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Logistics and Transport ITSurvey sponsored by KewillNovember 2012
Logistics and Transport IT Survey sponsored by KewillAbout Transport IntelligenceTransport Intelligence is one of the world’s leading providers of expert research andanalysis dedicated to the global logistics industry. Utilising the expertise of professionalswith many years’ experience in the mail, express and logistics industry, TransportIntelligence has developed a range of market leading web-based products, reports,profiles and services used by all the world’s leading logistics suppliers, consultancies andbanks as well as many users of logistics services.Transport Intelligence products and services include: Ti's news and analysis briefing service, Logistics Briefing Exclusive access to Ti’s extensive research output through the groundbreaking Global Supply Chain Intelligence portal www.gscintell.com Dedicated research through Ti Consulting Market and competitor monitoring Industry leading research reports including trend analysis, market sizing,market share, forecasting and ranking across global logistics markets In-depth intelligence on the world's leading logistics providers throughSupply Chain Leaders Intelligence Ti Conferences and seminars – www.ticonferences.com China Supply Chain Intelligence (CSCi) - China Market Intelligence andCompany Profiles combined in a powerful new online research portalAll rights reserved. No part of this publication may be reproduced in any material formincluding photocopying or storing it by electronic means without the written permission ofthe copyright owner, Transport Intelligence Limited.This report is based upon factual information obtained from a number of sources. Whilstevery effort is made to ensure that the information is accurate, Transport IntelligenceLimited accepts no responsibility for any loss or damage caused by reliance upon theinformation in this report. November 2012 Transport Intelligence LtdPage 2
Logistics and Transport IT Survey sponsored by KewillAbout Kewill LtdInnovative Software for Global Trade and Logistics.Kewill is a leading provider of software solutions that enable enterprises and logisticsproviders to manage the movement of goods and information across the globe.We deliver innovative software for business-critical global supply chain requirementsthrough our three product suites: Logistics, to support freight forwarding, transport,warehousing and customs compliance; Transportation and Shipping, to enable parcel,LTL, TL and desktop shipping and export trade compliance, and; Business to BusinessIntegration, to drive B2B eCommerce, order management and supply chain integrationOur customers rely on our deep domain knowledge to improve their business processes,exchange information and provide visibility to simplify the management of their supplychains.Established in 1972, Kewill has over 7,000 customers around the world including Bayer,Black & Decker, DHL, Gondrand Group, Hankyu Hanshin, Hellmann Worldwide Logistics,Hitachi, Ingersoll Rand, Jan de Rijk Logistics, Janssen Distribution Services, Mothercare,UPS, Raben Group, Scott’s & Co., Seacon Logistics, Van Maanen, Verhoeven Logisticsand s blog. November 2012 Transport Intelligence LtdKewill,pleasevisitwww.kewill.comorPage 3
Logistics and Transport IT Survey sponsored by KewillContentsAbout Transport Intelligence.2About Kewill Ltd .31.0Executive Summary .61.1Background .61.2Key Figures from Findings .62.0Introduction .83.0Survey Questions.93.1General information.93.2Business Outlook .103.3Current IT Facilities .103.4Business Strategy .113.5IT Plans .123.6IT Evaluation .124.0Sample.134.1General.134.2Geographic Split.164.3Organisation Size .175.0Survey Findings - Business Outlook .185.1Recent Performance .185.2Future Prospects .226.0Survey Findings – Current IT Facilities .266.1Supply Chain Management Software .266.2Software Importance .266.3Software Effectiveness.286.4Software Shortcomings .296.5Sharing Information .307.0Survey Findings – Business Strategy.317.1Priorities .317.2Strategy Actions .328.0Survey Findings – IT Plans .338.1Future Collaboration.338.2IT Investment .33 November 2012 Transport Intelligence LtdPage 4
Logistics and Transport IT Survey sponsored by Kewill9.0Survey Findings IT Evaluation .359.1Criteria .359.2Timescale .36Contact Transport Intelligence .37 November 2012 Transport Intelligence LtdPage 5
Logistics and Transport IT Survey sponsored by Kewill1.0Executive Summary1.1BackgroundIn August 2012, Kewill asked Transport Intelligence to conduct a survey focusing on howthe use of key logistics/transport related IT solutions have assisted companies inresponding to the volatile market conditions and fluctuating customer/consumer demandof recent years. This acts as an update to a survey undertaken by Transport Intelligenceon behalf of Kewill in August 2010, which examined the impact of the global economicdownturn on logistics and transport companies and the role of IT in ensuring theirsurvival. The 2012 survey incorporated a number of additional questions in order toestablish whether customer views and buying behaviour have changed over the past twoyears.A total of 484 individuals responded to the survey, of which 280 (58% of the sample)were logistics service providers. The remainder were individuals within manufacturers,distributors, advisors and retailers who had responsibility or involvement in supply chainoperations and others working in consultancies and similar support services related tologistics or supply chains. Respondents were categorised as logistics service providers,manufacturers, retailers and others.46% of those surveyed were from ‘global’ businesses and over 40% of those surveyedworked in businesses with over 2,000 employees.1.2Key Figures from Findings Over 80% of those responding to this survey had seen some expansion of activityduring the past two years and over 75% can see expansion continuing in the nextyear. The growth was well spread geographically and across different sizes offirm, although logistics companies in Europe indicated lower growth than theircounterparts in Asia and North Africa / Middle East. The logistics companies inthe Americas, particularly freight forwarders and 4PLs, experienced the highestlevels of growth. Larger firms seem to have performed well in the past two yearswith growth expected in the next year across all sizes of firm. Medium-sized organisations, with 251 to 500, employees, were most likely tohave grown in the past two years and are most likely to grow in the coming year. Most expansion and growth is likely to be generated organically although thereare still organisations seeking mergers and acquisitions. Supply chain management software is used by 62% of logistics service providers.To the logistics service providers, freight forwarding, transport management andwarehousing software were the most important management tools. November 2012 Transport Intelligence LtdPage 6
Logistics and Transport IT Survey sponsored by Kewill In addition, 55% of other respondents in the survey utilise supply chainmanagement software. These respondents rated enterprise resource planningand finance software as the most important tools. There was general satisfaction in the ability of existing software to provideoperational insights with trade and customs compliance and propertymanagement seen as the weakest areas. However, in a separate question,software was seen as an inhibition to exploiting new business opportunities. Themain cause of this difficulty was the time required to implement new systems. Over 40% of logistics service providers had software links with their customersbut other than that only a small proportion of respondents used electronic datainterchange with external organisations. For most of the respondents, economic performance and meeting customerrequirements were the top strategic priorities. The consequential actions giventop priority were planning optimisation, cost reductions, operationalimprovements and improving visibility. Visibility is seen as the top priority forlogistics service providers and fourth priority for all other respondents. In future over 85% of the respondents expect to be exchanging data with otherson a wider basis. Most of those responding had plans to invest in software in a wide range ofareas. Despite a significant proportion of respondents reporting weak insightsfrom trade and customs software only 50% of respondents are planning to investin this area. The main criteria for IT investment decisions was stated as being return oninvestment, with the payback period a significant secondary consideration. In aseparate question, respondents expressed the view that software investmentshould be producing a return on investment well within 2 years. November 2012 Transport Intelligence LtdPage 7
Logistics and Transport IT Survey sponsored by Kewill2.0IntroductionKewill Ltd asked Ti to assist in producing and undertaking a survey among its 26,000strong subscriber base.The intention of the survey is to gain a greater awareness of the attitude towards logisticsrelated software since the recent economic downturn and whether buying behaviour andthe use of software has changed radically since the previous survey, undertaken in 2010.In addition, management at Kewill are also keen to establish whether any difference existin the purchasing decision between 3PL providers and manufacturers.While the survey was designed to segment the results by logistics service provider andnon-logistics service provider (e.g. manufacturer, retailer, other) as well as bygeographical region, no significant differences have been highlighted between thesedifferent divisions of the Client’s customer base. November 2012 Transport Intelligence LtdPage 8
Logistics and Transport IT Survey sponsored by Kewill3.0Survey Questions3.1General informationQuestionWhat is your company's main area ofbusiness?What type of services provider is yourcompany?Which is the main vertical sector yourcompany manufactures goods for?In which geographic region do youmainly operate?How many employees does yourcompany employ approximately? November 2012 Transport Intelligence LtdSectionReferenceAnswer Choices4.1Transport Logistics Service ProviderManufacturerDistributorRetailerOther (please specify)4.1Logistics Service Provider (3PL)4PLFreight forwarderRoad transport companyWarehouse operatorMultimodal operatorCargo airlineShipping lineOther Logistics4.1AerospaceAutomotiveChemicalsConsumer goodsFood/beverageHealth and AutomotiveChemicalsConsumer goodsFood/beverageHealth and PharmaceuticalHigh-techIndustrialOther4.3Under 5051 - 100101 - 250251 - 500501 - 1,0001,001 - 2,000Over 2,000Page 9
Logistics and Transport IT Survey sponsored by Kewill3.2Business OutlookQuestion1) Has your company expanded tocover new routes and/or markets inthe last two years?2) Has your company dropped anyroutes and/or markets?3) Are there plans to expand in thenext 12 months?What is the main reason behind theexpansion plans?3.3SectionReferenceAnswer Choices5.15.1YesNoNot sure5.15.2Merger/acquisitionOrganic growthBothNot sureCurrent IT FacilitiesQuestionDo you utilise supply chainmanagement software to manage youroperating costs?How important do you feel the followingsoftware systems are in assisting you inmanaging your operations? (1 beingmost important and 5 being leastimportant) Freight Forwarding Warehouse management Transport management Customs and compliancesoftware Software for visibility andbusiness integration Advanced planning andoptimisation software Enterprise resource planningsoftware Customer relationshipmanagement software Response Other (please specify)Does your company have detailed dayto-day insights of operationalexpenditure in the following areas? November 2012 Transport Intelligence LtdSectionReferenceAnswer Choices6.1YesNoNot sure6.2123456.3TransportationWarehousingTrade compliancePropertyStaffIT systemsPage 10
Logistics and Transport IT Survey sponsored by KewillThird party servicesTaxationDo you consider your current logisticssoftware a barrier to your ability to reactto new business opportunities orbusiness re-design?What are the main reasons for this?Which (if any) of your supply chaintrading partners does your currentsoftware enable you to shareinformation/collaborate with?3.46.4YesNoNot sure6.4Financial implicationsTraining of usersDependence on innovations ofcurrent vendor (lock in)Length of time to implement a newsystemOther (please specify)6.5CustomersPartner companiesLogistics networksIndustry resources (e.g.airline/shipping schedules)Other (please specify)NoneBusiness StrategyQuestionWhich of the following issuessignificantly influences your businessstrategy (please tick all that apply)?Which of the following areas is yourcompany taking/considering takingaction in, in order to respond moreeffectively to customer demand (pleasetick all that apply)? November 2012 Transport Intelligence LtdSectionReferenceAnswer Choices7.1Sustainability/environmentEconomic performanceOpen up new marketsIntroduction of newproducts/servicesMeet customer requirementsGlobalisationComplianceSupply chain securityImprove operational visibilityOther (please specify)7.2Planning optimisationImprove visibilityCustomer retention programCollaborationOperational improvement programImplement cost savingsGreen' initiativesOffer services at a lower rateCommencement of (new)partnershipsNetwork re-designOffer VAS/VAL (value-addedservices/logistics)Introduce new productsOpen up in new geographicmarketsOutsource logistics to 3PLNonePage 11
Logistics and Transport IT Survey sponsored by Kewill3.5IT PlansQuestion3.6SectionReferenceAnswer ChoicesIs your company looking to increaseinformation sharing/collaboration in thefuture?8.1YesNoNot sureDoes your organisation have long-termIT investments on the agenda for thefollowing: Freight Forwarding Warehouse management Transport management Customs and compliancesoftware Software for visibility andbusiness integration Advanced planning andoptimisation software Enterprise resource planningsoftware Customer relationshipmanagement software Response Other (please specify)8.2YesNoNot sureIT EvaluationQuestionWhich factor is most important whenevaluating a new supply chain ITsystem?How quickly would you expect to startseeing a return on investment for a newsupply chain IT system implementedwithin your business? November 2012 Transport Intelligence LtdSectionReferenceAnswer Choices9.1Projected return on investmentCost of acquisitionTotal cost of ownershipTimescale for benefits to berealised9.2Within 12 months13-24 months2-5 years2-5 yearsNo set timescalePage 12
Logistics and Transport IT Survey sponsored by Kewill4.0Sample4.1GeneralA total of 484 individuals participated in the survey. The questions in Chapter 4 provideinformation on the total number of participants that answered each question, allowing thereader the ability to assess the level of confidence that can be placed on the findings.58% of the companies that responded to the survey categorised themselves as eithertransport or logistics companies with 35% (172 respondents) manufacturers or retailers.(The retailer category includes retail service providers and wholesalers supporting enduser sales). The ‘other’ is made up of companies such as consultants, researchers,trainers and industries such as extraction.What is your company’s main area of business?Other, 32, 7%Manufacturer,88, 18%Retailer, 84,17%Logistics serviceprovider, 280,58%Source: Transport Intelligence November 2012 Transport Intelligence LtdPage 13
Logistics and Transport IT Survey sponsored by KewillAmongst the 280 logistics service providers the largest elements were 3PLs and freightforwarders.What type of service provider is your company?120100806040200Source: Transport IntelligenceThe companies in the ‘other’ section include consultancies, trainers, specialist softwareproviders, etc. November 2012 Transport Intelligence LtdPage 14
Logistics and Transport IT Survey sponsored by KewillThe manufacturers and retailers included a large number of agents and distributors notoperating within a specific sector. Amongst the other sectors well represented wereautomotive component and part producers, wholesalers and retailers and hi-tech industrycompanies.If you are a manufacturer / retailer, which sector do you mainly operate within?1009080706050403020100Source: Transport Intelligence November 2012 Transport Intelligence LtdPage 15
Logistics and Transport IT Survey sponsored by Kewill4.2Geographic SplitBy far the largest number of participants in the survey operate on a global basis,representing almost half of the respondents. This is supported by the high response fromlarge companies (see below). European companies make up 19% of respondents andAsian companies 17%.What region are you based in?Latin America, 13,3%North America, 17,4%Middle East/NorthAfrica, 20, 4%Other, 32, 7%Asia, 81, 17%Europe, 89, 19%Global, 216, 46%Source: Transport Intelligence November 2012 Transport Intelligence LtdPage 16
Logistics and Transport IT Survey sponsored by Kewill4.3Organisation SizeOver 40% of the sample surveyed comprised very large companies, employing more than2,000 members of staff, whilst mid-sized companies, employing between 101 and 500members of staff, made up 25% of the total sample. Large companies, employingbetween 501 and 2,000 staff members, made up only 5% of the total sample surveyed.How many members of staff does your company employ?45%40%35%30%25%20%15%10%5%0%Under 50 51 - 100101 - 250 251 - 500501 1,0001,001 - Over 2,0002,000Source: Transport Intelligence November 2012 Transport Intelligence LtdPage 17
Logistics and Transport IT Survey sponsored by Kewill5.0Survey Findings - Business Outlook5.1Recent PerformanceThe respondents to this survey were asked if they had expanded in the past two years.79% of the 280 logistics service providers said that they had expanded in some way,whilst 75% of the others also explained that their operations had expanded.Has your company expanded to cover new routes or markets in the last two years?Logistics Service ProvidersNo12%All OthersNot sure9%Not sure4%No16%Yes75%Yes84%Sample size 263Sample size 163Source: Transport IntelligenceIn response to the question ‘Has your company dropped any routes and/or markets?’ 5logistics service providers (2%) answered yes and a similar number of ‘other’respondents also gave a positive answer to this question. November 2012 Transport Intelligence LtdPage 18
Logistics and Transport IT Survey sponsored by KewillA geographic analysis of the answers to the above to questions is shown below. Logisticsservice providers in North America and Latin America have all expanded in the past twoyears, possibly due to a recovery after the global crises. By contrast over 40% of the nonlogistics companies in Latin America and in the Middle East and North Africa have notgrown in the past two years.Not surprisingly, European companies have experienced the least growth in recent years,hindered by the on-going ‘Euro-crises’ which have plagued the European Union. Asianlogistics service providers, which have witnessed year-on-year growth in recent years,have been among the slowest growing companies, possibly highlighting a slight decline inthe growth of these economies.Has your company expanded to cover new routes or markets in the last two years?100%90%80%70%60%50%40%30%20%10%0%Logistics Service ProvidersSample size 263100%90%80%70%60%50%40%30%20%10%0%All OthersNot sureNot sureNoNoYesYesSample size 198Source: Transport Intelligence November 2012 Transport Intelligence LtdPage 19
Logistics and Transport IT Survey sponsored by KewillMiddle sized organisations, with 251 to 500, employees were most likely to have grown inthe past two years and are most likely to grow in the coming year. The pattern of growthby firm size is mixed with recent growth slightly stronger in the larger organisations.Has your company expanded to cover new routes or markets in the last two years?All OthersLogistics Service 0%70%60%50%40%30%20%10%0%YesNoNot sureSample size 253YesNoNot sureSample size 198Source: Transport IntelligenceAs was noted earlier, 79% of all logistics service providers have expanded in some wayin the past two years. The responses by segment are shown below. In most of thesectors 80% of the respondents have grown. The three sectors with the least growth areroad haulage, warehousing and others. In addition to acting on their own account manyroad haulage and warehousing operators act as subcontractors to 3PLs and 4PLs andservice providers also typically serve the large logistics service providers. It may be thatthe large logistics service providers have sought to control their costs in difficult times andsubcontractors and service providers have suffered as a result. November 2012 Transport Intelligence LtdPage 20
Logistics and Transport IT Survey sponsored by KewillHas your company expanded to cover new routes and/or markets in the last twoyears?100%90%80%70%60%50%40%30%20%10%0%Not sureNoYesSource: Transport IntelligenceIn other studies, Ti has seen the industry’s revenues growing slowly and somewhaterratically and similar slow and erratic improvements in profitability. In a survey suchas this there may be a tendency towards optimistic response and the high proportionof growing businesses should be viewed with some caution. The relationship betweenthe sectors of the business is fairly consistent with other studies carried out by Ti.These show the road haulage sector with limited growth and low profitability, contractlogistics service providers with mixed but, on the whole, improving fortunes and freightforwarders in general being the most profitable sector.Of the five logistics service providers who said that they had dropped routes ormarkets, one was a forwarder one was a sea freight operator and the remainder were‘others’. November 2012 Transport Intelligence LtdPage 21
Logistics and Transport IT Survey sponsored by Kewill5.2Future ProspectsThis apparent optimism is carried into the future in that when asked about futureexpansion over 70% of those responding indicated that they will be expanding in the next12 months.Are there plans to expand in the next 12 months?All OthersLogistics Service ProvidersNot sure11%Notsure17%No9%No10%Yes73%Yes80%Sample Size 263Sample Size 196Source: Transport IntelligenceThe geographic analysis of responses is shown below.expectation are similar to the pattern of the past two years.The growth areas andAre there plans to expand in the next 12 months?100%90%80%70%60%50%40%30%20%10%0%Logistics Service Provider100%90%80%70%60%50%40%30%20%10%0%All OthersNot sureNot sureNoYesSample size 263NoYesSample size 196Source: Transport Intelligence November 2012 Transport Intelligence LtdPage 22
Logistics and Transport IT Survey sponsored by KewillThe analysis of respondents’ expectations of growth in the coming year appears to beevenly spread among firms of different sizes with fewer smaller firms with pessimisticoutlooks.Are there plans to expand in the next 12 months?All OthersLogistics Service 0%70%60%50%40%30%20%10%0%YesNoNot sureSample size 263YesNoNot sureSample size 196Source: Transport IntelligenceThe responses to the question ‘Are there plans to expand in the next 12 months?’produced a similar pattern to the previous question regarding past growth. Perhapsthe most notable feature of this data is the optimism of the 4PLs in this survey. Thedata is shown belowAre there plans to expand in the next 12 months?100%90%80%70%60%50%40%30%20%10%0%Not sureNoYesSource: Transport Intelligence November 2012 Transport Intelligence LtdPage 23
Logistics and Transport IT Survey sponsored by KewillVery few respondents intend to pursue growth through acquisitions alone and mostrespondents either intend to pursue growth organically or via a mix of organic growth andacquisitions.What is the main reason behind the expansion plans?Reasons for Growth100%90%80%70%60%50%40%30%20%10%0%Not sureMerger/acquisitionOrganic growthBothLogistics serviceprovidersSample size 208All othersSample size 141Source: Transport Intelligence November 2012 Transport Intelligence LtdPage 24
Logistics and Transport IT Survey sponsored by KewillWithin the logistics industry there are a significant number of companies with noborrowings and cash balances and others at the opposite end of the liquidity spectrumwith very high borrowings. Typically those with high borrowings are the 3PLs who wenton acquisition sprees in the mid-2000s whilst those with high cash holdings are typicallysmaller forwarders with few tangible assets and who have made smaller acquisitions withshorter payback times.It would, therefore, be expected that most of the logistics service providers will seek togenerate their future expansion from organic growth and the results of this survey seemto bear out this expectation. Nevertheless (possibly reflecting their sector’s stronger cashpositions), over 30% of the forwarders and 4PLs expected to make growth by merger oracquisition.What is the main reason behind the expansion plans?100%90%80%70%60%50%40%30%20%10%0%Not sureMerger/AcquisitionOrganic GrowthBothSource: Transport IntelligenceDespite continuing difficult economic times, the logistics sector has experienced areasonably high level of M&A activity over the past 12 months. There have been a rangeof deals announced, across all segments and geographies, with companies such as CHRobinson, Damco, and DSV making multiple acquisitions during the year and marketssuch as Russia and the Middle East / North Africa attracting attentio
In August 2012, Kewill asked Transport Intelligence to conduct a survey focusing on how the use of key logistics/transport related IT solutions have assisted companies in responding to the volatile market conditions and fluctuating customer/consumer demand of recent years. This acts as an update to a survey undertaken by Transport Intelligence
