Global Logistics and Supply Chain Strategies - April 2008 - (Page 32)

Table 2: Top Global Fortune 500 Buyers of 3PL Services Number of 3PLs 43 36 32 31 30 27 25 24 21 19 18 17 15 14 13 12 11 Company General Motors Ford Motor Wal-Mart Stores DaimlerChrysler Volkswagen Hewlett-Packard, Procter & Gamble PepsiCo Unilever BMW, General Electric, Home Depot, Sears Holdings Nestlé, Toyota Motor Siemens Altria Group Intl. Business Machines, Royal Philips Electronics Johnson Controls, Sony Coca-Cola, International Paper, Robert Bosch Dell, Novartis, Target Deere, DuPont, Exxon Mobil, Honda Motor, Johnson & Johnson, Nissan Motor, Samsung Electronics, Sara Lee, Weyerhaeuser BASF, LG, Mitsubishi Motors, Whirlpool Source: Armstrong & Associates 10 market will expand 7.5 percent, +/- 1.5 percent, in 2008. The increased 3PL usage described above is consistent with information from A&A’s other ongoing 3PL market research. We estimate 3PL penetration of the total potential U.S. 3PL market is 16 percent, up from 10 percent in 2002. Consistent with this figure is A&A’s estimate of total U.S. 3PL revenues increasing from $65.3bn in 2001 to $122bn in 2007. A&A’s estimate of the 2006 3PL revenues from the Global Fortune 500 is $162.4bn. These companies account for 38.9 percent of the $417.1bn global 3PL market. This estimate is subject to our North American definitions and orientation to third-party logistics. That is, we define segments as domestic transportation management, international transportation management, dedicated contract carriage (DCC) and value-added warehousing/distribution (VAWD). The first two categories are non-asset based; the latter two are traditionally asset-based. Our definitions grew out of the regulatory framework for transportation and warehousing in the U.S. Our European colleagues tend to lump the VAWD and outbound transportation into “contract logistics.” To the degree that third-party logistics is developing in Asia, the separate segments are more likely to be lumped under the term supply chain management and tend to be focused on international transportation management (freight forwarding and NVOCC). A&A’s estimates of the total logistics costs and corresponding 3PL revenues for the Fortune 500 Global companies and by industry vertical are shown in the table below. (See Table 3) Figure 2 provides a breakout of A&A’s 3PL revenue estimates for the Fortune 500 global companies. In reviewing Figure 2, it is important to remember that these categories are broad. For example, “Technological” includes aerospace and defense companies. We include some information on the various sub-segments within the major industry segments in the following paragraphs. The largest industry segment is “Automotive” of which $38.9bn of the 3PL spend is from the “Motor Vehicles and Parts companies” sub-segment. General Motors, Ford Motor, DaimlerChrysler, Volkswagen, BMW and Toyota Motor 32 APRIL 2008

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Global Logistics and Supply Chain Strategies - April 2008 Contents Editorial GL & SCS Exclusive Fast Forward Up Front Cover Story: Continuing to Add Ever More to Their Offerings, 3PLs Are - At Your Service Over the Long Haul Opinion: Freight Audit Bill Can't Show All Mistakes that Hurt the Bottom Line Opinion: The ‘Good-Freight’ and ‘Bad-Freight’ Trucking Customers Industry Voices

Global Logistics and Supply Chain Strategies - April 2008

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