Wednesday, June 28, 2006

Niche Logistics Companies Play Important Role

Niche logistics providers still play important role, shippers say

Small, regional logistics providers are still viable in an era of consolidation spurred by large multinational companies’ demands for global logistics providers that can manage all aspects of international supply chains, according to several logistics professionals who spoke at an industry conference in Atlanta.

In the past year, DHL has merged with UK freight forwarder Exel to create the largest logistics company in the world, Kuwait-based PWC Logistics bought Santa Clara, Calif.-based forwarder GeoLogistics, UPS acquired piece shipment truckload carrier Overnite Transportation and Schneider Logistics acquired deconsolidation and transloading specialist American Port Services. Smaller freight forwarders are also making acquisitions to get bigger and offer a wider range of logistics services.

But big is not always better.

"Many shippers are looking at a variety of service providers when we consider outsourcing logistics," said Robert Brescia, vice president of logistics for tire manufacturer Michelin, at a logistics conference organized by eyefortransport.

Smaller logistics providers have the advantage of having top management that is accessible and can quickly focus on customer problems, whereas in large outfits executives are stretched across a large number of logistics accounts. Smaller companies are likely to provide more attention because the customer represents a bigger chunk of their business, he said.

Michael Stolarczyk, a senior director for Exel, tipped his hat to the niche logistics providers, saying that his company is constantly evaluating how best to adapt to national and regional third-party logistics providers "who are making an impression on customers."

Dupre Logistics, a small company that specializes in serving the chemical industry, knows its customer base and its own capabilities, "and does not go after customers who need a global provider," said Tracy Pellerin, director of logistics.

Technology provider HP has a strategy to use global 3PLs, but will use specialist logistics providers in countries where the large provider is not strong, John Daniels, a logistics manager for the company said on the sidelines of the conference.

But even smaller companies need to provide a broader range of services because shippers are reorganizing their own businesses at a rapid clip and streamlining the number of service providers they use so they can better manage their logistics, said Genco CEO Herb Shear.
"When I got in the business, it was not uncommon for a business to deal with 300 to 400 carriers, and 30, 40, 50 warehouses. Today, it’s rare for even the largest company to have that many suppliers," he said.
This is direct from the AmericanShipper daily news break...


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