Journalists tend to lump logistics businesses together but these show a wide range of product mixes. This note analyses the service offering mix of selected players by revenue from their latest interim statements.
We talk and write about logistics businesses in general but of course when we generalise we run the risk of obscuring details that distinguish between competitors. One important trend over the last fifteen years or so has been consolidation of the industry (although it is still very fragmented) and the combination of what were separate contract logistics and freight forwarding businesses into conglomerates aiming to become soup-to-nuts supply chain service providers. The structural models of the big players probably doesn’t help to bring these services together, but let’s look at that some other time.
In the chart below I compare the proportions of our chosen sample of companies’ turnover which are reported in certain segments. A clear problem is that although international and national accounting standards require segmental information, interpretation is often up to the boards of the companies and they are inconsistent. For example:
- Kuehne + Nagel shows Air-freight, Sea-freight, Overland and Contract Logistics.
- DP-DHL naturally enough shows Mail (or as it is now called Post-eCommerce-Parcel) and Express, with Global Forwarding, Freight as a division plus Supply Chain. They are good enough to disclose Freight (European road transportation) separately. Similarly Williams-Lea is in Supply Chain but disclosed.
- Expeditors shows customs brokerage, which no other of our sample does. I have included that revenue in forwarding.
- Panalpina discloses Air-freight, Sea-freight and Logistics.
- Wincanton distinguishes between contract logistics and specialist businesses.
So ensuring comparability isn’t straightforward but I have done my best. The major adjustment I have made is to exclude Mail and Express from the DP-DHL numbers. These constituted 50% of the group’s turnover and masked the story in which I am most interested: the balance between contract logistics and freight forwarding.
For all companies other than Wincanton I have used the first-half 2014 published results. For Wincanton the full year results to 31st March 2014 were the latest available. I have also, where possible, excluded non-margin earning revenue such as duties.
You can draw your own conclusions from this, but what it tells me is:
- Expeditors is still essentially a pure forwarder; Panalpina isn’t far behind.
- K+N’s contract logistics business is still quite small, although combine it with Overland and they represent some 39% of revenue.
- Ceva and DP-DHL have a close to 50:50 split (for the latter, excluding Mail and Express and grouping Freight (road transportation) with forwarding).
- Norbert Dentressangle has come from a transportation background but has built up its contract logistics business so that it is now of equivalent size; the forwarding business is minimal.
- Wincanton is 85% contract logistics, 15% specialist business.
None of that will come as much of a surprise, but it does confirm that really only Ceva and DHL have built businesses of comparable size in forwarding and contract logistics. The others all have a particular strength (forwarding or contract logistics) which dominates.