i Global Logistics Strategies ii THIS PAGE IS INTENTIONALLY LEFT BLANK iii Global Logistics Strategies Delivering the goods John Manners-Bell KoganPage iv Publisher’s note Every possible effort has been made to ensure that the information contained in this book is accurate at the time of going to press, and the publishers and author cannot accept responsibility for any errors or omissions, however caused No responsibility for loss or damage occasioned to any person acting, or refraining from action, as a result of the material in this publication can be accepted by the editor, the publisher or the author First published in Great Britain and the United States in 2014 by Kogan Page Limited Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 2nd Floor, 45 Gee Street London EC1V 3RS United Kingdom www.koganpage.com 1518 Walnut Street, Suite 1100 Philadelphia PA 19102 USA 4737/23 Ansari Road Daryaganj New Delhi 110002 India © John Manners-Bell, 2014 The right of John Manners-Bell to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988 ISBN 978 7494 7023 E-ISBN 978 7494 7024 British Library Cataloguing-in-Publication Data A CIP record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Manners-Bell, John Global logistics strategies : delivering the goods / John Manners-Bell pages cm ISBN 978-0-7494-7023-4 (pbk.) – ISBN 978-0-7494-7024-1 (ebook) 1. Physical distribution of goods. 2. Business logistics–Management. I. Title HF5415.6.M317 2014 658.7–dc23 2013032117 Typeset by Graphicraft Limited, Hong Kong Print production managed by Jellyfish Printed and bound by CPI Group (UK) Ltd, Croydon, CR0 4YY v co n t e n t s List of figures ix List of tables xii Acknowledgements xiii About this book xiv Introduction 01 What’s shaping the global logistics market? Trade and globalization The impact of supply chain management practice on logistics 14 Centralization of inventory 16 Outsourcing logistics 19 Evolution towards value-adding services 22 To offshore or near-source? 23 02 An industry in transformation: towards consolidation 27 Consolidation and fragmentation in the logistics industry 28 Options for growth 34 Is acquisition worthwhile? 36 Acquisition strategies 37 The emergence of the ‘mega-carrier’ 40 The key logistics segments 41 Case study: Deutsche Post DHL: the emergence of a global powerhouse 49 03 Logistics market development by geography Influences on market characteristics 51 Geographic market profiles 53 04 The emergence of logistics clusters 77 Where to locate distribution centres? 77 Centralization of distribution in Europe 81 51 vi Contents Centralization of distribution in the United States 86 Centralization of distribution in China 90 05 International freight forwarding 94 The structure of the freight-forwarding industry 94 Modal choice by shippers 97 Fragmentation and consolidation 98 The restructuring of the freight-forwarding sector 99 Integrators v freight forwarders 100 ‘Disintermediation’ 101 Freight-forwarding market dynamics 102 Future forwarding sector performance 106 06 Contract logistics 111 Emergence of a global industry 111 Selecting the right logistics service provider 113 Financing contracts 116 Sales cycle times 118 Contracts and relationships 119 Profit margins 120 Enhancing value through deeper relationships 120 07 European road freight 122 Drivers of growth and profitability 122 The structure of the European road freight industry 124 The link between fuel costs and rates 132 What causes transport company failures? 134 Margins and cost increases 136 08 Express parcels 138 The origins of the express parcels industry 138 Market definitions and structure 139 Express market leading companies 141 Express operating model – hub and spoke 143 Express economics 144 Long-term trends in the express sector 146 Key developments in the supply side 147 Contents 09 Air cargo 150 Development of the air cargo industry 150 Industry players 153 The air cargo chain 157 Cargo types 159 Freight aircraft 159 Air cargo routes 160 Leading air cargo operators 160 10 Container shipping 162 The origins of the modern industry 162 The structure of the shipping industry 164 Consolidation in the shipping industry 166 Ship size 168 Freight forwarders v shipping lines 168 Key growth lanes 169 11 The European rail and intermodal sectors 171 What is intermodal transport? 172 Who does what in intermodal transport? 173 How is the market structured? 174 Who decides what to use? 178 Case study: Rotterdam’s intermodal solution 178 Largest domestic intermodal operators 179 Intermodal solutions in the automotive sector 179 12 Supply chain dynamics of vertical sectors Automotive manufacturing logistics 185 Pharmaceutical logistics 193 Consumer goods and retail logistics 199 High tech manufacturing 210 13 Risks in global supply chains 218 Rebalancing ‘external’ and ‘internal’ risks 218 Quantifying supply chain risk 220 Types of supply chain threat 221 Unknown unknowns 225 185 vii viii Contents Sector resilience to threats 226 Examples of supply chain disruption 227 Conclusion 234 14 The e-commerce logistics phenomenon 235 What is e-commerce? 236 The impact of e-retailing on logistics 237 International commerce 240 The role of the postal services 241 Case study: Amazon drives the market in Europe 242 E-retailing in Asia 243 Case study: China’s leading e-retailer builds its own logistics 244 E-retailing in North America 245 15 3D Printing: the end of global supply chains? 248 What is 3D Printing? 248 Can 3D Printing revolutionize global industry? 249 What are the implications for the logistics industry? 250 The logistics company of the future 251 Conclusion 252 Index 255 ix L is t o f f ig u r e s Figure 1.1 The confluence of supply-side and demand-side trends Figure 1.2 World trade growth: value of world merchandise exports, 2005–12 10 Figure 1.3 China exports 2009–12 US$m 11 Figure 1.4 Asia trade by region as a percentage of total value 12 Figure 1.5 Increasing supply chain complexity 13 Figure 1.6 Supply chain hazards of inventory reduction strategies 16 Figure 1.7 The transport cost/inventory trade-off 17 Figure 1.8 The changing structure of supply chain costs 18 Figure 1.9 The location of high tech European distribution centres 18 Figure 1.10 Stages in the logistics outsourcing process 20 Figure 1.11 3PL/Shipper perceived user value survey 22 Figure 1.12 Logistics costs and value added services 23 Figure 1.13 The evolution of the logistics industry 24 Figure 2.1 Merger and fragmentation of logistics functions 29 Figure 2.2 The ‘mega-carrier’ quadrant 40 Figure 2.3 Reversal of the mega-carrier trend? 41 Figure 4.1 Preferred/future European distribution centre locations 83 Figure 4.2 Location of European distribution centres 83 Figure 4.3 European strategic distribution locations 85 Figure 4.4 The United States – main distribution centre hubs 87 Figure 4.5 China – main distribution centre hubs 91 Figure 4.6 Chinese warehouse locations by region 93 Figure 5.1 The freight-forwarding Herfindahl-Hirschman Index 99 Figure 5.2 Theoretical countercyclicality in the freight-forwarding sector – Scenario 103 Figure 5.3 Theoretical countercyclicality in the freight-forwarding sector – Scenario 2 105 250 Global Logistics Strategies issues and more responsiveness to market needs Lower batch quantities would consolidate these benefits 3D Printing, combined with efficient manufacturing, will revolutionize the principles established in the first Industrial Revolution Not only will local manufacturing re-establish itself close to end markets, but it will allow the flexibility to reconfigure in response to changing consumer demands The nature of manufacturing will be very different from traditional models in which it takes established production plants months (or even years) to retool The philosophy of manufacturing, in which products are made precisely to customer demand, could have big implications in certain sectors For instance, in healthcare vertical small ‘one-off’ production runs of drugs/ compounds will reduce inventory holding costs But this capability will also enable the rapid transport of entire production plants to areas where large amounts of drugs may be needed in times of emergency (ie pandemics or natural disasters) Looking even further into the future, some household products could actually be manufactured in the consumer’s home, once the cost of 3D printing technology has become affordable This would have even greater impli cations for the logistics industry – this time on a domestic rather than international basis This is not as far off as may be thought 3D printers for consumers can already be purchased for just a few hundred dollars What are the implications for the logistics industry? The implications of this new manufacturing technology for the logistics industry could be massive: ●● ●● ●● Potentially a proportion of goods which were previously produced in China or other Asia markets could be ‘near-sourced’ to North America and Europe This would reduce shipping and air cargo volumes The ‘mass customization’ of products would mean that inventory levels fall, as goods are made to order This would have the effect of reducing warehousing requirements There would be fewer opportunities for logistics suppliers to be involved in companies’ upstream supply chains, as manufacturing processes are increasingly rebundled within a single facility Tiers of 3D Printing: the End of Global Supply Chains? component suppliers are done away with, as is the need for supplier villages, line side supply, etc ●● ●● ●● Downstream logistics would also be affected Build-to-order production strategies could fundamentally impact the manufacturer–wholesaler– retailer relationship In the future, the shopping experience could also be vastly different In some sectors, retailers will either cease to exist or become ‘shop windows’ for manufacturers, keeping no stock of their own Orders are fulfilled directly by the manufacturer, and delivered to the home of the consumer A major new sector of the logistics industry would emerge, dealing with the storage and movement of the raw materials which ‘feed’ the 3D printers As 3D printers become more affordable to the general public, the home delivery market of these materials would increase The service parts logistics sector would be one of the first to be affected At present billions are spent on holding stock to supply products as diverse as cars to x-ray machines In some cases huge amount of redundancy is built into supply chains to enable parts to be dispatched in a very short timescale to get machines up and running again as fast as possible It doesn’t take much imagination to understand the benefits for a service parts engineer of being able to download a part design from an online library, 3D Print it and then fit it within a very short time window This would make global and national parts warehouses as well as forward stock locations unnecessary to fulfilling customer needs The logistics company of the future The changing supply chain dynamics will lead to the evolution of a new type of logistics company resembling a ‘4PL’, or service management company, as much as anything else Their businesses will comprise a mix of software development, delivery services, partner relationship management, contract management and brainpower The new logistics company will design solutions comprising demand planning, manufacturing, delivery, market monitoring, service parts management and return and recycling services In essence, they will become Product Life-Cycle Management service providers This is a big opportunity for the major industry players that have the resources to establish these new organizations 251 252 Global Logistics Strategies The service parts logistics industry could be either transformed or de cimated by 3D manufacturing With small 3D Printing machines available, operations in remote locations – or even in an engineer’s van – will only need electronic libraries of designs available to them on a local computer They can then call up the design of the spare part required and immediately print it Obsolete parts could simply be scanned in 3D, fixed in the computer’s memory and the new part printed The implications for inventory are clear Conclusion If the new technology is to completely transform global industry, 3D Printing must be able to mass-produce goods in the same volumes as traditional manufacturing techniques At present, the jury is still out on whether this is feasible Some in the sector (such as global manufacturing group GE) foresee a time when a whole engine, for example, could be printed Others believe that, at least in the medium term, hybrid solutions will develop, which combine new technologies with more traditional techniques However, what 3D Printing is certainly not is science fiction Its ability to create strong but light parts has been identified by the aerospace sector; components for the automotive sector are already being printed and the technology is being adopted by the mobile telecoms sector It has been estimated that in 2012 up to 30 per cent of finished products already involve some kind of 3D Printing By 2016, this is expected to rise to 50 per cent and by 2020 potentially up to 80 per cent At the moment the following areas are in line for transformation: ●● Now: –– production prototypes; –– small manufacturing runs of high value/high complexity products; –– dental/aural healthcare forms/aids ●● Soon: –– almost all service parts; –– complex high volume/high value forms; –– products related to fashion/trends that have a high volume/short lifespan profile ●● Later: –– mass-produced fast-moving consumer goods 3D Printing: the End of Global Supply Chains? It is difficult to see that industry will undergo complete transformation for many years – probably decades – to come What could happen, though, is that some sectors are penetrated by the technology at a much earlier stage, such as the manufacture of spare parts In this case, the most enlightened logistics companies could even become early adopters of the technologies – investing in the 3D printers and providing facilities for engineers – rather than kicking against the progress This would also provide a way of leveraging their capital and their own technological capabilities It is clear that, if the larger logistics companies delay or ignore the implications of this trend, they are vulnerable to new kinds of organizations or associations that will match or leap ahead of their capabilities for very little outlay 253 254 THIS PAGE IS INTENTIONALLY LEFT BLANK 255 Index (italics indicate a figure or table in the text) ABX Logistics 4, 32, 37, 38 Acer 212, 213, 215 Alibaba Group case study 244–45 Alliances 35 air cargo 150–61 aircraft 159 airlines 153–54 airports 155 cargo charter airlines 151 chain 157–58 customs brokers 156 development of industry 150–53 express operators 156 freight forwarders 155 general sales agents (GSAs) 155 high tech goods 213 integrators 152, 153, 154, 158 logistics operators 156–57 market growth 152 processes 157, 158 route tonne kilometres (RTKs) 152–53 routes by volume 161 security systems 233 terrorism and 231–33 top 10 carriers 161 transit warehouse operators 156 trucking companies 156 types 159 volume by commodity 159 Airbus 159 Airborne Express 147 airlines 46 Amazon 64, 235, 236, 237, 245 case study 242–43 CollectPlus 243 locker pick up service 239 United States of America 246–47 American Airlines 197 Apple 204, 211, 213 Asda 240 Asian Highway 90 Asos 235–36 Association of Southeast Asian Nations (ASEAN) 9, 90 Atlanta, USA 88 automotive manufacturing logistics 185–87 assembly plants 189 impact on transport demand 189–90 inbound logistics operations 191–93 production concepts 187–88 retailing 190–91 supply chain geography 188–89 Baldwin, Richard 25 Belgium 82 Bettembourg-Boulou rail-freight line 172, 173 BetuweLine 178 Biopharma Cold Chain Sourcebook 196–97 BMW 184, 191 Brazil 11, 72, 73–74 infrastructure 73 shoe production 73–74 British Airways 197 ByBox 239 cabotage 58 Canada 65 Carrefour 55, 59, 208 Cemat 179 CEVA Logistics 57, 58, 99, 217 Chicago, USA 88 China 4, 5, 6, 31, 57, 66, 67, 68–70, 96, 169, 205 acquisitions/take-overs 45 air transport 92 automotive sector 70, 186, 188, 189, 190 distribution centres 90–93 e-commerce 244–45 economic growth 8, 10–11 exports 11 high tech manufacturing/export 211, 213, 215 infrastructure 92 inland waterways 92 joint ventures 36 road networks 79 vehicle manufacturers (VMs) 186 256 Index wage costs 25 warehouse locations 93 Christian Salvesen 3, 37 Cisco 230–31 Clecat 94 CMA CGM 166, 167 consolidation in logistics industry 27–50 airlines 46 alliances 35 external pressures 28–30 fragmentation 29 freight forwarders 43–44 impact of deregulation 32–33 joint ventures (JVs) 35–36 liberalization of markets 31–33 ‘mega-carriers’ 40–41 organic growth 34–35 parcels networks 44–45 ‘piggybacking’ 36 post offices 41–42 railways 42–43 road freight 47–49 shipping lines 46–47 see also mergers and acquisitions consumer packaged goods (CPG) 199–210 collaboration within supply chains 207–08 consolidation services 204–05 developing countries and 205–06 Factory Gate Pricing (FGP) 200, 209 market 201–03 oil prices and 206–07 regionalization of supply chains 203 retail trends 208–09 supermarkets 210 transportation 207 warehousing 207 container shipping 162–70 consolidation 166–68 container relocation 166 fleet size/capacity 163, 167 freight forwarders v shipping lines 168–69 industry origins 162–64 intermodal freight 166, 175–76 ports 165 ship size 168 shipping lines 165 ‘Slow Steaming’ 164 structure of industry 164–66 supply/demand relationship 163–64 terminal operators 165 top 20 containerized trade routes 169 contract ‘churn’ 2–3 contract logistics 111–23 closed-book 119 financing 117–18 lifecycle costs 117 globalization 111–13 open-book 119 origins 112 outsourcing 115–16 profit margins 120 relationships 119–21 risks 118 sales cycle times 118–19 selection of service provider 113–16 value chain 121 see also outsourcing, supply chains Convoy Escort Programme (CEP) 234 Con-way Inc 35, 49 Council of Supply Chain Management Professionals (CSMP) 230 customs brokerage 95 Czech Republic 61 Damco 11 Danzas 100 Dell 15, 214, 229 ‘dematerialization’ 123 Deutsche Bahn 28, 29, 42–43, 99 Deutsche Post 1, 3, 4, 28, 32, 41, 42, 43, 82, 99 Packstations 241 Deutsche Post DHL (DP DHL) case study 49–50 DHL 4, 11, 28–29, 37, 41, 45, 48, 57, 58, 59, 68, 70, 78, 95, 126, 217 air cargo 154 European Air Transport network 158 express parcels 139, 142, 145, 147–48 pharmaceuticals 194 ‘disintermediation’ 101–02 D.Logistics 38 distribution centres 77–80 air links 78 China 90–93 costs 80 customer distribution profile 77–78 European 18, 81–82, 83, 84, 85 functions 81 geographical location 17, 84–85 labour 80 location in supply chain 77 product type 78 shipping links 79 United States 85 Index dotcom boom 3–4 DTW 36 Dubai 74, 230 Easydis 45 eBay 235, 236, 244, 245 e-commerce 34, 235–47 alliances 238 Asia 243–44 business models 236 courier express and parcels (CEP) sector 238–39 defining 236–37 e-fulfilment centres 237 international 240–41 North America 245–47 parcel shops 239–40 reverse logistics 237–38 role of postal services 241–42 warehousing 237 Envirotainer 198 EuroShuttle 172 European Commission 51, 171 European Logistics Association 23 European postal markets 31–32 European Union (EU) 1, 5, 82 Exel 1, 3, 33, 37, 41, 48, 56, 68, 99 Expeditors 30 express parcels 138–49 air carriers 142 business to business (B2B) 140–41 business to consumer (B2C) 140–41 consignment size/weight 140 cost structure 144 definition of ‘express’ 139 integrators 142 international/domestic 141 link with US economic output 145, 146 long-term trends 146–47 market structure 139–41 operating model 143 profitability 144, 145 time sensitivity 139–40 FedEx 36, 45, 49, 78, 194, 241 acquisition of Tatex 241 air cargo 154 express parcels 138, 139, 142, 144, 145, 152 pharmaceuticals 194, 196 ‘4PL’ (fourth party logistics) companies 121, 156–57, 251 Ford 112, 182, 187, 191 France 55–56 freight forwarders 43–44, 46, 47, 94–110 air freight 96, 103, 155, 198 analysis of size and profitability 109 asset ownership 129–32 buying power 110 countercyclicality scenarios 103, 104 customs brokerage 95 definition of industry 94–95 ‘disintermediation’ 101–02 fragmented market 98 ground 129 ‘hub-and-spoke networks’ 101 ‘integrated logistics’ 94 Integrators v freight forwarders 100–01 margins 109 market dynamics 102–06 modal choice by shippers 97, 98 overheads 110 profitability 108–10 relationship between rates, gap ratio and gross margin 107 restructuring 99–100 road hauliers 128 sea freight 95–96, 103, 105, 106, 108, 168–69 structure of industry 94–99 fuel costs 132–34 correlation between margins and 136–37 European diesel prices 133 index of company failures and 135 link to freight rates 134 Fujitsu Logistics 68 ‘gap ratio’ 106–07 GEFCO 182 General Motors (GM) 183, 191 Geodis 43 GeoPost 44 Germany 53, 82 global logistics industry consolidation 27–50 global logistics markets 51–76 Africa 75–76 Asia-Pacific 66–71 Brazil 72, 73–74 Canada 65 central/eastern European 60–62 China 66, 67, 68–70 Dubai 74 economic openness 52 France 55–56 Germany 53 import/export balance 52 India 70–71 257 258 Index Italy 57–58 Japan 67–68 Mexico 65–66 Middle East 74–75 Nigeria 76 North America 62–66 regulation 51–52 retail development 52 South Africa 75–76 South America 72–74 Spain 59–60 UK 56–57 urbanization 52–53 USA 62–64 globalization 4, 30–31, 210, 220, 248 contract logistics 111–13 networks 14 trade and 7–14 world trade growth 10 Goodman 117 ‘Great Recession’ of 2009 4–5 ‘Green Monday’ 245–46 Hapag-Lloyd 47 Hays 3, 37 Healthcare Distribution Management Association (HDMA) 199 Hermes 238–39 Herfindahl-Hirschman Index (HHI) 98, 99 Hewlett Packard (HP) 212, 213, 214–15 high tech manufacturing 210–17 aftermarket sales 216 air freight 213 field part/spare parts logistics 217 logistics services 215–17 ocean freight 213–14 returns/repairs 216–17 reverse logistics 215 supply chains 211–12 transport 213–15 Honda 187, 191 Hong Kong 205 Hub Group 181 Hungary 61–62 IBM 43 Icelandic volcanic eruption 229 India 45, 70–71, 205 India Railways 71 in-house logistics companies 45–46 ‘inland ports’ 57, 79 Institute of Grocery Distribution (UK) 208 Intel 15, 228 inter-modal transport 172–73 automotive sector 179–84 continental rail-road 177–78 definition 172 demand side 173 market segments 175 merchant haulage 176 operators 179 railway operators 176–77 ro-ro (roll-on/roll-off) ferries 177 Rotterdam case study 178–79 seaport terminals 176 shipping lines and 175–76, 178 supply side 173–74 International Brotherhood of Teamsters 63 Iran 230 Italy 57–58 Japan 67–68, 227 Jobs, Steve 213 John Lewis click and collect 240 joint ventures (JVs) 35–36 Just-in-Time manufacturing 1, 14, 146 Kiala 34 Kimberley Clark 208 Kombiverkehr 179 Kowin 34 Kuehne, Klaus-Michael 167–68 Kuehne + Nagel 37, 48, 57, 95, 100, 217 La Poste 34, 42 Chronopost 142 less-than-truckload (LTL) (groupage) networks 48, 125–26 Li & Fung 203, 204 logistics clusters 77–93 European 81–85 United States 86–89 see also distribution centres Logistics Consulting Partners 208 logistics service providers (LSPs) Los Angeles, California, USA 89 Louisville, Kentucky, USA 89 Lufthansa 158 mergers and acquisitions (M&As) 1, 2, 36–37 ‘blockbuster deals’ 37–38 evolution 38 freight-forwarding industry 99–100 major 39 niche specialists 33 strategies 37–39 Index Ma, Jack 244 Maersk 27, 47, 165, 166, 167, 176 Memphis, Tennessee, USA 89 Mercedes Benz 184, 192 Mexico ‘Modern Silk Road’ 11 MSC (Mediterranean Shipping Line) 47, 166, 167 supply chains and 194, 196 temperatureregulation 194, 196 value 194 Poland 61 Procter & Gamble 201, 206 ProLogis 117 PSA Group Peugeot-Citroen 182 Qatar Airways incident 2010 232 near-shoring 5, 65 near-sourcing 30–31 Netherlands, the 82 New Breed Logistics 217 Nigeria 76 Nike 204 Nippon Express 67 Nissan 187, 191, 227 NOL 168 non-vessel owning common carriers (NVOCCs) 95–96 Norbert Dentressangle 30, 37, 57 Norfolk Southern 181 North American Free Trade Agreement (NAFTA) 1, Novatrans 179 offshoring 23–26 oilprices 5, 206–07, 220, 230 see also fuel costs Oman 230 Oneworld 154 Opek 241 ORIUM 34 Otto Group 235 outsourcing 2, 3, 19–22, 25–26, 32–33 assets and 20 benefits 20 costs 116 cultural issues 116 governance 115 importance of trust 114 reasons for 21–22 stages 20 transport 20 warehousing 20–21 see also contract logistics parcels networks 44–45 see also express parcels pharmaceutical logistics 193–99 cold chain market 196, 197 distribution services 198–99 market 195 packaging 198 reverse logistics 199 rail transport 171–72, 179 strategies of European auto manufacturers 181–82 traffic volumes 180, 181 US providers 181 see also inter-modal transport regulation 51–52 Europe 51 United States 51 Renault 191, 227 Renault-Nissan 183 risks to supply chains 218–34 economic 223–24 environmental 222–23 examples of disruption 228–34 external 218, 221, 222, 224 food supply 227 geopolitical 223, 229–30 globalization 220 internal 218, 221, 222 mitigations 225 piracy 223 probability of disruption 219 quantifying 220–21 sector threat resilience 226 strategies 220 technological 224 terrorism 223, 231–33 transport costs 220 road freight/haulage 47–49 asset ownership 128–32 causes of company failures 134–36 consignment attribution 127–28 drivers of growth/profitability 123–24 fuel costs 132, 133, 134, 135 full truckload (FTL) 126 geographical segmentation 127 index of company failures and retail sales 136 ‘less than truckload’ (THL) operators 125–26 operating margin and retail sales 137 ‘own account’/‘hire and reward’ 124–25 segmentation 124–32 259 260 Index service attribution 128 specialization 127 structure 124–37 transit traffic 124 Road Freight Price Index 133 road links 79 road tolls 56 Rotterdam intermodal case study 178–79 Royal Dutch Post 42 Royal Mail 42, 44, 149 ‘Delivery to Neighbour’ initiative 242 Sainsbury’s 3, 240 Saturn 236 Schenker 59, 61, 70, 82, 95, 99, 126, 196 Seagate 228 Single European Market (SEM) 9, 124, 126, 185, 200 Sinotrans 36, 45 SkyTeam 154 Slovakia 61 SNCF 29, 43 Somali piracy 233–34 South Africa 75–76 Spain 59–60 Star Alliance 154 Straits of Hormuz 229–30 supply chain management centralization of inventory 16–19 impact on logistics 14–16 inventory reduction strategies 16 ‘Kanban’ system 15, 185 transport cost/inventory trade-off 17 see also Just-in-Time manufacturing supply chains automotive manufacturing 185–93 complexity 13 consumer packaged goods (CPG) 199–210 costs 18 disruption 227–34 food 227 high tech manufacturing 210–17 pharmaceuticals 193–99 risks in 218–34 vertical sectors 185–217 see also contract logistics Target 203 TDG 3, 37 terrorism 231–33 Tesco 3, 200, 208, 235, 240 Thailand 222 floods in 2011 228–29 3D printing 248–53 impact on global logistics industry 249–51 ThielLogistik 4, 37, 38 Tibbet&Britten 1, 3, 41 TNT 1, 28, 35, 41, 42, 45, 58 air cargo 154 Asia Road Network 90 express parcels 138, 139, 142, 143, 144, 145, 148 Post 238 TNT Post 34 Toyota 15, 16, 191, 192, 221–22, 227, 228 Trans-Pacific Partnership (TPP) Transatlantic Trade and Investment Partnership Transport Intelligence 21, 25, 123 transport-related costs 17 UK 56–57 Unilever 201, 256–06, 208 UPS 4, 29, 30, 36, 44, 45, 49, 63, 78, 99, 100, 217 air cargo 154 attempted acquisition of TNT 148–49 express parcels 138, 139, 142, 144, 145 parcel shops 240 pharmaceuticals 194, 196, 198 USA 62–64 deregulation 63 distribution centres 86, 87, 88–89 e-commerce 64 outsourcing 64 unionization 63 value-adding services (VAS) 22–23 Venables, Anthony 25 VW-Audi Group 14, 61, 182–83 Waitrose 240 Walmart 188, 200, 203–04, 208, 235 Wehkamp 235 Wincanton 3, 37, 41, 45, 57, 59 Working Time Directive (WTD) 55–56 World Economic Forum 218 Supply Chain and Transport Risk Survey 2011 225 World Trade Organization (WTO) 7–8 Yellow Roadway Corporation 49 Yodel 239 Yusen Logistics 181 261 THIS PAGE IS INTENTIONALLY LEFT BLANK 262 THIS PAGE IS INTENTIONALLY LEFT BLANK 263 THIS PAGE IS INTENTIONALLY LEFT BLANK 264 THIS PAGE IS INTENTIONALLY LEFT BLANK [...]... examining the title, Global Logistics Strategies: Delivering the goods, ’ in a little more detail The analysis contained within the book takes a global view of the issues affecting the industry although many of the issues discussed could be said to be regional, national or in some cases local in nature Some parts of the industry are indeed truly global – for example, air cargo, shipping or the international... their customers as well as the unique dynamics of their own market This book is designed to provide the necessary background to allow executives, or future executives, to confidently make these decisions The subtitle of the book is Delivering the goods and this provides a positive assessment of the impact which the modern logistics industry has had on the global economy The levels of professionalism,... some of the key macro-economic and demand-side drivers which have brought about today’s logistics industry It will identify how the logistics industry has gone far beyond simple transport and warehousing services, becoming the glue which holds together the systems that underpin the global economy Trade and globalization One of the driving forces behind the trend towards the free movement of goods between... driver of the global economy Since the first major acquisition which kicked off the period of frenetic consolidation (that of TNT Express by the Dutch Post Office in 1996), there have been a variety of different trends which have influenced the strategies of the market leading companies At this time (the mid-1990s), the ability to offer global ‘one stop shopping’ became an ambitious goal for major logistics. .. understand the background of the markets in which their logistics suppliers work At the same time it will provide insight for managers of all levels into the workings of the freight markets and the macro-economic and supply chain trends which influence them The information contained within the book will also prove invaluable to the next generation of logistics executives – whether presently studying at... express sector Other parts of the logistics industry undertake services at either the beginning or end of international supply chains, and these tend to be road-based and localized The ‘micro-economics’ of these sectors, whether international or not, have gone a long way towards shaping global supply chains and, in a circular relationship, have in turn been shaped by globalization The term logistics is... across the industry, and gave the major road freight operators the opportunity to develop their value proposition 2 Global Logistics Strategies Up until this point they had struggled to compete in a market characterized by low barriers to market entry and exit The intensity of the merger and acquisition (M&A) activity came about due to a ‘perfect storm’ of market conditions These included the demand... improving its image – the global logistics industry can be rightly proud of its achievements xv xvi THIS PAGE IS INTENTIONALLY LEFT BLANK 1 Introduction T he global logistics industry is vast, both in terms of market size and the huge numbers of people employed in the sector It is therefore surprising that its role in the development of the global economy is generally overlooked Without the inexpensive and... substantially lower Looking ahead, trade deals which lead to the creation of single markets, whether in Asia, the Middle East, South America or Africa, have the potential to revolutionize distribution strategies in the same way in which they were in the European Union 9 Global Logistics Strategies Growth in trade World trade is a key driver of the freight-forwarding market Although most elements of road... logistics The outsourcing of logistics functions by manufacturers and retailers over the past 30 years has been one of the defining trends of the global logistics industry The logistics provider’s importance in terms of the overall supply chain has risen considerably with the ongoing trend towards outsourcing of non-core competences At the outset, classical outsourcing theory suggested that companies ... provide the reader with an indication of the content of this book, it is worthwhile examining the title, Global Logistics Strategies: Delivering the goods, ’ in a little more detail The analysis... decisions The subtitle of the book is Delivering the goods and this provides a positive assessment of the impact which the modern logistics industry has had on the global economy The levels of professionalism,... services, becoming the glue which holds together the systems that underpin the global economy Trade and globalization One of the driving forces behind the trend towards the free movement of goods between