Looking for a one-stop global logistics service? Is there one available? While there is no one company for Wal-Mart, there are global solutions. It's a question of size. There are global solutions for smaller companies and small shipments. For companies with customers in Europe and a few major Asian nations, there are individual 3PLs who can supply a complete solution. For package shippers there are true global solutions.

FedEx and UPS now serve 99 percent of the global GDP. DHL has nearly the same reach. In short, the major package integrators cover the globe. Key elements of these services include a wide range of value-added services for those who need more than transportation (see Table 1). Most important of these services is the ability to function as a lead logistics provider or 4PL and have very good information technology solutions. The major package integrators make global tracking and tracing, customs clearance and returns easy. They will warehouse and control inventory. UPS Capital has a major service offering for which it will buy and finance inventory. And the list of value-added services goes on.

The major shortcoming of this high quality service is that it normally stops at 108 inches and 70 pounds. Less-than-truckload, less-than-container load and full load shipments don't get the same service. The lower hundredweight costs of larger shipments have not traditionally allowed room for all of the value-added activities that package shipments receive. Nor have transportation consumers demanded them.

But the demand for services globally on larger shipments continues to intensify.

Major players like Danzas/AEI, TPG, Exel, and Kuehne & Nagel have moved beyond freight forwarding to acquire more_supply chain_management capabilities to cover global networks. Exel serves 90 percent of the world's GDP. Danzas/AEI and TPG have even broader coverage with a mix of package and logistics solutions. These larger freight forwarding 3PLs are migrating quickly to software solutions like G-Log with universal track-andtrace plus strong event management. The overall visibility of these Web-based solutions gives the 3PL the ability to see everything and manage exceptions.

A third group of companies includes those built primarily in the United States as 3PLs who are expanding to meet the European and Asian needs of their customers. Companies like Ryder, Menlo and CH Robinson have enough overseas locations to handle the needs of North American companies operating in a smaller global range. Many of these companies fall outside of the Fortune 200. Their total number of shipments per day is in the hundreds or at most a few thousand. Optimizing transportation networks of this size is a standard process for the 3PLs in this group.

The software threshold for most of these companies is i2's suite of transportation management modules. Ryder, Penske, and northAmerican Logistics have built strong transportation network capabilities around i2's offerings. These companies are using the i2 applications for Europe as well. Menlo has developed its own solution--LMS.

In searching for a global provider, a major consideration is its financial stability. Strong profitability is a good indicator of quality logistics operations. The financial results for the global 3PLs mentioned above are very mixed (see Table 2). How well off these companies are now is an important indicator of their suitability as partners going forward. Several of the players need to show marked improvement.

Danzas/AEI is part of Deutsche Post World Net. DPWN has had difficulty in finding the formula for producing profits outside of its mail monopoly in Europe. It has subsidized its European package operations from its mail profits and is being forced to change this practice by the European Union. The pieces of the Danzas/AEI merger are now integrated. The whole needs to restore the profitability that existed in the parts before they were combined.

DHL reports only turnover in its financial results. If purchased transportation were eliminated, DHL would be about half the size it reports. DPWN has acquired about 75 percent of DHL. Visibility into DHL's actual financial picture may improve as a result. DHL's lack of financial clarity should be an issue for U.S. companies used to the financial visibility of UPS and FedEx.

Over the next one to three years, success by Danzas/AEI and DHL will be necessary to make DPWN a continuing long-term global threat to its competitors.

Exel also continues to emphasize its turnover as revenue. The revenue figure in Table 2 is inflated by more than $2 billion in purchased transportation costs. Exel does not report its net revenues. As a result, Exel looks larger and less profitable than it really is.

The strongest financial results come from UPS, Expeditors, CH Robinson and Kuehne & Nagel. UPS makes its money in the package business. Its logistics operation is nearly $2 billion in net revenues but unprofitable. However, UPS has a history of making good on its acquisitions. We expect UPS Logistics to follow the same path with Fritz and other logistics purchasers. But, Expeditors and Kuehne & Nagel are better operations at this time.

Kuehne & Nagel has made three important moves over the last two years. It acquired important access in the Asian market by selling 20 percent of its stock to SembCorp based in Singapore. It then purchased USCO, which was one of the most profitable and well run U.S. warehouse-based 3PLs. Finally, it became Nortel's global lead logistics provider this spring.

TPG has also done well with its acquisitions. CTI brings decent margins and a strong background in automotive logistics, a TPG global specialization. TPG's postal operations are still the cornerstone, but its logistics operations have their own profitability.

CH Robinson has better financial results than any other 3PL. CHR has operations in Europe but needs to make a move in international freight forwarding. Like Expeditors, it does what it does very well, but will that be enough in 5 years.

Nippon Express' results are indicative of the general problems with the Japanese economy. Nippon needs to be more global and open. Nippon has the additional problem of being a major midsized logistics company. Midsized companies need to get bigger or smaller. They do not survive as markets grow and become more unforgiving.

The global market is evolving. As this quick look at service offerings shows, there are choices available now based on size considerations. The financial results indicate that a few have a much better chance than most of developing into the one-stop global providers many companies are looking for.