Study of 3PL with Granularity

30th March 2013 Study by Pelican and Equinox

3PL activities which are currently being done in US

Raw material movement.
For eg., Sugar in the US is moved in bulk and directly loaded into silos. This saves bagging and debagging cost and time. Also helps in reducing contamination through handling.

3PL activities which are currently being done in US

List of raw materials used in a beverages company are
Sugar Citric acid Emulsions Additives Flavoring PET bottle preforms PVC crates Paper cartons Aluminum cans Etc.,

3PL activities which are currently being done in US

Other Activities covered under 3PL
Call center Warehousing and WMS Freight from plant to central WH and onto Distribution centers and final retail distribution. (Less Than Truck Load LTL and FTL) Shipping including cross docking, multimodal Load creation Route planning Demand planning E commerce Real time reporting system Fleet management and online tracking Order management system Up sell and cross sell capabilities to increase revenue streams Product Life management. (Case study copy this URL bit.ly/10XXMSx. ) Big data handling (See next slide for example) Reverse logistics

Big Data: What is it all About?

Downstream Data

Cold Chain eCommerce

Ratings & Reviews

Call Center Logs

EDI

Geolocation
RFID
Weblogs Sensors

Social
Facebook

What-if Models Hadoop Learning Systems

Sentiment Analysis

Text Analytics

Photographs Video T-Log Data Twitter

Warranty Returns Information

Data Visualization Scorecards Rules-Based Map Reduce Ontology

Forecasting

Mobile Applications

Digital Path To Constraint-based Planning Purchase

Data Mining

3PL companies
Next slide we will see a list of top 3PL companies in US and they are globally very big. Most of the 3PL companies revenues actually flow from transportation. You will see this in the next slide. Also from the following URL we can see top 100 3PL companies in the F&B industry in US. http://bit.ly/11VA4Fp. Most of the top 100 companies work regionally in the US.

USA

(In U$D Billion)

Top 3PL firms

3PL services Supply chain solutions, Warehousing, Distribution, Trucking etc

Total Revenue

3PL Revenue

Present in India

F&B Supply chain

Clients

UPS

54.13

5.97

Yes

Yes
PepsiCo, Subway, FritoLay, Dole Food, Yakima, Coca-Cola Supply, Tetra Pak, ConAgra Foods, Continental Mills

Truck Load, Less than Truck Load, Ocean, air, Intermodal, Warehousing CH Robinson & Distribution Supply chain solutions, Warehousing, Distribution, Trucking etc Supply chain solutions, Warehousing, Distribution, Trucking etc

1.63

0.05

Yes

Yes

DHL

72.1

16.5

Yes

Yes

Penske Logistics

3.2

No

Yes

Supply chain solutions, Warehousing, DB Schenker Distribution, Trucking etc Supply chain solutions, Warehousing, Distribution, Trucking etc JB Hunt

47.375

18.75

Yes

Yes

No

Yes
Ranked No "1" 3PL in 2010 by customers Sara Lee, ConAgra Foods, Kraft Foods, General Mills, Kellogg,Georgia Pacific, Dean Foods,PepsiCo, Bay Valley Foods, Maple leaf Bakery

Supply chain solutions, Warehousing, Distribution, Trucking etc 7 Ryder

6.26

2.28

No

Yes

3PL companies in India

TCI Safexpress Gati TVS Logistics and many other small companies

3PL activity in India

3PL Services: Logistics services like transportation, warehousing, crossdocking, inventory management, packing and freight forwarding are all part of third party logistics services. Companies in India currently outsource an estimated 52% of logistics, and 3PL represents only 1% of logistics cost. As of now, the 3PL activity is limited to only few industries like automotive, IT hardware, telecom and infrastructure equipment. Global Players: The industry is becoming more competent with entry of global giants like Gazeley Broekman (Walmarts Logistics partner), CH Robinson and Kerry logistics and large Indian Corporate houses like Tata, Reliance and Bharti group. A series of mergers and acquisitions like DHL acquiring Blue Dart, TNT acquiring Speedage Express Cargo Service and Fedex buying over Pafex, AFL Logistics are also leading to consolidation of the industry at various levels and segments

3PL activity in India

Express Logistics: Organized players have a monopoly over the express logistics industry. 65% of express business is in the hands of organized players, while semi-organized and unorganized players account for 25% and then the remaining 10% of the market by EMS Speed Post. On the domestic front, unorganized players hold 41% of the market share based on price advantage and organized players account for 45% and EMS Speed Post the remaining 14%

Warehouses: Warehouses have become key growth drivers in the logistics industry. Warehousing does not only provide conventional storing services, but also provides value-added services like consolidation and breaking up of cargo, packaging, labeling, bar coding and reverse logistics etc. Warehousing and related activities account for approximately 20% of total logistics industry and as per KPMG, an additional 120million square feet of warehousing space is needed in 2014 to meet demand gap in storage space. Our view is that Warehousing will see a lot of investment in the coming years. Cost of construction for 1 ton is Rs.5000/- and the pay back is 10 to 12 years.

3PL activity in India

India is seeing large Private equity play in this sector. To name a few
India Equity Partners (IEP)
Startrek Logistics formerly TNT India trucking logistics Fourcee Infrastructure - Fourcee is involved in transportation of liquids in containers like edible oil Coldex --- Cold chain distribution in India

Everstone Capital
Transpole Logistics. Everstone has invested 200 crores.

Challenges & Opportunities in India

India distribution is always led by C&F cum distributors. Most of these C&F agents have had business relationship with the companies for close to 3 generations. While this arrangement is working fine, companies in India have not looked at 3PL as a profit driver rather they remain as cost centers. This goes for large firms like Unilever and ITC to name a few.

Challenges & Opportunities in India

Due to the long relationship led business by C&F cum distributors, their reach is limited to their small geography. On account of this there is multiple warehouses and 1000s of C&F cum distributors for a large company like Unilever or ITC. When GST is rolled out this will become a major hurdle for companies to maximize their benefit under GST.

Challenges & Opportunities in India

3PL opportunity in India exists in a very big way. In India companies are not even scratching the tip on the activities which we see in slide no 4. We need a good tie up with a company which is very good in systems and procedures. Investments will be quantified once we start the discussion with potential customers and the partner whom we want to tie up.