The Power 25: How long can the good times last?

EARLY RISERS

For this year’s Power 25, the positive trends outweighed the bad. Last year, we at Air Cargo World predicted DSV, following its completed absorption of UTi, would be a fast riser – and rise it did, leaping up seven spots on the Power 25 list, from No. 16 to No. 9. Now that DSV is in the Top 10, in terms of

airfreight volume, rising 86 percent, from 311,193 tonnes per year to 574,644 tonnes, a new major player has been born in the freight forwarding community.

“They’ve done a good job of integrating UTi and getting it on one IT platform, and it’s showing in the numbers,” said Evan Armstrong, president of Armstrong & Associates, the Wisconsin-based market research firm that cooperated with Air Cargo World in compiling this list from its database of more than 550 profiles of 3PLs. DSV is now the 6th-largest global 3PL, in terms of revenues, with just over $10 billion – a 33 percent rise versus 2015.

“They’re good at process control. They have a good corporate culture,” Armstrong added. For IT, “they’re not having to go to SAP-TM, like Panalpina or DHL, which had to work through IT problems. Whereas a lot of other 3PLs are having IT issues and having to migrate systems.”

Panalpina made a slight move to 5th place, leaping over Expeditors thanks to a surge in tonnage, from 836,200 in 2015 to 921,400.

GEODIS inched up from No. 17 to No. 16, in terms of airfreight tonnes, rising 10.4 percent to 330,000 tonnes. But measured by revenue, GEODIS is now the 9th-largest global 3PL, with $6.8 billion, after last year’s acquisition of OHL. “I think they’ve really seen some benefit by cross-selling those U.S. accounts,” Armstrong said. “We’ve worked with some customers on outsourcing projects. We’ve had OHL in the room and OHL is definitely cross-selling the freight forwarding business as well.”

Also Hellmann Worldwide Logistics was boosted one spot to No.8, rising from 561,240 tonnes in 2015 to 576,225 last year, while FedEx Trade Networks/Supply Chain/GENCO, also rose one rung to No. 20 on the strength of a slight increase from 263,000 tonnes in 2015 to 268,340 in 2016.

The “Big 4” (DHL, Kuehne + Nagel, DB Schenker and UPS Supply Chain Solutions) all held their positions from the previous listing, but Armstrong noted that they also had revenue losses across the board. Part of this comes from a currency issue. “The dollar versus the euro – it’s gone up and that negatively impacts those with revenue growth,” he explained.

“But if you look at the tonnage – DHL was ‘off’ in terms of air tonnes – but K+N and DB Schenker were up just over 4 percent growth in air tonnes.”

Another factor in the top forwarders’ success has been the surprising rise in European cargo traffic. “Europe was a little later than the U.S. in sourcing from China,” Armstrong said. “So I think we’re still seeing some increased trade from Asia to Europe because it was slow to go to that China sourcing model. I think it’s just a timing issue.”

DHL was not alone in embracing innovation to help its bottom line last year. Stuart Lund, vice president of air capacity and procurement at UPS, said that, earlier in 2016, the company sought to offer greater visibility to customers by updating its Flex Global View – “a platform particularly beneficial to our air, ocean freight, and brokerage customers,” he said.

“New enhancements announced in February 2017 include more descriptive alerts providing customers with shipment milestones about air, ocean and surface freight forwarding shipments,” Lund said. “Users also benefit from new systems-driven logic to help ensure shipment updates are more helpful and timely.”

Looking back on 2016, Lund said the first quarter was challenging “as we cycled over the impact from the prior year’s surge of airfreight due to the West Port congestion.” After that point, customers’ inventory levels began to increase as manufacturing decreased and impacted the need for airfreight shipments.

“However,” he added, “we saw demand pick up halfway through the year and remain steady through December.”