Global study reveals increased use of third party logistics providers and outsourced logistics services key to success in emerging markets

Capgemini Consulting, the global strategy and transformation consulting brand of the Capgemini Group, in cooperation with Penn State University, leadership advisory firm, Heidrick & Struggles and global logistics provider, Panalpina, today announced the findings of the 16th Annual Third-Party Logistics (3PL) Study, examining the global market for outsourced logistics.

The report reveals that the majority of shippers worldwide are increasing their use of 3PL services, with 64 percent of respondents reporting a rise. At the same time, the report indicates an average of 42 percent of total logistics expenditures being spent on outsourcing, the same as last year’s study. However, 24 percent of shipper respondents reported some return to insourcing 3PL services and 58 percent report they are reducing or consolidating the number of 3PLs they use, indicating uncertainty about the global economy continues to impact 3PLs.

The 2012 Third-Party Logistics Study is based on over 2,250 responses from both shippers and logistics service
providers in North America, Europe, Asia-Pacific and Latin America, as well as other locations throughout the
world such as the Middle East and Australia. In addition to documenting the evolution of the third-party logistics market, this year’s report also provides an in-depth analysis of logistics operations in emerging markets and the electronics industry as well as talent management to address the skills shortage in the logistics industry.

Today’s 3PL marketplace is experiencing significant change and established 3PLs are adjusting their business
models to provide greater value to shippers. The report shows relationships between shippers and 3PLs continue
to be successful with 94 percent of 3PLs and 88 percent of shippers stating communication, flexibility and
openness are key to contributing to their success. However just 68 percent of shippers judge their 3PLs as
sufficiently agile and flexible, down from 72 percent last year suggesting this is an area where 3PLs can make
significant further contributions to supply chain success.

“The responses from this year’s study represent an interesting record of the shifting use of 3PL services,” said
Dan Albright, Vice President and North American Supply Chain Leader at Capgemini Consulting. “Whilst some
companies are increasing outsourcing services, we are still seeing the consistent churn that occurs each year
with 3PL respondents observing that some of their customers are returning logistic activities back in-house. It’s vital that 3PLs and shippers work in close collaboration and that 3PLs remain innovative by offering value
added services to provide true value to shippers to help reverse this trend.”

Spotlight: Growth in Emerging Markets while Traditional markets are slowing

A substantial 80 percent of shippers in the survey conduct business with or within an emerging market, with the
majority (52 percent) doing so from a mature market. China, India, Brazil and Mexico are considered the top
emerging market opportunities amongst respondents. With mature, industrialized markets largely growing at a
slower pace, the emerging markets offer significant growth potential. The 3PL capabilities shippers most value
when entering emerging markets are expertise on the latest global trade regulations and managing and
optimizing shipment routing based on free trade agreement (FTA) knowledge. The majority of shippers in
mature (65 percent) and emerging markets (73 percent) recognize 3PLs’ knowledge of FTAs as very important.
“Entering any new market requires due diligence and this is more critical when it’s an emerging market.
Government investment in infrastructure will contribute to attracting global manufacturers and 3PLs to do
business in emerging markets.” said Nicholas Wyss, Senior Vice President, Global Head of Industry Vertical
Fashion, Panalpina Management Ltd. “Shippers based in mature and emerging markets favor strong support
from 3PLs for a successful 3PL operating model in emerging market countries.”

Spotlight: Challenges facing 3PLS in the Electronics sector

Multiple layers, supply constraints and the specific challenges the various channels present, coupled with short
product lifecycles, mean the electronics industry demands a fast and nimble supply chain. Because electronics
products are often high value, they pose specific challenges including assuring security, preventing counterfeit
and packaging sufficiently to handle long distance transportation. Pressure to reduce operating costs was cited
as the top logistics challenge for shippers in the electronics industry (59 percent), but just 28 percent believe
3PLs can help them with this challenge. The report’s findings suggest that within the electronics industry, 3PLs
need to perform better in selling to electronics customers and shippers need to be more open to collaborating
with 3PLs to address their top challenges.

“Logistics operations within the electronics industry are faced with a number of unique challenges. Close
communication and collaboration between shippers and 3PLs is vital as supply chains become more complex”
said Dr. C. John Langley, Clinical Professor of Supply Chain Management, and Director of Development for
the Center for Supply Chain Research, Penn State University. “As the demand for high value electronic goods
increases, it is more important than ever that shippers are able to draw on 3PLs’ knowledge to achieve a solid
supply chain.”

Spotlight: Importance of Talent Management for 3PLs

Despite the positive reports of the supply chain’s role as a significant contributor to attaining business goals, the
logistics industry is experiencing a shortage of capable supply chain managers prepared to work in vital
management positions. As supply chains grow more complex, they require leaders who are more diverse and
multi-faceted. The report revealed shippers and 3PLs most highly value operational execution (51 percent and
60 percent respectively) followed by people management and development skills (54 percent and 43 percent
respectively) in their leaders. To date, the majority of both shippers and 3PLs recruit from inside their own
industries but many are increasingly looking to recruit talent from other industries. Company success and
performance, attractive salary and benefits and personal development opportunities within the company are
considered the top qualities needed to attract talent.

“As logistics become ever more intrinsic to a company’s ability to attain its business goals, shippers and 3PLs
must be able to put trust in supply chain leaders to be prepared for future business challenges.” said Neil
Collins, Managing Partner, Transportation & Logistics – Americas, Heidrick & Struggles. “The logistics market
must look to develop programs for talent management to create a clear, well-defined business strategy for the
recruitment, retention and development of talent.”

For more information and to access the full study please log onto: www.3plstudy.com

About the 2012 Third-Party Logistics Study

2,258 logistics executives from both 3PL users and providers in North America, Europe, Asia-Pacific and Latin
America, as well as other regions and geographies, participated in the 2012 Third-Party Logistics Study via a
web-based survey. The findings were supplemented with a significant number of focus interviews with industry
observers and experts, primarily relating to the special topics identified for this year. Facilitated workshops were
also conducted where shipper participants collaborated on shared issues to help provide a better understanding
of the survey’s results and to gain their valuable perspective as 3PL users. Though last year the 2010 3PL study
was published, this year’s report is called 2012 since that will be when the results will be in active discussion.

About Capgemini

With around 115,000 people in 40 countries, Capgemini is one of the world’s foremost providers of consulting,
technology and outsourcing services. The Group reported 2010 global revenues of EUR 8.7 billion. Together
with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive
the results they want. A deeply multicultural organization, Capgemini has developed its own way of working,
the Collaborative Business ExperienceTM, and draws on Rightshore ®, its worldwide delivery model.
Learn more about us at www.capgemini.com.

Rightshore® is a trademark belonging to Capgemini

Capgemini Consulting is the Global Strategy and Transformation Consulting brand of the Capgemini Group,
specializing in advising and supporting organizations in transforming their business, from the development of
innovative strategy through to execution, with a consistent focus on sustainable results. Capgemini Consulting
proposes to leading companies and governments a fresh approach which uses innovative methods, technology
and the talents of over 4,000 consultants world-wide.
For more information: www.capgemini-consulting.com

About Penn State University

Penn State is designated as the sole land grant institution of the Commonwealth of Pennsylvania. The
University’s main campus is located in State College, Pennsylvania. Penn State’s Smeal College of Business is
one of the largest business schools in the United States and is home to the Supply Chain & Information Systems
(SC&IS) academic department and the Center for Supply Chain Research (CSCR). With more than 30 faculty
members and over 600 students, SC&IS is one of the largest and most respected academic concentrations of
supply chain education and research in the world. SC&IS offers supply chain programs for every educational
level, including undergraduate, graduate, and doctorate degrees, in addition to a very popular online, 30-credit
professional master’s degree program in supply chain management. The supply chain educational portfolio also
includes open enrollment, custom, and certificate programs developed by Smeal’s Penn State Executive
Programs and CSCR, which helps to integrate Smeal into the broader business community. Along with
executive education, CSCR focuses its efforts in research, benchmarking, and corporate sponsorship. CSCR
corporate sponsors direct the Center’s research initiatives by identifying relevant supply chain issues that their
organizations are experiencing in today’s business environment. This process also helps to encourage Penn State
researchers to advance the state of scholarship in the supply chain management field Penn State’s Smeal
College of Business has the No. 1 undergraduate and graduate programs in supply chain management,
according to the most current report from Gartner.
For more information, please visit: www.smeal.psu.edu/scis and www.smeal.psu.edu/cscr

The Panalpina Group

The Panalpina Group is one of the world’s leading providers of supply chain solutions, combining
intercontinental Air and Ocean Freight with comprehensive Value-Added Logistics Services and Supply Chain
Services. Thanks to its in-depth industry know-how and customized IT systems, Panalpina provides globally
integrated end-to-end solutions tailored to its customers’ supply chain management needs. The Panalpina Group
operates a global network with some 500 branches in more than 80 countries. In a further 80 countries, it
cooperates closely with partner companies. Panalpina employs approximately 15,000 people worldwide.
www.panalpina.com

About Heidrick & Struggles

Heidrick & Struggles, the leadership advisory firm providing senior-level executive search and leadership
consulting services, has one of the industry’s leading, dedicated Transportation and Logistics practices round
the globe. We have a demonstrable track record of delivery in each niche of the segment with truly global
coverage. Clients include Integrators, Freight Forwarders, 3PL Providers, Ocean Carriers, NVOCCs, Airlines,
Rail Operators, Port Operators, Terminal Operators, and Airport Operators. Our relationships go beyond cargo
transportation and logistics companies themselves as further convergence emerges in the industry – we hold key
relationships with PE Firms, venture capitalists, infrastructure funds, deal makers (both buy and sell side),
investment bankers, management consultants and the academic community. We know the talent and with our
team dispersed all over the world, we are uniquely equipped to serve an industry that is being redefined locally,
regionally and globally.

For more information, please visit
www.heidrick.com.

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