Global Recession Squeezes 3PLs
Thomas L. Gallagher | Sep 23, 2009 2:53PM GMT 

CEOs forecast lower revenue, prices, shorter supply chains in near term 

The global recession is putting unprecedented pressure on third-party logistics providers, according to an industry survey released Sept. 21 at the Council of Supply Chain Management Professionals Annual Global Conference.
The 16 annual survey of 3PL CEOs, sponsored by Penske Logistics, revealed lower company and industry revenue growth projections, further pricing compression, increased reverse globalization and a sustained commitment to “green” initiatives as key trends in the coming year.

“This year’s survey results underscore the caution and anticipation felt by 3PL executives as they wait for signs of a global economic recovery,” said survey author, Dr. Robert Lieb, professor of supply chain management at Northeastern University. “Yet, despite bearish growth projections and acknowledgement that consolidation, pricing pressures and operational reductions were, and may continue to be, necessary adjustments, the opportunities for improved collaboration with customers, expansion into emerging markets and the possible addition of new management talent have many excited about the next several years.”

“The past 12 months have posed unprecedented challenges for logistics providers around the world and yet opportunities for developing collaborative partnerships with customers have never been greater,” said Vince Hartnett, president of Penske Logistics. “But in that time we have all learned a great deal and made business adjustments that have undoubtedly positioned the industry for steady growth and continued success as the economy rebounds.”

Revenue projections this year were even lower than last year’s record lows. On average, 3PL CEOs in Europe project negative growth rates for their companies during the next year. CEOs in North America and the Asia-Pacific regions forecast growth at almost half the rates of last year.

Many CEOs surveyed expect that the trend toward reverse globalization and the shortening of supply chains will continue during the next several years. Of the 35 CEOs surveyed, 20 reported that some of their major customers had shifted manufacturing activities from Asia to

North or Central America or Eastern Europe.

Despite the global economic downturn, 3PLs have maintained support for environmental sustainability and human capital issues. During the past 12 months, 25 of the companies involved in this year’s survey reported launching new sustainability initiatives; 22 have expanded existing sustainability programs and none reported scaling back “green” programs.

While 28 of 35 CEOs reported layoffs during the past year, 27 CEOs noted a reduction in recruiting efforts. There were 26 leaders who reported reduced executive trips to industry conferences. Only six noted a cut in employee training programs.