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Future Trends in the LSP Industry

This article explores the evolving landscape of the Logistics Service Provider (LSP) industry and highlights key drivers, trends, and challenges that LSPs are facing. It also discusses the importance of collaboration and relationship alignment for successful partnerships in the global logistics market.

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Future Trends in the LSP Industry

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  1. Where is the Logistics Service Provider (LSP) Industry Going? LQ Symposium April 20, 2006

  2. Global Logistics Market Trends

  3. Logistics market continues to expand rapidly Source: Datamonitor D A T A M O N I T O R 2005

  4. Source: Datamonitor D A T A M O N I T O R 2005

  5. Market Shared between Key regions Source: Datamonitor D A T A M O N I T O R 2005

  6. Key Drivers for LSPs • Changes in sourcing behavior – pursuing lower costs with adequate quality • This ‘globalization’ creates logistics complexity • Changes in outsourcing behavior – • This increase in complexity drives the desire for simplicity • More and more companies are pursuing business strategies to outsource more and more bundled business processes

  7. Evolution towards broad supply chain solutions Increased outsourcing of transaction based activities Enhanced 3PL provider technology capabilities Deeper client industry focus and expertise by 3PL providers Continued expansion, acquisition and consolidation of 3PL industry Expansion into global markets Further clarity and usage of 4PL(LLP) solutions Enhanced long term relationship management capabilities Future Industry Trends Source: CAP Gemini - Findings from the 2004 Ninth Annual Study

  8. Source IDC The New Face of BPO: Customer Adoption Patterns for Logistics BPO

  9. Source IDC The New Face of BPO: Customer Adoption Patterns for Logistics BPO

  10. Evolution Service Provider Rationalization SC Integration Professional Services Supply Chain Solutions Complexity of Solution Single Logistics Service Multiple Logistics Products Bundling No. of Services

  11. Process 1 Process 2 Process 3 Integration and Alignment • Integration – the linking of business processes from previously independent activities Process 1 Process 2 Process 3 • Collaboration – the ongoing effort of sharing pertinent information to continuously align expectations

  12. Collaboration Trends Both want the progression but don’t have a framework to manage the journey Low Value High Value Transactional Collaborative Partnership Enhanced • Shared risks & investment • Deeply integrated • Mutually dependent • Commodity Price • Interchangeable Product • Highly specifieddeliverables • Customized/ individualized • Process & data integration • Solutions oriented • Shared rewards • Some customization • Flexibility/levels of service • Special knowledge Source: Mike Nevin Consulting - 5 year cross industry study

  13. Summarizing . . . • Globalization means more complex supply chains • Manufacturing costs down but …Logistics complexity & costs up • Global logistics integration is the challenge • Maintaining Relationship Alignment is key to successful collaboration which leads to strong partnerships

  14. Transport & Logistics Contract Logistics Air & Sea Freight Land Operations Rail Freight Transport DB Logistics has four strong business units

  15. BAX and Schenker European Land Transport USA Integrated Heavy Weight Freight Global Air Freight Global Sea Freight Global Contract Logistics No. 1 No. 3 No. 6 No. 2 No. 3 2.1% 5.5% 4.7% 17.8% 12.6% BAX/Schenker KN DHL/Exel UPS DHL/Exel 7.0% 2.0% 5.4% 2.4% 16.1% BAX/Schenker DHL/Exel DHL/Exel TNT FedEx 1.1% 4.6% 3.2% 1.3% 9.8% DFDS Transport UPS BAX/Schenker KN BAX/Schenker 1.0% 4.5% 2.9% 1.0% 2.5% Dachser Panalpina Panalpina Ryder DHL/Exel 1.0% 3.6% 1.9% 0.9% Geodis KN SDV Wincanton 0.7% 3.0% 1.9% 0.8% ABX EGL Expeditors BAX/Schenker Combined, we hold excellent market positions in global air, sea freight and logistics

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