Sourcing is Moving Away from Asia, Closer to Home

The 15th Annual 3PL Provider CEO Perspective study uncovers evidence of “reverse globalization” due to climbing expenses for labor, concern over Asian governmental regulations and shipping costs rising in response to higher fuel prices.

Conducted by Robert Lieb, Ph.D., Professor of Supply Chain Management at Northeastern University under the sponsorship of Penske Logistics, each year’s research results are described as providing, “insight into the near-term direction of the logistics industry, and serve as a benchmark for supply chain professionals around the world.” This year’s study incorporates the insights of 20 CEOs in North America, 10 in Europe and 9 in the Asian-Pacific region.

The observation that more “near sourcing” is underway is based on insights from 11 North American executives who see some of their customers shifting manufacturing operations back from Asia to North or Central America. A movement by some customers to bring operations from Asia to Eastern Europe was reported by 20% of European CEOs. In the Asian-Pacific area, a third of CEOs claim that customers have shifted manufacturing away from the area.

Other trends detected this year include significantly low revenue projections for the industry, increase in green efforts by the supply chain and 3PLs along with continuing price pressure. Too, respondents show greater interest in the world’s emerging markets including India, Eastern Europe and Mexico.

Discussing survey results, Dr. Lieb noted, “While nearly one-fourth of CEOs said that their organizations failed to meet 2007 revenue projections, almost 90% reported profitability last year. Despite rising prices at the pump and a stagnating economy, these numbers indicate that global 3PL efforts to reduce costs, optimize networks through technological advances, and intensify the focus on customer selectivity are working—we will definitely see a continued focus in these areas well into 2009.”

Survey results were drawn from responses of CEOs who completed them in summer this year. Participating companies include Cardinal Logistics, Caterpillar Logistics Services, CEVA, DSC Logistics, DHL Exel Supply Chain, Genco, Kuehne & Nagel Logistics, Landstar, Menlo Logistics, NYK Logistics, Panalpina, Penske Logistics, Pittsburgh Logistics, Ryder, Schenker, Schneider Logistics,, UPS Supply Chain Solutions, UTi, Wincanton and YRC Logistics. All told, these companies generate some $60 billion in revenue.

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