Survey: 3PL execs project sustained growth; note capacity issues, rise of e-commerce

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Executives at 3PLs are confident about the current state and future revenue growth of their companies and the regional industries, according to the 21st Annual Surveys of Third-Party Logistics Provider CEOs.

The survey, sponsored by Penske Logistics and presented Monday at the Council of Supply Chain Management Professionals Annual Global Conference, found that approximately 75 percent of the companies involved in the surveys were profitable in 2013.

North American and Asian-Pacific CEOs forecasted three-year company growth of 10.77 percent and 16.2 percent, respectively. European CEOs forecasted 8.33 percent growth over the same period.

The CEOs were also asked to project regional 3PL industry revenue growth rates for the next three years in all three regions. North American CEOs projected average revenue growth rates of 6.54 percent; European CEOs projected average revenue growth rates of 4.17 percent; and CEOs in the Asia-Pacific region projected average revenue growth rates of 10.4 percent.

The findings analyze responses from 27 major third-party logistics company CEOs across North America, Europe and Asia-Pacific whose companies generated approximately $46 billion in revenue in 2013.

Among the key survey findings:

Capacity Issues in North America: Nearly 70 percent of North American 3PL CEOs reported capacity shortages across modes, including: truckload, LTL, intermodal and rail. The capacity crunch has led to higher rates and longer transit times with 3PLs struggling to meet on-time service goals and cost targets.

Mergers and Acquisitions: These companies project relatively little revenue growth related to mergers and acquisitions during the next three years. The primary reasons cited by CEOs for this are a dearth of attractive candidates, economic uncertainty and integration issues experienced during prior acquisitions.

Sustainability: Companies remain committed to environmental and sustainability issues, but the emphasis has shifted to maintaining and expanding existing sustainability programs (55 percent) over launching new programs (29.6 percent).

Amazon and the 3PL Industry: The 3PL CEOs acknowledged the impact that Amazon has had on the field of supply chain management, particularly in terms of raising customer service level expectations and focusing on shipment visibility. Many of the CEOs noted that in a number of markets Amazon is not only a customer of theirs, but also a competitor in the market for logistics services. They also suggested that Amazon might become a more significant competitor because of scale of the logistics infrastructure the company has built.