34 DC VELOCITY OCTOBER 2017 www.dcvelocity.com
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transportation management services in
these countries are experiencing significant
growth,” he wrote in a note.
Another reason to go abroad is that
expansion-minded customers will want
their service partners to be in as many markets as possible, Jacobs said. Large global accounts will, almost by definition, be
off-limits to providers whose geographies
don’t align with their clients’, he added.
U.S. firms not operating outside North
America “should listen to their customers and find ways to leverage operational strengths” to enlarge their footprint,
Armstrong urged. That will usually mean
an acquisition versus organic growth, he
said.
That is all very well, but for small to mid-sized U.S. 3PLs with champagne tastes and
(perhaps) beer budgets, jumping into global markets presents a bevy of challenges.
Unlike the homogeneity of U.S. commerce,
working in global markets means multiple
languages, cultures, currencies, and customs requirements.
Going abroad also means butting
heads with a raft of seasoned competitors. For example, European-based 3PLs
like Panalpina, DHL Global Forwarding,
Kuehne + Nagel, Schenker, and Ceva
Logistics have decades of experience serving global markets and have the resources
to go, without much friction, where customer demand takes them.
U.S. 3PLs should also know that while
Europe’s transport and distribution infrastructure is more unified than ever, there
are still differences among the continent’s
trading partners that could affect operations, said Alex LeRoy, a 3PL analyst for
Transport Intelligence, a U.K. consultancy. LeRoy said the European 3PL market
may be too established and saturated for
U.S. firms to break into and advised them
to focus on the Asia-Pacific marketplace,
which is not nearly as mature and where
the growth rates are “so inviting that you
can’t ignore it.”
HELP ON THE GROUND
To ease their way into unfamiliar markets, 3PLs sometimes turn to outside help.
Matson Logistics, the North American 3PL
unit of liner company Matson Shipping,
will often enter international markets
Jacobs said XPO would have
eventually gone global because its
multinational customer base would
have demanded it. But those plans
weren’t on the drawing board in
mid-2015. The Dentressangle deal
was “completely opportunistic,” he
said.
THERE FOR THE TAKING?
Not every U.S. 3PL has access to
private equity as Transplace does
or deep internal resources like
XPO’s. Nor is every 3PL like giant
C.H. Robinson Worldwide Inc.,
which in 2012 acquired Phoenix
International, an international
freight forwarder and customs broker, for $635 million—a move that
overnight more than doubled the
revenue of Robinson’s global forwarding unit—and then followed
it up last year by buying Australian
3PL APC Logistics for $225 million.
Yet that shouldn’t stop 3PLs of
all sizes from casting their nets
outside the U.S., because that’s
where the growth is, according to
Evan Armstrong, president of consultancy Armstrong & Associates
Inc. According to Armstrong data,
China, India, Russia, and the Asia-Pacific will generate the highest
growth rates for 3PL services from
2016 through 2022, expanding at an
annual compound rate of 8 percent
a year during that time. By contrast,
the North American market is projected to grow by 5. 2 percent a year
through 2022, Armstrong said.
As Asian consumers accumulate
wealth and increase their consumption, services are shifting to support
intraregional ground distribution
and away from export-related activity, Armstrong said. “3PLs providing value-added warehousing and
distribution, and cross-border
