As the market for logistics services both in the United States and worldwide continues to grow, it is attracting some new and unusual players – moving companies.
North American Logistics (NAL) of Ft. Wayne, Ind., is one example. Founded by moving giant North American Van Lines, NAL is seeking to use the assets of its parent company to tap into and grow its presence in the logistics field.
“Demand for logistics is exploding,” said James E. Grieger, VP of global strategic marketing for NAL in an interview. “The high-technology marketplace that involves companies such as Lucent, Bell Labs, Sun Microsystems, and Hewlett Packard, are getting far more competitive. It is becoming a competitive advantage to such companies to get their order-to-delivery cycle down – and that’s where good logistics management can play a role.”
Grieger said even the current economic slowdown in the U.S. is helping spur logistics growth.
“In a downturn, especially, companies have to stay focused on their customers and increase their service levels to them to retain business,” he said. “Better logistics is a way to do that.”
Logistics is also big business in the U.S. – a market worth some $890 billion a year, according to banking firm Credit Suisse First Boston. Pure transportation services, by contrast, are worth $790 billion a year, the firm said.
Even more importantly, the bulk of transportation and logistics needs are met by truck in the U.S. – a whopping 82.1%, according to Credit Suisse.
That’s one reason why moving companies are looking to logistics markets for more business – they already have extensive networks of agents and trucking equipment in place to handle them. North American Van Lines, for example, has 1,114 agents nationwide and operates a fleet of 3,900 tractors, 1,100 straight trucks and 5,900 air ride trailers. The company also employs over 6,000 drivers.
On top of that, the traditional moving market has matured considerably, according to the American Moving & Storage Association. Also, a pattern of consolidation within the industry over the last few years has created larger companies with more assets – easily capable of absorbing logistics business in addition to their traditional market.
“The trend [in logistics] is now towards asset-based third party logistics providers,” said Grieger. “The days when shippers could build dedicated networks of warehouses and other assets are over. That’s why they are looking to outsource to asset-based providers – companies that already have warehouses and fleets in place.”
NAL is also investing $30 million to beef up its technology infrastructure, so it can offer a wider range of supply chains management functions, said Grieger. “We need the technology in place to manage their supply chains, too,” he said.