Consistent with the notion that every cloud has a silver lining, achievers in the logistics business are finding opportunities in difficult times.
The 2009 edition of the Transport Topics Top 50 Logistics Companies, which you can pull from the center of this issue, features an examination of collaborative distribution — how goods of competing shippers can be consolidated in a single truck to cut transport costs. In many configurations, it’s much like a less-than-truckload service, complete with cross-docking, at truckload prices.
Similarly, deliveries to customers from various retailers also can be consolidated. By sharing the costs of fulfillment, manufacturers and retailers are able to offer free delivery to buyers, a most attractive value-added proposition.
The savings makes shared logistics particularly attractive to smaller businesses on both ends of the supply chain. Transport Topics Senior Features Writer Daniel P. Bearth, who has prepared the Logistics 50 list since its inception, reports that some logistics companies are taking advantage of the slump in business to proselytize customers and candidates on the glories of collaborative distribution.
And those who heed the call appear to be reaping rewards in these difficult times, as exhibited in the “milk run” networks set up for the automotive parts industry.
The Great Recession has not spared third-party logistics players. The chunk torn out of the 3PL top line — expected to be nearly 9% of gross revenue, when all the 2009 numbers are tabulated — is as painful as any other freight transport sector’s wound. The truckload industry says its rates have fallen by nearly 10% from last year.
An interesting development of the past week, however, suggests faith in the eventual return of a strong freight market is not misplaced.
Warren Buffett, globally regarded as a bellwether investor (everyone would love to be as wisely successful), bid $44 billion for BNSF, the largest U.S. railroad — the same railroad that leads the nontrucking pack in the Logistics 50’s top freight transportation firms. In 2008, BNSF earned more than $18 billion in revenue, a small portion of which came from BNSF Logistics.
Buffett’s bid is seen as a strong vote of confidence in the future of rail freight, especially from the intermodal perspective, and carries with it implications for what some dub an ongoing “cutthroat” truck-rail price war.
TT’s 2009 Top 50 Logistics Companies serves well as a players program for those who are trying to keep track of the scoring.