Global Logistics and Supply Chain Strategies - March 2008 - (Page 64)

INDUSTRY VOICES service requirement. Our business now all has to do with technology. people did not have the time to even think about logistics systems. We hear that a lot. There is an opportunity for 3PLs to come into these companies with turnkey solutions that provide the IT capability and processes. This need for better IT support is driving a lot of outsourcing business to us. tion margins are always going to be market competitive, so there is no significant profit opportunity for the 3PL. Customers still want their supply chains to be lean and mean, so our focus is on such things as inventory carrying costs and obsolescence—not just point-to-point rates. Q: There has been a huge consolidation among global 3PLs in recent years, especially among the largest companies. How does this trend impact companies like SEKO that have to compete with the really big players? Fitzgerald: The merger and acquisition trend in the 3PL industry has created challenges for customers and employees at the companies being consolidated and going through the integration process. Such consolidations tend to adversely impact service levels, employee turnover, operations, IT integration and so on. So at SEKO, we see 3PL industry consolidation as a way to find new employees and gain customers who feel lost in the midst of the transitions. Their dissatisfaction is an opportunity for us. In fact, industry consolidation is a net positive for us. Q: What services, markets and industries Q: What parts of the world are growing are providing SEKO with its greatest growth right now? Fitzgerald: Our greatest growth area is medical technology, aerospace and last mile delivery programs, and most of the services are not strictly about airfreight. We have moved away from the traditional airfreight forwarding model and moved into entirely new directions that involve broad supply chain issues, not just point-to-point transportation. We are seeing similar growth in pharmaceuticals and trade shows, and we are multiplying this growth by penetrating these markets on a global scale. Residential home delivery has grown in direct proportion to internet sales that are rapidly expanding all over the world. In the U.S., home delivery is our fastest vertical. Our international business has been growing tremendously for us because the low-valued dollar has allowed exports to take off. In fact, we are growing much faster internationally than we are domestically. the fastest for your business? Is the story still all about outsourcing and imports from China, or are there other markets that demand attention from the shipping public? Fitzgerald: China is still the world’s manufacturing center, and it probably will be the key market for some time to come. What is changing is that China logistics is no longer about movements to the U.S. and Europe, but also to other parts of the world. We also are seeing big growth in business in India, Central Europe, the Middle East and even Ireland. Growth is happening around the world for us. Q: Do you see more consolidation coming among the global 3PLs? Is this a positive trend? Fitzgerald: The nature of venture capital and private equity is to look for acquisitions that can provide moneymaking opportunities. It is not usually about the customer. A lot of the deals are like a game of Monopoly with money men playing with companies, customers and people’s lives. It is not all positive, but it is inevitable. Q: Logistics outsourcing is a fairly mature business. Is the growth trend flattening out worldwide, or do you still see significant growth opportunities? Fitzgerald: We still see plenty of opportunity as long as value is being added. Many smaller corporations are looking at 3PLs like SEKO to develop customized supply chain programs. We find great potential to provide value in highervalue product industries such as medical technology, pharmaceuticals and aerospace. Much of the growth opportunity is IT driven. Companies do not have the funding, the people or the resources to implement the supply chain systems they need, so they look to 3PLs to meet their needs. I was visiting a customer yesterday. They told me their company could not invest in any logistics IT for two to three years because the company was switching over to a new, big ERP system. Their IT Q: Many global carriers, especially among the airlines and the all-cargo airlines in particular, have been in financial trouble for years. Are you at all concerned about the availability of lift if the economy slows down and basic costs such as fuel continue to climb? How about the ocean carrier industry? Fitzgerald: We all have to be concerned about the health of the air carrier industry. Fuel is going up. Capacity and carrier health is always a concern. Customers are not happy to pay fuel surcharges, but they understand that it is part of the business. Q: For several years, freight capacity by both air and ocean into the U.S. has been tight while rates and surcharges have been climbing. Have you seen any shift in this trend in light of the much heralded global economic slowdown? Fitzgerald: The global economy has not slowed down for us. Quite the opposite. With the dollar down, there is plenty of export business moving out of the U.S. So far, there has been no significant reduction in capacity. However, we are still running charters out of Hong Kong to the U.S. to ensure that we have capacity for Chinese exports to the U.S. and Europe. In terms of ocean, there has been a shift to move capacity from the U.S. market to the Asia-toEurope markets, and we are very much involved in that business. We haven’t seen much change in rates so far, but we are not really in the point-topoint transportation business anymore. Our goal is to help the customer drive down their total supply chain costs. Transporta- Q: To what degree have security initiatives such as the 24-hour rule, C-TPAT, etc., placed a burden on international cargo? Fitzgerald: Security measures have not really created a problem for our industry, but they have caused us to bring about major changes. We sincerely believe that effective security will ultimately make carriers, forwarders and 3PLs more efficient. The providers that find security to be a burden will not be competitive over the next few years. To access this article online, visit The Digital Edition at www.SupplyChainBrain.com. Resource Link SEKO Worldwide, www.sekoworldwide.com www.supplychainbrain.com GLOBAL LOGISTICS & SUPPLY CHAIN STRATEGIES 65 http://www.SupplyChainBrain.com http://www.sekoworldwide.com http://www.supplychainbrain.com

Table of Contents Feed for the Digital Edition of Global Logistics and Supply Chain Strategies - March 2008

Global Logistics and Supply Chain Strategies - March 2008 Editorial GL & SCS Exclusive FastForward Up Front The Green in Green Think Inside the Box Have a Second Look Can't Happen Here Opinion: Stay in the Black as Your Workforce Fades to Gray Opinion: Four Critical Steps to Managing Change in the Supply Chain Industry Voices

Global Logistics and Supply Chain Strategies - March 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.