



Click here for a PDF of Warehousing Based 3PLs (Table One)
Click here for a PDF of the Top 25 3PLs ranked by revenue (Table Two)


Want more information about Global and Regional 3PLs? Contact Dick Armstrong at 800-525-3915 or dick@3PLogistics.com.

About Armstrong & Associates: Armstrong & Associates Inc. is a supply-chain management consulting firm specializing in market research, mergers and acquisitions and outsourcing. Armstrong & Associates publishes Who's Who In Logistics? Armstrong's Guide to Global Supply Chain Management. Recent research papers include Warehousing in the United States and Global Logistics Services Providers II. In addition, Armstrong & Associates maintains databases of warehousemen, freight forwarders and third-party logistics and distributing companies. Armstrong & Associates, Inc., 100 Business Park Circle, Suite 202, Stoughton, WI 53589; Ph: 608-873-8929; Fax: 608-873-5509; Web: www.3PLogistics.com.



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