3PL Subway Map by Supply Chain Magazine

What does the logistics market look like in The Netherlands in 2010 and what are the distinguishing factors that characterise this market? To answer this question, Supply Chain Magazine (SCM) has, literally, put the Dutch logistics market on the map. The result: an easy-to-read, easy-to-understand subway map; the second edition which follows on from the success of SCM’s subway map for Dutch suppliers of supply chain software, issued at the end of 2009.

SCM asked logistics service providers to fill in a questionnaire relating to the value of various logistics services. Just like in 2008, these key players were asked to name the competitors they most often came up against when tendering for logistics contracts. One other important source was the annual report on the Dutch logistics market which is issued by TNO in conjunction with the trade journal Logistiek. Every year, this report includes a top 50 of logistics service providers based on the number of employees, and registers the services each company provides and their specific target sectors.

To make sure that the logistics providers’ answers were consistent, the editors at SCM went to the trouble of checking each of the companies’ websites. After all, a logistics company’s website should be a true representation of its mission and vision. Should one of the respondents have claimed to provide all kinds of services that were not on its website, the editors could obviously assume that something was not quite right.

The distinguishing factor
The biggest challenge was restricting the number of subway lines per supplier to create a map that was easy to read. Should all of the logistics providers have been able to provide the same services, the map would have ended up with just one simple circular route made up of parallel subway lines.

When it comes to price and services, there is an obvious difference between Full Truck Load and Less Than Truckload shipping, but the most logistics service providers offer both forms. The same applies to the intricacies of distribution: wrapping and labelling fall more or less under warehousing as part of standard service packages, just like cross-docking.

On the subway map, SCM has tried to include logistics services that are distinctively different from one another. The Cold Chain line, for example, encompasses temperature controlled and conditioned storage and distribution whilst the shipping of dangerous substances is included in the Chemicals Logistics line. The storage and distribution of dry goods on the other hand has not been given its own line, because as a product group, it has very few exceptional requirements. The services offered in the Automotive Industry include Just-in-Time (JIT) delivery to the production line, often involving parts on special trolleys, whilst Fourth Party Logistics (4PL) only encompasses companies that are truly non-asset based, so this does not include ownership of lorries or warehouses (in The Netherlands).

The size of a logistics company has been determined by the number of services they provide. Global players have separate departments and even separate divisions for individual activities. Some organisations have acquired and integrated companies for their specific activities and others have autonomous subsidiaries.

An immature market
Looking at the Dutch market, you can see that many of the companies offer similar service portfolios. There is very little evidence of specialisation among the biggest logistics service providers in the top 50 and analysis of the companies’ websites concurs: there are few companies that specialise in particular market sectors.

When you compare the subway map for supply chain software suppliers with the map for logistics service providers, you can see obvious differences in how these markets are developing. There have been many more large-scale takeovers in the software market in the past ten years than in logistics. This is understandable, as the software market has higher margins and relatively stable income from long-term licensing agreements. A large-scale takeover in the logistics market is certainly not a guarantee for keeping hold of your new acquisition’s clients, quite the opposite in fact. Yet still, mergers, acquisitions, liquidations, hiving off of non-core activities and further specialisation are bound to help the logistics market to mature.