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READING, PA-Third-party logistics providers say they face an uncertain future as a result of the global recession. According to the 16th annual survey of 3PL CEOs by Penske Logistics, the industry faces lower growth projections, further pricing compression and an increase in “reverse globalization.”

“This year’s survey results underscore the caution and anticipation felt by 3PL executives as they wait for signs of a global economic recovery,”says survey author Dr. Robert Lieb, professor of supply chain management at Northeastern University in Boston. “Yet, despite bearish growth projections and acknowledgment 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 survey analyzes responses from 35 3PL company CEOs in North America, Europe and the Asia-Pacific region. Companies surveyed generated approximately $64 billion in revenue in 2008. Results varied significantly by region, but all regions anticipate a worse performance this year than last. For example, one-year company revenue growth projections were 6.9% for North America compared to 12.6% in ’08, -3.3% for Europe compared to 10.8% in ’08) and 12.9% for Asia-Pacific compared to 21.4% in 2008. One-year industry revenue growth projections averaged 3.5% for North America compared to 9% in ’08, -1.4% for Europe compared to 7.3% in ’08) and 10.7% for Asia-Pacific compared to 11.2% in ’08.Respondents, however, projected generally stronger growth for subsequent years. Average three-year growth projections stood at 11.8% for North America and 8.7% for Europe, though only 16.7% for the Asia-Pacific region. Average three-year industry growth projections were 7.9% for North America, 4.9% for Europe and 11.7% for Asia-Pacific.

Despite rising prices and lower volumes, more than 70% of respondents promised sustained commitment to “green” initiatives, including the launch of new sustainability initiatives. In addition, while 16 of the companies surveyed failed to meet revenue growth projections last year, 33 CEOs reported at least moderately profitability. Only one reported a loss.

In a major change that could have a dramatic impact on distribution center development and leasing, many CEOs surveyed noted a trend toward reverse globalization and shortened supply chains. They expect these to continue for several years. According to the survey, CEOs in North America and Europe reported that nearly a quarter of their customers have taken steps to shorten supply chains. By contrast, the comparable percentage for the Asia-Pacific region was only 9%. Furthermore, 20 CEOs reported that some of their major customers had shifted manufacturing activities from Asia to North or Central America or Eastern Europe.

“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,” observes Penske Logistics president Vince Hartnett. “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.”

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