Growth Shows in Logistics Profession

July 30, 2009
Optimism is strong in logistics compensation, but challenges remain in filling skill gaps through hires or outsourcing

From Logistics Today's Digital Edition

To be the best paid logistics professional, you should be working for a publicly held third party logistics provider (3PL) as a vice president or senior vice president. But to get there, you'll need a graduate degree or additional post-graduate education and 20 years of experience. That's the over-simplified view based on the results of a logistics salary survey conducted by Logistics Today in January and February 2009. As of February 5, 2009, we had collected 806 responses to our online survey. 513 from users of logistics services (shippers), 164 from carriers and 129 from 3PLs.

Let's start with the good news. If the general feeling is that the first victim of the declining economy was optimism, logistics runs counter to that trend. While a third of respondents said they expect their compensation to remain the same in 2009, relative to 2008, 45.8% expect modest to significant increases in compensation. Of shippers/users of logistics services, 46.1% expect to end 2009 ahead of 2008 in compensation. Slightly fewer carrier executives (43.1%) expect increases. And, the largest group of optimists are among the 3PLs, 48.2% of whom expect higher compensation in the coming year.

This first-ever survey covered three elements of the logistics community: users of logistics services, carriers and 3PLs. The survey was structured to branch to a set of parallel questions modified to suit each of the different groups. Common questions could be broken down under each category as well so, for instance, the directors of operations and logistics could be viewed as a whole or separated into shippers, carriers or 3PLs. That said, nearly two-thirds of respondents indicated by their type of business they are users of logistics services. One fifth were primarily transportation providers, and about one sixth are 3PLs.

Among the users of logistics services, the vast majority reported some form of centralized logistics/supply chain management function. Over half said the function was completely centralized, and another third said their company had a combination of centralized and divisional management. Only 12.5% had a decentralized, divisional management structure.

Most user companies are domestic US companies (73.3%). And in every case, more companies were privately held than are publicly traded. Of shippers' companies, 59.8% are privately held. It is important to keep in mind these questions reflect a company's base and ownership, not the scope of its operations.

One fifth of shippers reported they own none of their logistics and supply chain operations making them, at least from a logistics perspective, a non-asset-based organization. Nearly half (46.4%) are in the 50% and under category when it comes to logistics asset ownership. Viewed another way, 40.6% of these companies outsource over 50% of their logistics and supply chain operations. Validating the 21.1% who said they own no assets, 21.1% said they outsource 100% of their logistics operations.

Industry experience is almost identical across the three groups. Shippers reported a mean average of 18.4 years in the field. Carrier executives reported an identical level of experience. The 3PL number averaged an even 18 years. It is the time with their current company and time in their current position which offers some opportunity for speculation. Shippers and carrier executives had significantly longer tenures with their current company. Both averaged in double digits, while 3PL executives average 7.5 years with their company. Similarly, shippers averaged 6.7 years in their current position (37% under 3 years) and carrier executives had been in their positions for an average of 7.3 years. The 3PL executives averaged 4.9 years in their current position, with 58.1% reporting they had been in their present job under three years (73.6% when the tenure is expanded up to five years).

Respondents from 3PLs have the highest median base salary at $90,624, followed by respondents from shipper compnaies at $75,382 and transportation providers/carriers at $70,555.

Respondents from 3PLs also received the largest median bonus at $7,894, followed by respondents from users of logistics services at $2,876 and transportation providers/carriers at $1,817. About one in ten 3PL respondents (12%) indicate they receive a gainshare bonus.

More than one in three respondents (36%) had a total compensation of $100,000 or more in 2008. And, 44% indicate their total compensation was between $50,000 and $99,999.

Various company factors impact total compensation levels. For example, professionals at 3PLs have higher median total compensation levels than those at shipper companies and transportation providers/carriers. Companies with a foreign parent provided higher median compensation levels than domestic US owned companies; and public companies have higher compensation levels than privately owned companies. Company size is also an indicator of compensation, as large companies ($1 billion or more in annual revenue) have higher compensation levels than smaller companies.

Time in the industry and education level are directly proportional to total compensation. Surprisingly, Senior Vice President/ Vice President titles have a higher median total compensation than CEO/ President/Partner/Principal titles; however, further investigation reveals that top level respondents primarily work for smaller companies ($77 million in average revenue) compared to that of SVP/VP respondents (an average $382 million in annual revenue).

The average respondent’s compensation increased 5% between 2007 and 2008. At 7%, 3PL respondents experienced the largest increase, compared to 5% for shipper respondents and 3% for transportation providers/carrier respondents. (Note: average compensation change was calculated by using the midpoints of the ranges for increase and decrease and “0” for compensation levels that remained the same.)

Perhaps more surprising given the current economy is the fact nearly half of respondents expect their 2009 compensation to increase over 2008. However, at a 2% increase, the average change expected is not as high as the average increase experienced in 2008.

Mobility appears to be a factor in advancing in a logistics career—especially in compensation. Of the respondents who currently work for 3PL companies, 74% have prior experience with user firms (an average 8 years of experience) and 72% have prior experience with a transportation provider (an average 9 years of experience).

Shippers are also in demand among carriers, considering 66% of respondents working for carriers have worked for a user of logistics services in the past (an average 8 years) and 34% have worked for a 3PL (an average 3 years).

More technical skills in the financial areas and especially in information technology and systems range from the simple—ability to use a spreadsheet—to complex analytical tools and systems such as enterprise resource planning (ERP) systems. And, reiterating general communications skills, these technical skills were often mentioned in conjunction with the ability to communicate results and needs.

Many of the functions users would like to fill through outsourcing paralleled these same needs. International transportation management as well as customs compliance, import/export regulations and functions, and various financial and trade functions all received frequent mention. Domestic transportation management from network planning and optimization to freight bill audit and payment and some specialized services such as hazardous materials all received regular mention.

It's difficult to declare this first decade of the 21st Century the age of logistics, but the significance of effective logistics and supply chain management appears to remain strong despite a weak global economy. Across the board, respondents to the Logistics Today salary survey said their compensation rose in 2008 relative to 2007. Most (52.4% overall) said it rose by 10% or less, but 11% saw increases in the 10% to 19.9% range. There was some stagnation for 18% who said their compensation remained the same. And some (10.6%) saw declines in compensation.

Logistics executives at foreign-owned companies reported increases in over 75% of the cases where under 70% of those working for domestic companies reported increased compensation in 2008.

Type of Respondent
User of logistics services 64%
Transportation Provider 20%
Third Party Logistics Provider 16%
Supply Chain Structure
Centralized 53%
Divisional 13%
Combination (centralized and divisional) 34%
Base Salary of Shippers
Under $30,000 3%
$30,000 to $49,999 17%
$50,000 to $74,999 30%
$75,000 to $99,999 26%
$100,000 to $149.999 18%
$150,000 to $199,999 5%
$200,000 to $249,999 1%
Expected Change in Compensation in 2009
Increase by 30% to 39.9% 1%
Increase by 20% to 29.9% 1%
Increase by 10% to 19.9% 6%
Increase by less than 10% 38%
Remain the same 35%
Decrease by up to 9.9% 11%
Decrease by 10% to 19.9% 5%
Decrease by 20% to 29.9% 2%
Decrease by 30% to 39.9% 1%