3PL execs assess global business conditions, highlight healthcare's potential


Annual survey of leading third-party logistics providers tabulates their interest in serving manufacturers, hospitals and retail

In conjunction with the Council of Supply Chain Management Professionals’ annual symposium (Atlanta, Sept. 30-Oct. 3), the 19th Annual Survey of Third-Party Logistics Providers was delivered. The survey conducted by Dr. Robert Lieb, a business school professor at Northeastern University, and Joe Gallick, SVP sales for Penske Logistics (Reading, PA)—and with funding from Penske—polled 31 “large” 3PLs in North America, Europe and Asia-Pacific. Most of the study looks at overall business conditions and forecasts; this year, a part of the study was dedicated specifically to healthcare.

Respondents in North America say that 73% of them met or exceeded their revenue projections for last year—which is actually down by about 15 percentage points from the year before. (However, “meeting an expectation” might simply mean good forecasting, and not necessarily actual growth.) In Europe, just under 60% met or exceeded expectations (and 25% were actually unprofitable)—which is actually up slightly from the year before, and with just under 30% exceeding expectations—indicative of a climate of clear winners and losers there. In Asia-Pacific, four of the eight companies surveyed met their financial objectives for the year.

These 3PLs handle all sorts of traded goods, and via a full range of transportation modes; healthcare products are actually a relatively small portion of the physical volume for most of them. However, the survey highlighted the potential these firms are seeing in healthcare products delivery now and in the future. The expectations is highly optimistic: 3PLs worldwide say that the sector currently accounted for 8.2% of their revenue in 2011; and expect it to rise to 15.9%--a near-doubling—by 2014. While it is mathematically possible for business to double in size, across the world, in the next three years, it is more likely that some of the surveyed firms will meet these projections—and some will not.

And while medical devices is a smaller dollar-volume business than pharmaceuticals, it could be a larger physical volume (which is important to logistics providers). More than half of the CEOs predicted the medical devices segment of the industry will grow fastest during the next three years.

“Our aging population and ongoing technological innovations have led to a proliferation of medical devices and equipment for large and mid-sized distributors,” stated Gallick in a news release. “As these companies grow, the increasing complexity and higher costs of managing logistics internally make a compelling case for collaborating with a third-party logistics provider, who can help them design and implement more efficient transportation and distribution solutions.”

From the 3PL executive perspective, here’s what they believe are the critical concerns of healthcare products clients:

— Growing importance of compliance and regulatory assurance

— Developing countries increasing consumption—major logistics needs

— Hospitals looking to outsource procurement and delivery

— More stringent government regulation of imported medical products

— Aging population and building of hospitals/clinics, coupled with growing global urbanization, expected to drive growth in medical device industry.

One other element of the report surveys 3PLs’ understanding of their clients’ commitment to sustainability. Based on the 2012 data, sustainability fell as a business concern, continuing a trend that began in 2010. Addressing environmental needs is often looked on as a desirable but not essential business value; it looks like the current tough economic conditions are affecting that trend.

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