David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
What do ice cream, french fries, and fax machines have in common? Not much, unless you happen to be in Tilloy-les-Mofflaines, France. There, you'll find all those products and more housed in the same distribution center.
That DC itself is fast becoming a sort of United Nations of distribution: The ice cream is owned by Haagen-Dazs (a company based in the United States), the french fries are a product of McCain Foods (Canada), and the fax machines are from Brother International (Japan). While it might seem odd for all these products to be occupying the same facility, there's a simple enough explanation: Their makers have all contracted with the same third-party logistics service provider (3PL)—France's FM Logistic—to handle their distribution in Europe.
These three companies are hardly alone in their decision to take the 3PL route. Plenty of foreign manufacturers have done the same, for reasons ranging from costs to the opportunity to avail themselves of the provider's local expertise. As a result, business for 3PLs in Europe has boomed in the last few years. And it shows no signs of slowing. Executives of European 3PL operations who responded to a recent survey by Boston's Northeastern University projected growth of about 15 percent for this year.
Despite what you might expect, this growth is not just being driven by large companies with an established customer base on the continent. "The majority of companies that use 3PL services are not multinationals, but rather, companies looking to get their feet wet in Europe. It is a good way for small companies to get there without having to invest in an asset base," says Jeffrey Rodriguez, senior logistics manager for Craters & Freighters, a nonasset-based logistics service provider.
The 3PL advantage
As for why they turn to 3PLs for distribution on foreign soil, manufacturers cite a number of reasons. But one that appears on nearly every list is knowledge of local markets. Language and cultural differences among European nations often make it tricky for newcomers to navigate the marketplace. The creation of the European Union (EU) has made things easier, but moving products from Germany into France is still not the same as delivering goods from Kansas to Nebraska.
That's where the seasoned 3PL comes in. "It's a matter of core competency," explains John Langley, professor of supply chain management at Georgia Tech. "A 3PL's core competency is that they help companies mitigate their risk with someone who has on-the-ground knowledge of each country and region."
Not only do 3PLs know local markets, but most already have the necessary infrastructure in place, with facilities in prime distribution locations. That's a major consideration in Europe, where land is at a premium. In Europe, prime distribution locations include the Netherlands, Belgium, northern France, and northern Germany—all points from which shipments can easily reach the continent's largest cities within one to two days. These locations also offer the advantage of proximity to ocean ports, such as Rotterdam, Amsterdam, Antwerp, and Dunkirk, and to the superb network of canals, rails, and roads in this part of Europe.
FM Logistic's Tilloy-les-Mofflaines facility is one such example. Located in northern France, the site is within easy reach of the ports of Dunkirk and Antwerp.
Another is Menlo Worldwide Logistics' facility in Rotterdam, the Netherlands. Menlo Worldwide, a global third-party service provider, operates the dedicated facility for one of its clients, NCR, which manufactures items like cash registers, ATMs, self-service checkout stations, and point-of-sale workstations. At the Rotterdam site, Menlo aggregates products manufactured worldwide for shipment to NCR's clients. "The NCR customer is typically a retail chain," explains Michael Chandler, vice president of fulfillment operations for NCR. "The customer does not care where it comes from as long as it shows up as a complete order and not just separate components coming from all over the world." From Rotterdam, he adds, the company can reach most of Western Europe within 24 hours.
At present, 3PLs are pushing their frontiers eastward, expanding their presence in Eastern Europe, where the greatest market opportunities are believed to lie. "There has been a big push eastward by 3PLs," says Robert Lieb, professor of supply chain management at Northeastern University and the author of the university's 3PL study. "Eastern Europe and Russia are targeted as growth areas.
Many 3PLs are establishing operations in Hungary, Poland, Estonia, and other countries such as new European Union members." FM Logistic, for example, is establishing new facilities in Russia.
Getting a toehold
For many companies, another major attraction of using a 3PL is that it allows them to enter new markets with only a minimal capital investment. Essentially, the 3PL can serve as a stepping stone until such time as the company decides to construct its own DC. "It gives them the ability to scale up and minimize the risk until they have the volumes needed to justify building a facility of their own," says Lieb.
But it's not only the newcomers that are using 3PLs to limit the amount of capital they must invest. Companies that have an established presence in Europe are doing it as well. Campbell Soup is a case in point. Up until about a decade ago, it used its own warehouses and fleets to handle distribution on that continent. But as the company's business grew, it opted for a change in strategy. "We started to outsource about 10 years ago," recalls Hans Ernest, the company's vice president of supply chain for Europe. "If you look at our scale of operations, it is significantly smaller in Europe than it is in the United States. We have so much diversity of products, so we try to reduce our costs and invested capital by pushing our logistics activities outside."
Third parties also offer flexibility—an important consideration for a growing company. "Most companies that expand into Europe may not know what their volumes will look like two to three years out," notes Langley. "A 3PL can help companies match capacity to customer needs."
That holds true in the short term as well. For many shippers, a major advantage of using a third party is the 3PL's ability to accommodate peaks in demand. For example, in addition to the dedicated facility in Rotterdam, NCR can take advantage of shared flex space in other Menlo facilities when the need arises.
Beyond that flexibility, using a 3PL may allow the shipper to benefit from economies of scale. Third-party logistics service providers often can find complementary products among their clients' wares that can be stored, processed, and shipped together for maximum efficiency. McCain Foods and Haagen-Dazs, for example, share many of the same customers in Europe. As a result, FM Logistic can pick McCain's frozen food items and Haagen-Dazs's ice cream products and ship them together, allowing the companies to share costs.
Those economies of scale aren't limited to picking and handling. They also come into play with transportation. FM Logistic, for example, is currently developing plans to bring products from several of its food clients together so that they can be pooled and shipped as full truckloads.
On top of that, 3PLs often can leverage their volumes to get better transportation rates. That's been the experience of NCR, which uses Menlo to manage its transportation. Although Menlo often uses its own fleet to provide transportation, the 3PL also contracts out some of its business to other trucking lines. "They have a deep reach into the transportation network, as they represent multiple clients," says Chandler. "That allows them to bring in greater volumes and negotiate better rates with transportation providers."
Not just for distribution anymore
As the Menlo example indicates, 3PLs do more than merely store goods and fulfill orders these days. Many also handle transportation and related services like customs clearance for their clients.
More and more 3PLs are also offering "value-added" services at their DCs. For example, FM Logistic configures the Brother copiers, computer printers, and other office machines stored at its facility in Tilloy-les-Mofflaines to meet the needs of local markets. As anyone who has traveled in Europe knows, there's little standardization among the various countries' electrical systems—for instance, electrical plugs in France have a different prong arrangement from those used in England. To address these variations, FM Logistic workers wire the proper plugs onto the machines and add instruction booklets in the appropriate language before they ship the cartons to the end users.
In fact, Menlo's ability to perform value-added services is what led NCR Corp. to use the 3PL for its European distribution. Menlo's Rotterdam facility provides NCR with light manufacturing capabilities, which range from changing switch settings within a component to the kitting of all of the components—cash registers, scanners, and so forth— needed for a retail store. In these cases, all of the IT-related products needed for a retail operation are brought together, assembled as needed, and then shipped as a unit. "It involves bolting all of the pieces together, mounting the drawer in the cash register, and mounting the scanners— everything from the 700-pound self checkout to a handheld scanner that weighs just a few ounces," says Chandler.
Information please
For all the advantages of using a 3PL for distribution overseas, the decision isn't always a slam dunk. The advantages must be weighed against the main disadvantage of outsourcing: loss of control over your distribution.
"On one end [when you use a 3PL], you share the risk; on the other, you increase the risk," reflects Campbell's Ernest. That is, companies that contract with a 3PL reduce their risks by minimizing the amount of capital they have to invest, but they also increase their risks by ceding control of their distribution to an outside party.
Third parties are well aware of shippers' fears about loss of control. To reassure clients on that count, many 3PLs make it a point to provide comprehensive information about the transactions they perform on behalf of their customers.
New visibility technologies have made that a snap. "Third-party service providers are very IT-oriented," notes Rodriguez of Craters & Freighters. "Inventory status and booking reports can often be accessed online 24/7. There really is no discernable difference now working with someone in Germany or Chicago."
Kuehne + Nagel, a worldwide 3PL based in Germany, provides its customers with continuous updates on its transactions. The 3PL uses a tracking and tracing system to keep clients in the loop, says Ernst Cuppens, the company's director of contract logistics in Belgium. "With our main customers, we have direct EDI [electronic data interchange], which informs the customer every 15 minutes about the status of their orders."
Similarly, Menlo determines what information customers want to see and then generates regular reports providing the desired information. "The client can define what KPIs [key performance indicators] are to be used to measure under the contract, such as shipping on time, order accuracy, etc.," says Gert Askes, Menlo's managing director for European operations. "Real-time information can be provided, but it is costly. Usually clients can simply go to a Web site where information is updated throughout the day. Many clients only need a daily snapshot. If you get a daily report, you have control."
making the right choice
When it comes to choosing a 3PL to handle their distribution in Europe, many shippers go with what they know. Oftentimes, shippers that are already working with a third party in North America simply opt to use the same one in Europe, says Robert Lieb, professor of supply chain management at Boston's Northeastern University.
Take office machine specialist NCR, for example. NCR uses Menlo Worldwide Logistics for its distribution needs both in the United States and in Europe. That has a couple of advantages from NCR's standpoint. First, it's able to build upon an established relationship rather than start over with an unknown entity. Second, by expanding its relationship with Menlo, it gains economies of scale and added leverage when it comes to renegotiating contracts.
But that option isn't always available to companies expanding their operations overseas. Some, for example, cannot find a single provider in Europe that can fulfill all of their needs.
Campbell Soup is one such company. Campbell Soup has built up its business in Europe mostly through acquisitions, and it continues to maintain the local brands in each country. Because its products vary widely from market to market, Campbell Soup typically uses a separate 3PL for warehousing in each country it serves. It also uses a number of transportation service providers across the continent.
Hans Ernest, Campbell Soup's vice president of supply chain for Europe, would like to find one carrier that can meet all of his company's transportation needs continentwide. But at the moment, most carriers do not offer the coverage required. Yet that could change someday soon, he says. There's a shift under way in the European third-party marketplace, with traditional warehousing companies getting into the transportation business and transportation companies providing distribution services. Companies like Campbell Soup may have to be patient, he says, but it's probably just a matter of time before they'll likely get what they're seeking.
For companies that find themselves in need of a new third party, Ernest has some advice on what to look for in a service provider:
"First, look for experience," he says. "Ask yourself: 'How strategic are they and what are their capabilities? What other services are they developing, and how do they plan to expand their operations in Europe?'"
John Langley, professor of supply chain management at Georgia Tech, agrees that service is—and should be—a priority for shippers when choosing a 3PL. But he adds that there's one other consideration that invariably emerges when shippers go to make their choice: price. "Price and service will always be at the top of the list," he says. "That's no different in Europe than elsewhere."
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”