Executive Briefings

Global Growth of 3PLs Is in Response to Customer Demand

Providing third-party logistics services isn't just local anymore, and it isn't piecemeal. Customers want global reach from providers who either can manage the entire supply chain or bring visibility to all of it.

The goal of door-to-door global service with real-time order visibility continues to define the strategy of third-party logistics providers as they expand their reach with alliances and acquisitions.

For example, American President Lines late in 2000 acquired GATX to fatten its portfolio of services, particularly in the e-logistics area. Kuehne & Nagel International AG last summer bought USCO Logistics of Hamden, Conn., to strengthen its presence in the Americas. Exel and MSAS Global came together in May of 2000 and now operate as one with a broad global reach. United Parcel Service last year added Fritz Companies to its corporate structure. And Schneider Logistics continues to extend its sphere of influence through alliances with leading service providers on distant continents.

"Customers are becoming more interested in finding a third-party logistics provider who can bring visibility to the customer's inventory throughout the entire supply chain as opposed to looking to individual providers who perform buckets of transactions within the supply chain," says Jack Finholm, vice president of sales for UPS Freight Services, the corporate business unit now housing the acquired Fritz Companies.

"These customers also are looking to providers to be global in scope, because their supply chains are becoming global in scope," he explains. "Consequently, we're focusing on providing true item-level visibility throughout the supply chain as well as the integrated management of the flow of goods. And we're doing it in a manner that allows the customer to change not only the velocity of goods within that supply chain but the direction of those goods as well, such as bypassing a distribution center and going directly to stores."

For example, Finholm cites a major U.S. retailer that has completely outsourced its inbound supply chain to the Fritz operation. "When that U.S. retailer decides to purchase something, they obviously are buying against the company's sales forecast. Allocations to the store level or distribution points are all done on the front end." As part of that purchasing process, he says, Fritz (henceforth referred to as UPS Freight) receives the purchase information electronically, performs some pre-shipment compliance with the vendor, and validates the purchase order and ship date. Most important, it pulls a sample from the production and sends it to the U.S. retailer for approval. "If the retailer gives the sample a thumbs up, then they go into the UPS Freight system, okay the product, and we then go ahead and coordinate bringing the cargo together," Finholm says.

UPS Freight knows the date the cargo needs to be at destination, so it controls the velocity of the goods as they move through the supply chain - preferably by lower-cost ocean carriage - from origin factories worldwide into the U.S. and through U.S. Customs. Standard operating procedure is to then load the cargo into domestic 53-foot trailers staged at the individual distribution centers. Depending on the need for speed, UPS Freight either rails the trailers, assigns team drivers or, if necessary, expedites the goods via air.

Several distribution-center bypass programs allow UPS Freight to take cargo directly to the stores if there is demand.

The visibility factor is critical, says Finholm. "The earlier we can bring visibility of the merchandise that's available, at the item level, the earlier we can plan to move those goods through the supply chain and deliver them to where they need to be when they need to be there, at the lowest possible cost."

To further improve service to global customers, UPS recently announced a new enterprise solution that spans its various business units. This combined service, to be marketed as UPS Supply Chain Solutions, offers supply-chain design and management, freight forwarding, customs brokerage, mail services, multi-modal transportation, consulting and financial services. It will "allow customers to tap our global physical and technology infrastructure for broader, deeper solutions," says Joe Pyne, UPS senior vice president.

Global Talent
The push for global freight management capabilities surfaced four or five years ago for Exel, says Bruce Edwards, chief executive of the 3PL's consumer, retail and healthcare operations in the Americas. "We first saw the need develop with our high-tech and automotive customers, but the demand has really gained a lot of momentum, much of it driven by the global sourcing activities of our customers," he says. "We responded by developing global organizations targeted to our large technology and automotive customers."

To prepare its people for the challenge, Exel's human resources managers put together a series of global development programs. "We take top people from across the globe and put them into a series of six-week training programs held in different spots around the world," he explains.

It's a multi-functional and multi-business-unit approach designed for account managers and operational people as well, says Edwards. "The global freight management challenge requires a different skill set, and you can't kid yourself about that. There are some very real cultural and business challenges in the global service environment, and we're very fortunate, just through the nature of the companies that we've put together, to have a pretty good alignment of global talent. My feeling is that the successful 3PLs are going to be the ones that demonstrate that they are growing talented, value-adding managers with a global orientation, who want to grow up and live in that kind of environment. We're fortunate in that we've gotten down that path quite a ways already."

As manager of Exel's consumer products business in the Americas, Edwards points out that the biggest growth opportunities no longer are in countries like the U.S. and Canada. Accordingly, he says, companies look among their U.S. and European-based personnel for managers to go to these developing countries and put into place the right business processes to grow the business fast. "And these people are turning around and asking third-party service providers like us to come with them," adds Edwards. "It's exciting as hell, but it's quite a challenge, and it's one that the industry is really facing up to."

Increasingly customers are looking to their 3PLs to move into the role of lead logistics provider, says Rodger Mullen, president of Schneider Logistics of Green Bay, Wis. These customers want a single point of contact for solutions, even if those solutions extend beyond the 3PL's core competencies. "This is forcing the 3PL industry to get into more types of alliances to ensure that they have a strong network of providers with whom they can partner on behalf of the customer to extend that supply-chain management far into the global market."

The customer is the driver here, adds Mullen. "Customers with longstanding relationships expect us to become more strategically involved with their future supply-chain planning. That means it's no longer sufficient for third-party logistics providers to merely come in and execute what they've been told to execute. Now, the people who really can do well in this business are the companies that can bring more proactive solutions on a global basis and not just execute against the original agreement."

Accordingly, Schneider a few months back joined forces with Hellman Worldwide Logistics, a German-based freight forwarder/warehouse provider with a strong presence worldwide. "With Hellman we have formed a strategic alliance where Schneider, in certain scenarios, will be the North American/ European domestic freight manager and/or provider of technology on behalf of Hellman, and Hellman will be our freight forwarder/ warehouser of choice from an international perspective."

The alliance extends Schneider's global footprint dramatically, says Mullen. "We feel that by joining together we can provide a much more significant global reach for us and a stronger North American discipline for Hellman."

Schneider relies on its internet-based Supply Chain Integrator technology to provide its customer base with supply-chain visibility. SCI provides customers with visibility down to product-level detail from suppliers all the way to end locations, enabling cross-dock functionality. More than 2,000 suppliers are connected by the technology, including Caterpillar Logistics Services, the wholly owned logistics subsidiary of Caterpillar Inc. According to Steve Wunning, head of Cat Logistics and vice president at Caterpillar, Schneider's technology provides the software tools for Cat Logistics to optimize multiple transportation methods for inbound and outbound shipments while providing the ability to track and trace material in transit.

"Cat Logistics believes the relationship with Schneider Logistics provides a significant opportunity to further enhance the integrated transportation network we require for our dealers and customers, suppliers, manufacturing and distribution operations, and external clients," Wunning says. The initiative not only implements a centralized transportation optimization approach to truck shipments across the enterprise, but should improve transportation processes for Caterpillar facilities, suppliers and carriers.

Schneider will host the transportation management technology while its SUMIT applications suite will be used by Cat to provide transportation management as well as shipment information throughout the supply chain. "Cat Logistics will be utilizing our technology on their desktops in a hosted fashion to basically do the planning and optimization of their full truckload, LTL and specialized equipment services in North America as well as in Europe," says Mullen.

Shippers' Agent
Ryder System bought into the whole process of international transportation management in 1994 when it acquired the Logicorp operation, says Jim Monkmeyer, group director of transportation management for the Miami-based company. Logicorp, a non-asset based logistics management company, originally was spun off from Rockwell International.

 

 

 

 

 

Evolution in 3PLs needed as supply chains become more global.

 


 

 

 


Ryder runs that business in a non-asset-based manner, says Monkmeyer. "We essentially act as a shippers' agent and we do business in a manner very similar process-wise to that of a shipper, he explains. "But we feel that over the years, through our experience with different companies and our ability to invest in technology on behalf of multiple customers, we have developed capabilities that we can now leverage to provide more value at a reduced cost in terms of managing international transportation."

Ryder currently manages about a half-billion dollars' worth of international freight movements. "We purchase transportation from carriers and forwarders, we manage the transportation and we do performance reporting and continuous improvement for our shipper customers, all with the goal of continuously improving the transportation network."

This service is different from a forwarder company that is tied to certain networks and operations because it buys space on airlines and seagoing vessels, he says. "We feel we can operate in a more unbiased fashion because we don't have the space and we don't have the assets," he says. "Because of this, we have the ability to work, when we have to, with multiple forwarders. And while many forwarders don't want to work for another forwarder, they will work with us because they see us more as a shippers' agent.

"As a result, we've been able to get competitive pricing, and we've been able to get those forwarders to download their information into our technology visibility tools."

Consequently, Ryder is able to operationally control the service, regardless of the freight forwarder, Monkmeyer says. "This is something we have not seen out there in the market today among third-parties: the ability to capture that information regardless of the forwarder."

But Ryder isn't through expanding its operational reach. "We have found that we need to have those same capabilities on other continents where Ryder does not yet have a strong global presence," he says. This need is fueled by demands from current global customers in its primary markets of Europe and North America. "They have told us, 'If you want to play, you need to be able to provide one access point for the other regions as well as real-time and after-the-fact data for us to be able to do analysis so we can continuously improve the network,'" Monkmeyer says. "Our solution was to create this global logistics network that incorporates Ryder's Transportation Management Center as well as freight forwarders in remote regions, so we can have consistency of service and consistency of data. And we've been working with a number of freight forwarders to be able to integrate our systems and provide that information on a very consistent basis. We're not trying to cover the world tomorrow, but we certainly cover Asia, Europe and North America and we're going to follow customers as the need arises," he says,

Convinced of Ryder's capabilities in the international arena, Visteon recently announced plans to extend its domestic program with Ryder to the global level. Visteon is a supplier of automotive parts and components. "We now are in the process of negotiating with and selecting freight forwarders for this project," says Monkmeyer. "We also see opportunities to expand with Visteon overseas in terms of their regional transportation in Europe and Asia."

Ryder is in the process of developing for the European markets a transportation management center in Dusseldorf, Germany, much like the company's TMC in Fort Worth, Texas. A similar operation in Singapore will target markets in the Asia Pacific region, and the company is eyeing Sao Paolo, Brazil, as a hub for South American freight movements.

All The Pieces Now

Responding to the demand for global management capabilities was also behind European forwarder Kuehne & Nagel's purchase of USCO Logistics. "One of the drivers behind the USCO acquisition was to fill in some of the pieces we did not have in the K&N family of companies, such as distribution, warehousing and transportation management within the U.S., Canada and Mexico," explains Karen Petrosini, global sales manager for K&N.

USCO now serves as the warehousing, distribution and domestic transportation part of the K&N service portfolio. An alliance with SembCorp Logistics in Singapore provides K&N a similar range of services in the Asia Pacific region. K&N relies on a wide range of alliances with other service providers, including its Kuehne & Nagel Logistics subsidiary, to cover markets in Europe and on other continents. "We have contracts and agreements with carriers within every major alliance around the world and with every meaningful niche and regional player," she adds. "This gives us a considerable breadth of cost and service options to help our customers create virtually whatever kind of value proposition they can dream up on any given day."

The acquisition opened a wide door to USCO as well, says Denise Stevens, USCO's director of supply-chain management. "Customers in the current market really are much more knowledgeable in the matters of supply chain and accordingly have become less interested in traditional services, such as warehousing and pick/pack/ship activities," says Stevens. "Instead, they are looking for partners that can bring knowledge to bear across the supply chain. They are looking for providers that can provide what we call 'glass-breaking' ideas and strategies: innovative, out-of-the-box thinking that supports their strategies across t

 

 

 

 

 

Ryder is in the process of developing a transportation management center in Dusseldorf, Germany.

 


 

 

 

he global supply chain."

The two operations increasingly depend on each other's talents to heighten the level of service they provide to their customers, she adds. "We've already been involved in a significant number of opportunities that are global, and we're starting to leverage each other's unique capabilities. We have a lot of opportunities in North America where people have been doing a lot of freight forwarding but are struggling with that portion of their business. Accordingly, we leverage K&N heavily in anything that will require global locations in Asia, South and Central America and Europe. We're bringing those challenges together and pursing them jointly."

For example, earlier this year Nortel Networks, a global leader in networking and communications solutions, signed an agreement to divest its global outbound logistics operations management business to K&N. As lead logistics provider, K&N will be exclusively responsible for managing the performance of multiple Nortel Networks logistics service providers around the world, helping Nortel in its ongoing efforts to build on its advanced supply chain while optimizing service to its global customers. As part of Kuehne & Nagel's supply-chain management strategy, a new legal entity has been established to manage such complex global lead logistics projects.

"We recognized that leveraging Kuehne & Nagel's excellence in logistics, investment in its IT infrastructure and global presence could further streamline the management of our logistics operation," says Richard Lowe, vice president of supply-chain operations for Nortel. "Divesting the global logistics operations management to a best-in-class supplier like Kuehne & Nagel enables us to focus our investments and resources on developing and strengthening core competencies that provide differentiated value to our customers."

The goal of door-to-door global service with real-time order visibility continues to define the strategy of third-party logistics providers as they expand their reach with alliances and acquisitions.

For example, American President Lines late in 2000 acquired GATX to fatten its portfolio of services, particularly in the e-logistics area. Kuehne & Nagel International AG last summer bought USCO Logistics of Hamden, Conn., to strengthen its presence in the Americas. Exel and MSAS Global came together in May of 2000 and now operate as one with a broad global reach. United Parcel Service last year added Fritz Companies to its corporate structure. And Schneider Logistics continues to extend its sphere of influence through alliances with leading service providers on distant continents.

"Customers are becoming more interested in finding a third-party logistics provider who can bring visibility to the customer's inventory throughout the entire supply chain as opposed to looking to individual providers who perform buckets of transactions within the supply chain," says Jack Finholm, vice president of sales for UPS Freight Services, the corporate business unit now housing the acquired Fritz Companies.

"These customers also are looking to providers to be global in scope, because their supply chains are becoming global in scope," he explains. "Consequently, we're focusing on providing true item-level visibility throughout the supply chain as well as the integrated management of the flow of goods. And we're doing it in a manner that allows the customer to change not only the velocity of goods within that supply chain but the direction of those goods as well, such as bypassing a distribution center and going directly to stores."

For example, Finholm cites a major U.S. retailer that has completely outsourced its inbound supply chain to the Fritz operation. "When that U.S. retailer decides to purchase something, they obviously are buying against the company's sales forecast. Allocations to the store level or distribution points are all done on the front end." As part of that purchasing process, he says, Fritz (henceforth referred to as UPS Freight) receives the purchase information electronically, performs some pre-shipment compliance with the vendor, and validates the purchase order and ship date. Most important, it pulls a sample from the production and sends it to the U.S. retailer for approval. "If the retailer gives the sample a thumbs up, then they go into the UPS Freight system, okay the product, and we then go ahead and coordinate bringing the cargo together," Finholm says.

UPS Freight knows the date the cargo needs to be at destination, so it controls the velocity of the goods as they move through the supply chain - preferably by lower-cost ocean carriage - from origin factories worldwide into the U.S. and through U.S. Customs. Standard operating procedure is to then load the cargo into domestic 53-foot trailers staged at the individual distribution centers. Depending on the need for speed, UPS Freight either rails the trailers, assigns team drivers or, if necessary, expedites the goods via air.

Several distribution-center bypass programs allow UPS Freight to take cargo directly to the stores if there is demand.

The visibility factor is critical, says Finholm. "The earlier we can bring visibility of the merchandise that's available, at the item level, the earlier we can plan to move those goods through the supply chain and deliver them to where they need to be when they need to be there, at the lowest possible cost."

To further improve service to global customers, UPS recently announced a new enterprise solution that spans its various business units. This combined service, to be marketed as UPS Supply Chain Solutions, offers supply-chain design and management, freight forwarding, customs brokerage, mail services, multi-modal transportation, consulting and financial services. It will "allow customers to tap our global physical and technology infrastructure for broader, deeper solutions," says Joe Pyne, UPS senior vice president.

Global Talent
The push for global freight management capabilities surfaced four or five years ago for Exel, says Bruce Edwards, chief executive of the 3PL's consumer, retail and healthcare operations in the Americas. "We first saw the need develop with our high-tech and automotive customers, but the demand has really gained a lot of momentum, much of it driven by the global sourcing activities of our customers," he says. "We responded by developing global organizations targeted to our large technology and automotive customers."

To prepare its people for the challenge, Exel's human resources managers put together a series of global development programs. "We take top people from across the globe and put them into a series of six-week training programs held in different spots around the world," he explains.

It's a multi-functional and multi-business-unit approach designed for account managers and operational people as well, says Edwards. "The global freight management challenge requires a different skill set, and you can't kid yourself about that. There are some very real cultural and business challenges in the global service environment, and we're very fortunate, just through the nature of the companies that we've put together, to have a pretty good alignment of global talent. My feeling is that the successful 3PLs are going to be the ones that demonstrate that they are growing talented, value-adding managers with a global orientation, who want to grow up and live in that kind of environment. We're fortunate in that we've gotten down that path quite a ways already."

As manager of Exel's consumer products business in the Americas, Edwards points out that the biggest growth opportunities no longer are in countries like the U.S. and Canada. Accordingly, he says, companies look among their U.S. and European-based personnel for managers to go to these developing countries and put into place the right business processes to grow the business fast. "And these people are turning around and asking third-party service providers like us to come with them," adds Edwards. "It's exciting as hell, but it's quite a challenge, and it's one that the industry is really facing up to."

Increasingly customers are looking to their 3PLs to move into the role of lead logistics provider, says Rodger Mullen, president of Schneider Logistics of Green Bay, Wis. These customers want a single point of contact for solutions, even if those solutions extend beyond the 3PL's core competencies. "This is forcing the 3PL industry to get into more types of alliances to ensure that they have a strong network of providers with whom they can partner on behalf of the customer to extend that supply-chain management far into the global market."

The customer is the driver here, adds Mullen. "Customers with longstanding relationships expect us to become more strategically involved with their future supply-chain planning. That means it's no longer sufficient for third-party logistics providers to merely come in and execute what they've been told to execute. Now, the people who really can do well in this business are the companies that can bring more proactive solutions on a global basis and not just execute against the original agreement."

Accordingly, Schneider a few months back joined forces with Hellman Worldwide Logistics, a German-based freight forwarder/warehouse provider with a strong presence worldwide. "With Hellman we have formed a strategic alliance where Schneider, in certain scenarios, will be the North American/ European domestic freight manager and/or provider of technology on behalf of Hellman, and Hellman will be our freight forwarder/ warehouser of choice from an international perspective."

The alliance extends Schneider's global footprint dramatically, says Mullen. "We feel that by joining together we can provide a much more significant global reach for us and a stronger North American discipline for Hellman."

Schneider relies on its internet-based Supply Chain Integrator technology to provide its customer base with supply-chain visibility. SCI provides customers with visibility down to product-level detail from suppliers all the way to end locations, enabling cross-dock functionality. More than 2,000 suppliers are connected by the technology, including Caterpillar Logistics Services, the wholly owned logistics subsidiary of Caterpillar Inc. According to Steve Wunning, head of Cat Logistics and vice president at Caterpillar, Schneider's technology provides the software tools for Cat Logistics to optimize multiple transportation methods for inbound and outbound shipments while providing the ability to track and trace material in transit.

"Cat Logistics believes the relationship with Schneider Logistics provides a significant opportunity to further enhance the integrated transportation network we require for our dealers and customers, suppliers, manufacturing and distribution operations, and external clients," Wunning says. The initiative not only implements a centralized transportation optimization approach to truck shipments across the enterprise, but should improve transportation processes for Caterpillar facilities, suppliers and carriers.

Schneider will host the transportation management technology while its SUMIT applications suite will be used by Cat to provide transportation management as well as shipment information throughout the supply chain. "Cat Logistics will be utilizing our technology on their desktops in a hosted fashion to basically do the planning and optimization of their full truckload, LTL and specialized equipment services in North America as well as in Europe," says Mullen.

Shippers' Agent
Ryder System bought into the whole process of international transportation management in 1994 when it acquired the Logicorp operation, says Jim Monkmeyer, group director of transportation management for the Miami-based company. Logicorp, a non-asset based logistics management company, originally was spun off from Rockwell International.

 

 

 

 

 

Evolution in 3PLs needed as supply chains become more global.

 


 

 

 


Ryder runs that business in a non-asset-based manner, says Monkmeyer. "We essentially act as a shippers' agent and we do business in a manner very similar process-wise to that of a shipper, he explains. "But we feel that over the years, through our experience with different companies and our ability to invest in technology on behalf of multiple customers, we have developed capabilities that we can now leverage to provide more value at a reduced cost in terms of managing international transportation."

Ryder currently manages about a half-billion dollars' worth of international freight movements. "We purchase transportation from carriers and forwarders, we manage the transportation and we do performance reporting and continuous improvement for our shipper customers, all with the goal of continuously improving the transportation network."

This service is different from a forwarder company that is tied to certain networks and operations because it buys space on airlines and seagoing vessels, he says. "We feel we can operate in a more unbiased fashion because we don't have the space and we don't have the assets," he says. "Because of this, we have the ability to work, when we have to, with multiple forwarders. And while many forwarders don't want to work for another forwarder, they will work with us because they see us more as a shippers' agent.

"As a result, we've been able to get competitive pricing, and we've been able to get those forwarders to download their information into our technology visibility tools."

Consequently, Ryder is able to operationally control the service, regardless of the freight forwarder, Monkmeyer says. "This is something we have not seen out there in the market today among third-parties: the ability to capture that information regardless of the forwarder."

But Ryder isn't through expanding its operational reach. "We have found that we need to have those same capabilities on other continents where Ryder does not yet have a strong global presence," he says. This need is fueled by demands from current global customers in its primary markets of Europe and North America. "They have told us, 'If you want to play, you need to be able to provide one access point for the other regions as well as real-time and after-the-fact data for us to be able to do analysis so we can continuously improve the network,'" Monkmeyer says. "Our solution was to create this global logistics network that incorporates Ryder's Transportation Management Center as well as freight forwarders in remote regions, so we can have consistency of service and consistency of data. And we've been working with a number of freight forwarders to be able to integrate our systems and provide that information on a very consistent basis. We're not trying to cover the world tomorrow, but we certainly cover Asia, Europe and North America and we're going to follow customers as the need arises," he says,

Convinced of Ryder's capabilities in the international arena, Visteon recently announced plans to extend its domestic program with Ryder to the global level. Visteon is a supplier of automotive parts and components. "We now are in the process of negotiating with and selecting freight forwarders for this project," says Monkmeyer. "We also see opportunities to expand with Visteon overseas in terms of their regional transportation in Europe and Asia."

Ryder is in the process of developing for the European markets a transportation management center in Dusseldorf, Germany, much like the company's TMC in Fort Worth, Texas. A similar operation in Singapore will target markets in the Asia Pacific region, and the company is eyeing Sao Paolo, Brazil, as a hub for South American freight movements.

All The Pieces Now

Responding to the demand for global management capabilities was also behind European forwarder Kuehne & Nagel's purchase of USCO Logistics. "One of the drivers behind the USCO acquisition was to fill in some of the pieces we did not have in the K&N family of companies, such as distribution, warehousing and transportation management within the U.S., Canada and Mexico," explains Karen Petrosini, global sales manager for K&N.

USCO now serves as the warehousing, distribution and domestic transportation part of the K&N service portfolio. An alliance with SembCorp Logistics in Singapore provides K&N a similar range of services in the Asia Pacific region. K&N relies on a wide range of alliances with other service providers, including its Kuehne & Nagel Logistics subsidiary, to cover markets in Europe and on other continents. "We have contracts and agreements with carriers within every major alliance around the world and with every meaningful niche and regional player," she adds. "This gives us a considerable breadth of cost and service options to help our customers create virtually whatever kind of value proposition they can dream up on any given day."

The acquisition opened a wide door to USCO as well, says Denise Stevens, USCO's director of supply-chain management. "Customers in the current market really are much more knowledgeable in the matters of supply chain and accordingly have become less interested in traditional services, such as warehousing and pick/pack/ship activities," says Stevens. "Instead, they are looking for partners that can bring knowledge to bear across the supply chain. They are looking for providers that can provide what we call 'glass-breaking' ideas and strategies: innovative, out-of-the-box thinking that supports their strategies across t

 

 

 

 

 

Ryder is in the process of developing a transportation management center in Dusseldorf, Germany.

 


 

 

 

he global supply chain."

The two operations increasingly depend on each other's talents to heighten the level of service they provide to their customers, she adds. "We've already been involved in a significant number of opportunities that are global, and we're starting to leverage each other's unique capabilities. We have a lot of opportunities in North America where people have been doing a lot of freight forwarding but are struggling with that portion of their business. Accordingly, we leverage K&N heavily in anything that will require global locations in Asia, South and Central America and Europe. We're bringing those challenges together and pursing them jointly."

For example, earlier this year Nortel Networks, a global leader in networking and communications solutions, signed an agreement to divest its global outbound logistics operations management business to K&N. As lead logistics provider, K&N will be exclusively responsible for managing the performance of multiple Nortel Networks logistics service providers around the world, helping Nortel in its ongoing efforts to build on its advanced supply chain while optimizing service to its global customers. As part of Kuehne & Nagel's supply-chain management strategy, a new legal entity has been established to manage such complex global lead logistics projects.

"We recognized that leveraging Kuehne & Nagel's excellence in logistics, investment in its IT infrastructure and global presence could further streamline the management of our logistics operation," says Richard Lowe, vice president of supply-chain operations for Nortel. "Divesting the global logistics operations management to a best-in-class supplier like Kuehne & Nagel enables us to focus our investments and resources on developing and strengthening core competencies that provide differentiated value to our customers."