• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • Login
  • Subscribe
  • Logout
  • My Profile

  • CORONAVIRUS
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • REGIONS
    • Asia Pacific
    • Canada
    • China
    • Europe
    • Latin America
    • Middle East/Africa
    • North America
  • THINK TANK
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » How Well Can Providers Weather The Economic Storm?

How Well Can Providers Weather The Economic Storm?

February 18, 2009
Adrian Gonzalez, director, Logistics Executive Council, ARC Advisory Group

It's important to remember that the terms "logistics service provider" and "third-party logistics" refer to a very broad range of companies, with origins ranging from trucking firms to industrial manufacturers. A lot of the trade publications publish "Top 25 3PLs" lists that are basically meaningless, because they rank service providers solely by revenues, with no consideration given to the specific services and industries these 3PLs serve. It's the classic "comparing apples with oranges" problem. (A quick aside: ARC started to address this problem a few years ago when we developed our Logistics Service Provider Maturity and Performance Model, a framework for manufacturers and retailers to use when evaluating service providers, and we plan to do more work in this area in '09).

Therefore, it's difficult to offer a blanket statement of how the industry will fare as a whole this year, because LSPs fall into different categories. But there's one thing that's clear to me: the more diversified the LSP, in terms of the services they provide, the industries they serve, and the geographies they cover, the better positioned they'll be to weather the storm in 2009.

For example, if you're an LSP that derives most of its business from the automotive industry, you have reason to worry this year (regardless of a bailout). Similarly, if you only provide freight forwarding services, you also have reason to worry.  According to IATA, air cargo volume dropped 7.7 percent in September compared to the previous year (the worst decline since 2001), and year-to-date growth  slowed to 0.1 percent, with almost all regions reporting negative results. It's the same story for ocean cargo. According to the monthly Port Tracker report published by the National Retail Federation and IHS Global Insight, cargo volume at the nation's major retail container ports was expected to decline more than 7 percent in 2008 to 15.3 million twenty-foot-equivalent units, the lowest total since 2004.

In contrast, LSPs that offer "contract logistics" services, like transportation management and warehousing, will probably do okay in 2009, especially those with clients in food and beverage (people still eat in a down economy), pharmaceuticals (people still get sick), and energy/utilities (people still expect their lights to turn on).

The Outlook

M&A activity will probably slow down this year, as the era of "easy money" disappears. But will LSPs continue to invest in IT? This is a question many software vendors are asking themselves today. I've argued in the past that LSPs are at the IT tipping point, helping to drive the growth of the TMS market, for example. But the LSP industry is a low-margin business, and if their customers are inclined to freeze IT spending next year, there's no reason why LSPs won't do the same.

"If you have to forecast, forecast often." These words of wisdom come from economist Edgar R. Fiedler, and they're good words to live by these days.

RELATED CONTENT

RELATED VIDEOS

Air Cargo Logistics Global Logistics Logistics Outsourcing Ocean Transportation Transportation & Distribution Business Strategy Alignment Global Supply Chain Management Industrial Manufacturing
KEYWORDS Air Cargo Business Strategy Alignment Global Logistics Global Supply Chain Management Industrial Manufacturing Logistics Logistics Outsourcing Ocean Transportation Transportation & Distribution
  • Related Articles

    Control Inventory, and You Weather the Economic Storm

    Intermodal Will Weather Economic Storm, NYK Line's President Says

    Just What Do Logistics Service Providers Do - and How Well Do They Do It?

  • Related Events

    How Every Shipper Can Benefit from Modern Drop-and-Hook: Four ways to get nationwide, flexible, and quality drop capacity with unparalleled visibility

Adrian Gonzalez, director, Logistics Executive Council, ARC Advisory Group

How Well Can Providers Weather The Economic Storm?

More from this author

Wake up to Coronavirus Updates and the latest Supply Chain News!

Subscribe to our Daily Newsletter

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • Coronavirus-watch-Armada

    Virus Update: Biden to Join Global Covax Initiative; India to Ship Vaccines to South Asian Nations

    Coronavirus
  • U.S. and China Trade

    How China Won Trump’s Trade War and Got Americans to Foot the Bill

    Global Supply Chain Management
  • AT&T

    How the Pandemic Has Altered AT&T’s Global Sourcing Strategy

    Coronavirus
  • container port

    New Global Visibility App Sees Delays Before They Happen

    Logistics
  • U.S. Vaccine Shift Stirs New Unease as 128 Million Join Line

    U.S. Vaccine Shift Stirs New Unease as 128 Million Join Line

    Coronavirus

Digital Edition

Scb home issue 27

2020 Supply Chain Innovator of the Year

VIEW THE LATEST ISSUE

Case Studies

  • LSP Saves Customer $1.5 Million a Year With MPO Global Inbound Management

  • Auto Supplier Wows Key Client Using riskmethods Supply Chain Savvy

  • Integrating Shipping and Compliance Saves Conglomerate Millions

  • How a Consumer Goods Giant Upped Its On-Time Delivery Performance

  • LSP Wows Global Client, Quickly Advances to Become End-to-End Provider

Visit Our Sponsors

6 River Systems ArcBest Armada
aThingz BluJay Burris Logistics
DSC Logistics DCSA (Digital Container Shipping Association) DHL Resilience360
Genpact GEP Honeywell Intelligrated
Infor Logility Magnitude Software
MPO Old Dominion Oliver Wight
OpenSky Ports America Purolator
QAD Precision Red Classic Riskmethods
TGW Systems Transportation Insights Watson Land Company
Westfalia Technologies Workjam Yang Ming
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright © 2016 - 2018 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing