Longevity:

TRENDS IN
3PL / CUSTOMER
Insights and Analysis of the Global and Regional
Spare/Service Parts 3PL Markets
RELATIONSHIPS
March 2022

November 2016

Phone: +1-800-525-3915
Website: www.3plogistics.com
Email: [email protected]
ABOUT ARMSTRONG & ASSOCIATES, INC.
Armstrong & Associates, Inc. (A&A) was established in 1980 to meet the needs of a newly deregulated domestic
transportation market. Since then, through its leading Third-Party Logistics (3PL) market research and history of
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©2022 Armstrong & Associates

 Contents
Global Spare/Service Parts (SPL) 3PL
Market and Key Regions 1
Major SPL 3PL Vertical Industries and
Growth3
Major SPL 3PLs 6
CEVA Logistics 6
Choice Logistics 8
DB Schenker 11
DHL Supply Chain’s Service Logistics 14
Dimerco Express Group 16
FedEx Critical Inventory Logistics 17
Horizon Air Freight 19
Kuehne + Nagel 20
MNX Global Logistics 22
Penske Logistics 24
Ryder Spare Parts Operations 25
UPS Service Parts Logistics 29

©2022 Armstrong & Associates

 GLOBAL SPL 3PL MARKET

Global Spare/Service Parts (SPL) 3PL

Market and Key Regions
Supporting the machinery and devices of modern globalization has required the development of
sophisticated worldwide spare/service parts logistics (SPL) networks. A handful of third-party logistics
providers (3PLs) have answered the market’s demand and service most of earth’s area and population.
As a result, the Global SPL 3PL Market, which relies on larger 3PLs like DHL, UPS, FedEx, CEVA, Ryder,
and Penske, as well as smaller, niche players such as TVS Supply Chain Solutions, MNX Global Logistics,
Choice Logistics, and Dimerco Express Group, has seen a Compound Annual Growth Rate (CAGR) of
5.1% since 2016.

Over the first six months of 2020, third-party logistics providers felt a notable decline in SPL business
due to shutdowns and supply chain ripple effects resultant of the pandemic, causing the Global SPL 3PL
Market to only increase 1.4% over 2019. However, a CAGR of 9.2% is anticipated over the next two years.

Figure 1. Global SPL 3PL Market 2016-2023E (US$ Billions)

$55.0
$49.7
$46.3
$45.0 $41.7

$33.9 $34.5 $35.0

$35.0
$31.0
$28.7

$25.0

$15.0

$5.0

2016 2017 2018 2019 2020 2021E 2022E 2023E

$(5.0)

Geographically, 3PL spare parts logistics revenues follow the distribution of major markets and industrial
production. In 2020, the Asia Pacific region accounted for $14.2 billion (40.5%), North America made up
$8.9 billion (25.3%), and Europe generated $7 billion (20.1%) of global SPL 3PL revenues. Combined,
these three major SPL markets produce 86% of global SPL 3PL revenues. The rest of the world accounts
for the other 14% or $4.9 billion.

©2022 Armstrong & Associates 1

 GLOBAL SPL 3PL MARKET

Figure 2. SPL 3PL Market by Key Regions and Countries 2016-2023E (US$ Millions)

$20,000

$15,000

$10,000

$5,000

$-
2016 2017 2018 2019 2020 2021E 2022E 2023E
Asia Pacific $11,233 $12,221 $13,390 $13,778 $14,189 $16,743 $18,605 $20,154
North America $7,111 $7,751 $8,632 $8,730 $8,861 $10,909 $12,264 $13,105
Greater China $6,017 $6,575 $7,326 $7,553 $7,899 $9,481 $10,614 $11,541
United States $5,562 $6,076 $6,836 $6,887 $7,051 $8,696 $9,812 $10,489
Europe $5,993 $6,337 $6,868 $6,901 $7,032 $8,179 $8,974 $9,524
ASEAN* $1,249 $1,345 $1,447 $1,513 $1,514 $1,754 $1,943 $2,107

*Includes Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Asia Pacific, being the largest SPL 3PL market, saw a CAGR of 6% since 2016, with Greater China (con-
sisting of China, Hong Kong, Macau and Taiwan) being the largest contributor accounting for almost
56% of Asia Pacific’s SPL 3PL revenues in 2020. Greater China alone grew 7% since 2016 and is expect-
ed to have the largest CAGR of 10.3% over the next two years.

North America, the second largest SPL 3PL region, had a CAGR of 6.1% since 2016 with a 9.8% CAGR
anticipated over the next two years. The United States generates 80% of SPL 3PL revenues in the region.

©2022 Armstrong & Associates 2

 MAJOR SPL 3PL VERTICALS

Major SPL 3PL Vertical Industries and

Growth
The major SPL 3PL customer vertical industries globally are Automotive, Technological, Industrial, and to
a lesser extent the Healthcare and Elements industries.

• Automotive plants typically keep little on-hand inventory and run a tight assembly line
schedules. To keep assembly lines running, comprehensive spare parts logistics with time-critical
service is key.
• High-tech, aerospace and industrial machinery companies are also major users of time-
critical SPL due to the high-value nature of these businesses.
• Manufacturers where just-in-time assembly lines, lean inventory strategies, and the frequent
need for the replacement parts, combine to make extremely tight delivery windows the norm.
• Healthcare and medical device companies need especially efficient SPL networks where
equipment needed for emergency medical procedures and surgeries is dire.

In short, the SPL 3PL market is driven by high-value manufactured products and their maintenance.

To arrive at vertical estimates for the SPL 3PL market, we began with some basic Armstrong & Asso-
ciates’ research results. Each year, A&A estimates global third-party logistics market revenue. We then
split total revenues by Fortune 1000 industries. We also apply assumptions based on industry trends and
growth rates. The base year used in this analysis is 2020.

The following table breaks down global 3PL revenue by select vertical industries and the corresponding
spare parts logistics revenue.

Table 1. Global SPL 3PL Revenue Growth by Vertical Industry and Select Sub Segments
2016 SPL 3PL 2020 SPL 3PL 2021E SPL 3PL
Vertical Industry 2016-2020 CAGR 2020/2021E YoY %
Revenue Revenue Revenue
Automotive $ 9,083.9 $ 11,124.7 5.2% $ 13,297.2 19.5%
Industrial
Construction and Farm Machinery $ 3,100.9 $ 3,834.4 5.5% $ 4,520.2 17.9%
Industrial Machinery $ 885.7 $ 1,086.4 5.2% $ 1,371.9 26.3%
Oil and Gas Equipment, Services $ 404.8 $ 411.6 0.4% $ 461.5 12.1%
Industrial Total $ 4,391.4 $ 5,332.4 5.0% $ 6,353.6 19.2%
Technological
Electronics, Electrical Equipment $ 2,905.1 $ 3,668.6 6.0% $ 4,390.8 19.7%
Telecommunications $ 1,749.3 $ 2,087.2 4.5% $ 2,486.3 19.1%
Computers, Office Equipment $ 3,321.4 $ 4,105.2 5.4% $ 4,902.1 19.4%
Network and Other Communications Equipment $ 623.2 $ 804.4 6.6% $ 965.5 20.0%
Aerospace and Defense $ 2,263.4 $ 2,712.1 4.6% $ 3,054.4 12.6%
Semiconductors and Other Electronic Components $ 583.6 $ 777.3 7.4% $ 1,042.1 34.1%
Wholesalers: Electronics and Office Equipment $ 145.5 $ 174.0 4.6% $ 199.6 14.7%
Technological Total $ 11,591.5 $ 14,328.8 5.4% $ 17,040.8 18.9%
Healthcare $ 1,887.6 $ 2,273.0 4.8% $ 2,729.6 20.1%
Elements
Petroleum Refining $ 673.4 $ 808.9 4.7% $ 956.2 18.2%
Mining, Crude-Oil Production $ 207.5 $ 283.5 8.1% $ 344.2 21.4%
Energy $ 676.1 $ 675.7 0.0% $ 759.1 12.3%
Utilities $ 194.7 $ 198.5 0.5% $ 230.7 16.2%
Elements Total $ 1,751.7 $ 1,966.6 2.9% $ 2,290.2 16.5%
Sub Totals $ 28,706.1 $ 35,025.5 5.1% $ 41,711.4 19.1%

©2022 Armstrong & Associates 3

 MAJOR SPL 3PL VERTICALS

At $14.3 billion in SPL 3PL revenue, Technological is the largest vertical globally with “Semiconductors
and Other Electronic Components” and “Network and Other Communications Equipment” growing
at the fastest pace since 2016 with CAGRs of 7.4% and 6.6%, respectively. The Technological vertical
accounts for 41% of SPL 3PL revenue globally.

Automotive, chiefly motor vehicle components and parts, is the second largest SPL vertical with $11.1
billion in 3PL revenue and it generates 31.8% of global SPL 3PL revenue. Its CAGR was 5.2% over the
last four years; however, a 19.5% year-over-year increase is anticipated for 2021 due to challenges with
new car production.

The third largest vertical for 3PLs in SPL is Industrial at $5.3 billion, or 15.2%, of the global SPL 3PL
market with “Construction and Farm Machinery” and “Industrial Machinery” experiencing corresponding
CAGRs of 5.5% and 5.2% since 2016 with the latter expected to double year-over-year growth in 2021 to
nearly 26.3%.

In the Asia Pacific, Technological the largest vertical at $6.1 billion, generates 43.2% of the region’s SPL
3PL revenues. The vertical saw a CAGR of 6.5% from 2016 to 2020 and is expected to see a CAGR of
10.2% from 2021E to 2023E. Automotive is second at $4.4 billion or 31.3% of SPL 3PL revenues in 2020
and Industrial is third at $2.3 billion or 16%.

Figure 3. Asia Pacific SPL 3PL Revenue Growth by Vertical Industry – 2016-2023E (US$ Millions)

$9,000

$8,000

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$-
2016 2017 2018 2019 2020 2021E 2022E 2023E
Technological $4,776 $5,195 $5,745 $5,906 $6,136 $7,284 $8,115 $8,851
Automotive $3,504 $3,867 $4,195 $4,336 $4,444 $5,235 $5,836 $6,306
Industrial $1,823 $1,964 $2,184 $2,236 $2,267 $2,661 $2,950 $3,187
Elements $608 $637 $667 $681 $699 $803 $864 $906
Healthcare $523 $558 $599 $620 $642 $761 $840 $905

Technological, Automotive, and Industrial are the top three verticals in North America accounting for
41.4%, 30.4%, and 15.4% of SPL 3PL revenues, respectively, in 2020. However, the verticals with the
highest year-over-year growth in North America were Elements at 2.6% and Healthcare 2.3%.

©2022 Armstrong & Associates 4

 MAJOR SPL 3PL VERTICALS

Figure 4. North America SPL 3PL Revenue Growth by Vertical Industry – 2016-2023E (US$ Millions)

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$-
2016 2017 2018 2019 2020 2021E 2022E 2023E
Technological $2,884 $3,170 $3,550 $3,590 $3,669 $4,535 $5,106 $5,494
Automotive $2,191 $2,389 $2,639 $2,678 $2,691 $3,313 $3,729 $3,974
Industrial $1,092 $1,183 $1,346 $1,351 $1,362 $1,673 $1,885 $2,009
Healthcare $554 $597 $658 $670 $685 $843 $946 $1,008
Elements $391 $411 $439 $442 $454 $545 $599 $621

In tandem with global, the Asia Pacific and North America, Technological, Automotive and Industrial are
the primary vertical industries served in Europe’s SPL 3PL market which combined accounted for 88%
of the regions revenues in 2020.

Figure 5. Europe SPL 3PL Revenue Growth by Vertical Industry – 2016-2023E (US$ Millions)

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$-
2016 2017 2018 2019 2020 2021E 2022E 2023E
Technological $2,424 $2,555 $2,751 $2,758 $2,809 $3,170 $3,430 $3,643
Automotive $1,918 $2,035 $2,208 $2,237 $2,278 $2,709 $3,010 $3,201
Industrial $924 $979 $1,088 $1,082 $1,096 $1,301 $1,439 $1,529
Healthcare $465 $498 $536 $541 $558 $663 $732 $777
Elements $262 $271 $285 $283 $291 $337 $363 $375

In analyzing the distribution of transportation and warehousing related costs, we estimate that
transportation accounts for 70% to 75% and warehousing accounts for 25% to 30%. The transportation
component is higher in North America and Asia than in Europe.

An SPL 3PL warehouse handles spare and service parts which are challenging to manage due to an
unstable demand and the high number of SKUs. This type of warehouse typically has much inventory
on hand. Both larger stock orders and smaller emergency orders are handled. The large number of parts
means that the labor requirements are pretty stable over time.

©2022 Armstrong & Associates 5

 CEVA LOGISTICS

Major SPL 3PLs

CEVA Logistics

CEVA Logistics is one of the world’s largest logistics companies and has been the world’s largest
automotive 3PL. It has a heavy emphasis on manufacturing and is expanding operations in other sectors.
CEVA’s industry sectors are Consumer and Retail 27%, Automotive 25%, Industrial and Aerospace 24%,
Technology 15%, Healthcare 5%, Energy 3%, and Other 1%. CEVA services over 180 countries. Its core
services include fulfillment centers, high-velocity cross-docks, subassembly, sequencing, dedicated
contract transportation, and network designs/redesigns. Its revenue is split 50/50 between Contract
Logistics and Freight Management. Fiat is CEVA’s largest customer.

CEVA’s Automotive Customers

BMW Mercedes-Benz
Carraro Drive Tech Meritor
Chrysler Michelin
Continental Tire Mitsubishi Motors
Daimler Nissan Motor
Fiat Piaggio Group
Ford Motor Pirelli
General Motors Renault
Goodyear & Dunlop Tyres Renault-Nissan-Mitsubishi Alliance
Hankook Tire Rolls-Royce
Honda Motor Scania
Husqvarna Motorcycles Sogefi
KAB Seating Suzuki Motor
Knorr-Bremse Teksid Iron
Land Rover Toyota Motor
Lear Tri Petch Isuzu Sales
Magneti Marelli Triumph Motorcycles
MAN Group TRW Automotive
MANN+HUMMEL Visteon
Marangoni Commercial & Industrial Tyres Volkswagen
Mazda Motor Volvo

Within its strategic sector, Automotive & Tires, CEVA has extensive global expertise providing end-to-
end solutions including everything from Tiers 1, 2, 3 to I2M (Inbound to Manufacturing), OEM (Original
Equipment Manufacturer) manufacturing support and full vehicle distribution.

CEVA offers Aftermarket services around the world with solutions that include inbound domestic
and international transportation, air, ocean – short sea and international, rail roro from supplier to
manufacturer including aftermarket, finished vehicle, yard management and transportation to dealers
including e-commerce B2B (Business to Business).

CEVA’s contract with Volkswagen in Brazil was recently extended for the operation of the company’s
auto spares center at Vinhedo where CEVA received the top rating for audited logistics processes.

CEVA has been operating the 132,000 square meter Brazilian facility since 2010. More than 90,000 parts
are handled through the Vinhedo facility on a daily basis with more than 40 trucks a day delivering
freight from 600 national suppliers serving a network of dealers across the light, commercial, and heavy

©2022 Armstrong & Associates 6

 CEVA LOGISTICS

sectors. Services include receiving, checking, packaging, carpentry (where CEVA manufactures wooden
packaging for storage and exports), exports, warehousing and shipping.

Under the new contract, CEVA will focus on high performance and process improvement. New
operational activities will include using cameras to check all packaged items are correctly packed and
using pagers and tablets to digitize the receiving and packaging processes.

The top rated audit assessed inbound processes, internal handling, materials resources, KPI (Key
Performance Indicators) effectiveness, outbound processes and customer satisfaction.

In China, CEVA and Anji, China’s largest automotive logistic provider, established the first logistics joint
venture approved by China’s ministry of transport in 2002. Initially called Anji-TNT and was renamed
Anji-CEVA Automotive Logistics after the 2006 acquisition of Netherlands-based TNT Logistics by New
York-based private equity fund Apollo Global Management and its subsequent rebranding as CEVA
Logistics. The Automotive side of the business consists of four core segments: 1. Inbound Logistics, 2.
Aftersales Logistics, 3. Import/Export Logistics, and 4. Ground Transportation. The process from foreign
supplier to end customer is mapped out below.

Anji-CEVA Automotive Process

The 50:50 joint venture, with a land transport network covering more than 400 cities across China,
was renamed again in 2017 to Anji-CEVA Logistics to reflex its expansion into new industries such as
Aerospace, High-Tech, Retail, E-Commerce, and FMCG (Fast Moving Consumer Goods).

©2022 Armstrong & Associates 7

 CHOICE LOGISTICS

Choice Logistics
Choice Logistics has roots going back to a New York City ground courier--Choice Courier Systems-
-founded in 1964 by the Katz family. Due to dynamic changes in the courier and overall logistics
marketplace, a strategy to target high-tech customers with service parts inventory management and
distribution needs was developed. In 1994, Choice Logistics started up its first service parts logistics
operation for Tandem Computer. Since then it has capitalized on its service parts expertise to become a
global 3PL.

Today, Choice Logistics has 435 ‘active’ forward stocking locations (FSLs) and access to 627 total
locations which include both ‘active and qualified’ partners available for activation within its network, as
well as 10 regional distribution centers.

Choice Logistics’ Global Network

Importer of Record/Exporter of Record (IOR/EOR) services are provided on six continents in 100 coun-
tries.

©2022 Armstrong & Associates 8

 CHOICE LOGISTICS

Choice Logistics’ IOR Network

Choice has an asset-light business model with U.S. offices in New York, NY and Wayne, PA. Via its global
network of over 200 partners, Choice enables leading companies to move their products through their
full life cycle with tailored, global finished goods distribution, post-sales, reverse logistics, and end-of-life
solutions powered by data and technology as detailed below.

Choice’s Life Cycle Logistics Solutions

Choice specializes in managing service parts inventories at the FSLs for customers, fulfilling parts
orders, and arranging inbound and outbound transportation. Its extensive transportation management
solutions allow for in-market Will Call, Same Business Day, Next Flight Out, Next Business Day, Sched-
uled, and Economy services. Its target markets are as follows.

©2022 Armstrong & Associates 9

 CHOICE LOGISTICS

Choice’s Target Markets

©2022 Armstrong & Associates 10

 DB SCHENKER

DB Schenker
DB Schenker Logistics is an integrated logistics provider and global supply chain manager tied to major
European truck and rail companies. DB Schenker’s German operations, including Europe’s largest rail
freight and trucking operations, are over 70% of total revenues. Its European trucking operation has
about 24,000 employees/owner-operators and handles over 100 million shipments a year. Its European
land transport division accounts for 42% of the business, followed by its freight forwarding unit at 39%
and contract logistics accounts for the rest. DB Schenker Logistics has extensive SPL applications in the
Automotive, Aerospace, and Industrial industries.

For Automotive, its Service & Aftermarket Logistics solution is designed to support spare parts and
reverse logistics with a network consisting of central/regional dedicated spare parts centers and last
mile local shared spare parts depots, dedicated to the individual aftermarkets of its customers.

DB Schenker offers customized, integrated and intermodal logistics solutions for components, spare
parts and finished vehicle shipments along the supply chain, using all modes of transport.

DB Schenker Automotive Supply Chain Solutions

¹In cooperation with DB Cargo.

Its services cover:

• JIT (Just-in-Time) delivery to supply maintenance programs for end customer

• Time based service levels
• Warehousing and value-added services like kitting, technical inspection, and repacking
• Global stock transparency
• Transport consolidation and optimization
• Last mile delivery
• Transport and logistics coordination via control center

©2022 Armstrong & Associates 11

 DB SCHENKER

DB Schenker’s Automotive Supply Chain Process

DB Schenker’s Production Logistics Solutions for the Aerospace industry are designed to ensure each
machine, workstation and production line is being fed with the right product in the right quantity and
quality at the right point, in time.

Production Logistics includes:

• All feedstock supply related activities: materials, semi-finished products, equipment, and parts
• All activities related to the transfer of semi-finished and finished products to the consolidation
centers

Network Management
• Order Fulfilment/Return Processing
• Flow Management

Inventory Management
• Line Feeding and Kitting
◆ Line feeding solutions can provide kitted parts, expendables or toolings directly to pro-
duction lines on a just-in-time and sequenced basis
◆ Kitting solutions provides a service to convert bulk material or parts into a set of parts
ready to be manufactured into final assemblies

In House Logistics
• A large array of services from basic to most complex and integrated requirements: VMI, Ware-
housing, Transport Management, Customs, etc.

©2022 Armstrong & Associates 12

 DB SCHENKER

Oversized Parts Handling

• Expertise in storing, handling and shipping high value, oversized and highly sensitive aero -
space equipment.
• Risk assessment, packaging, handling and shipping conditions are managed by qualified
staff around our global network.

Production Vendor Managed Inventory (PVMI)

• Organization of transportation and warehousing, adjusting the level of inventory against the de-
mand and then supply materials to the FAL (Final Assembly Line).
• Minimization of out of stock and reduces inventory in the supply chain.

Its Total Care Solutions include regular spare parts delivery, emergency transports (AOG), warehousing
for critical spare parts, distribution center and repair logistics.

DB Schenker’s AOG Network

Another specialty is its DB Schenkermarineparts solution where it handles global parts supply for the
shipping and maritime industry. Operating 24/7, its services cover:

• Door to vessel
• Online track and trace
• Customs clearance
• Procurement logistics
• Cargo inspection and survey
• Project cargo
• Consulting
• Express delivery
• Value-added services

©2022 Armstrong & Associates 13

 DHL SUPPLY CHAIN

DHL Supply Chain’s Service Logistics

DHL Supply Chain’s Service Logistics has approximately 220 customers and serves 140 countries.
Controlling the global information and event flow are multiple-language Command Centers located in
Columbus, Ohio; Budapest, Hungary; and Singapore. The Command Centers provide round-the-clock
support through international call centers.

DHL’s SPL industry emphasis is on technology-related companies. Overall benefits include flexibility and
speed, a vast global network of stocking locations, full control and consistency through standardized
processes, and a single IT platform with real-time visibility.

DHL offers storage and inventory management, integrated transportation management, reverse
logistics, and value-added service for spare parts logistics.

Storage & inventory management – Distribution, storage, and inventory management of replace-
ment items. Service Logistics’ Warehousing offers an intelligent, integrated, and secure warehousing
solution, providing a network view of stock.

Warehouse infrastructure includes:

• Tier 1 – Global/Regional Service Logistics Centers
• Tier 2 – Country Service Logistics Centers
• Tier 3 – Decentralized warehouses for extremely urgent parts and components, serving a local
region out of a metropolitan area
• Command Centers, call centers, etc.

Integrated transport management – All after sales deliveries with full visibility.

Services include:
• Transportation in 228 countries and territories offering a mix of transportation modes
• Distribution and replenishment of warehouses in Tiers 1, 2, and 3
• Critical deliveries from local Tier 3 locations to meet emergency orders with timelines as short as
2–4 hours
• Economical non-critical deliveries
• Economical shipments for reverse flows
• Capability to integrate with over 180 different carriers with integrated label creation for multiple
carriers and end-to-end checkpoint visibility for next-day orders

Reverse logistics – One-stop shop for returns, repairs, and product service needs. Products are routed
either to repair vendors or back to manufacturers for return to stock. Repair activities can also be cov-
ered.

Value-added services – Client Support Services, Maintenance Repair and Operations (MRO), and
Technical Services.

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 DHL SUPPLY CHAIN

Services include:

• Smart Field Services via technical couriers, field engineers, and spares lockers
• Technical Services including screening, testing, and light repair
• Parts financial management – planning, procurement, and financing
• Maintenance Repair and Operations (MRO)
• Trade compliance
• Aircraft on Ground (AOG) and Vehicle off Road (VOR)
• Client Support Services with an emphasis on proactive support, relationship management, per
formance management and analysis, change management, continuous improvement, and inno-
vation.

Markets/Industries Served
The majority of services are provided in the Technology sector, with Life Science and Healthcare,
Engineering and Manufacturing, and Aerospace and Aviation growing rapidly. DHL has developed
bespoke solutions for these sectors within Service Logistics.

Technology
DHL’s proprietary software tools, including mySupplyChain, provide live, real-time visibility on inventory
in transit for technicians in the field and provide supply chain teams with enhanced reporting on perfor-
mance.

The commonly used, global IT system “SeLECT” is integrated with DHL’s centralized order processing
and connected to most transportation networks. The SeLECT integrated global IT platform provides
real-time visibility, resource and inventory optimization, and best-practice processes to Service Logistics
customers. Functionality includes:

• Access and Integration

◆ Web based system with standard interfaces
◆ Easy access and seamless integration
• Order management
◆ EDI and/or manual orders capability
◆ Real-time ETA calculation for mission critical service fulfillment
• Warehouse management
◆ Best-practice processes for inbound, storage, and outbound
• Same-day integration
◆ Real-time visibility for mission critical shipments
• Business intelligence
◆ Back-end reporting and front-end analytics

©2022 Armstrong & Associates 15

 DIMERCO EXPRESS GROUP

Dimerco Express Group

Dimerco Express Group is a top international air freight forwarder and successful 3PL handling a mix of
air and ocean freight, warehousing, China domestic transportation management and other 3PL activities
such as service parts logistics.

Dimerco is very strong in Southeast Asia and China. Asia accounts for 74% of Dimerco’s total revenue
with Greater China, including Hong Kong and Taiwan, making up a majority of that revenue, North
America generates 24% and Europe accounts for the rest. Over 80% of Dimerco’s overall revenues come
from high-tech vertical industry customers, much of them being SPL heavy as shown below.

Primary Dimerco Served Industries

Dimerco works with its high-tech service parts logistics customers by managing the inbound interna-
tional transportation of parts and components, and warehousing them in a network of contracted ware-
houses. Once an order is placed, Dimerco manages the transportation of parts and components ship-
ments for delivery to the end customer.

To meet customer demand, Dimerco puts emphasis on its forward stocking locations, 24x7 service,
2-hour/4-hour/Same Day/Next Business Day (NBD) service and continuous enhancement of its
in-house-developed Dimerco Value Plus System® for its Service Parts Logistics. As most spare/service
parts environments have inventory at strategic locations within a country to enable the most efficient
delivery in the shortest possible time, Dimerco has not only developed multiple locations within a coun-
try to provide 4-hour service in the major cities and NBD service for outlying areas but also coordinated
160+ self-owned service outlets in 17 countries in China, Asia Pacific, India, North America and Europe,
along with 200+ strategic partner agents across the rest of the world. Furthermore, Dimerco can also
fulfill the reverse logistics on collecting defective parts and support on diversified demands if there are
configuration or triage needs.

©2022 Armstrong & Associates 16

 FEDEX

FedEx Critical Inventory Logistics

FedEx is the world’s largest cargo airline and express transportation company, and now includes TNT
Express, enhancing its global network for customers in the U.S., Canada, Asia Pacific, Europe, Middle
East, Indian Subcontinent and Africa, and Latin America and Caribbean.

FedEx has over 40 years of experience in Spare Parts Logistics, and currently has over 930 stocking lo-
cations in 75 countries. FedEx Critical Inventory Logistics offers around-the-clock Command and Control
to optimize fulfillment locations, routes, and shipping modes with multiple global control tower teams.

FedEx Critical Inventory Logistics is a scalable solution that gives customers the ability to optimize their
stocking network and order management with the full portfolio of FedEx transportation options.

FedEx Transportation Options Portfolio

FedEx Global Distribution Center

FedEx’s Global Distribution Center (GDC) in Memphis, TN sits at the end of runway to the world’s sec-
ond largest cargo airport. FedEx operates 679 cargo planes with flights to over 650 airports in more than
220 countries. The GDC is cold-chain enabled, ISO 9001 and ISO 13485 certified, and supports val-
ue-added activities like kitting and dispositioning.

With FedEx Critical Inventory Logistics, customers can benefit from Sunday order acceptance, with
access to the night sort for Monday delivery. A late order cut-off time of 11:30 PM Central extends the
service day.

Forward Stocking Location Network

The FedEx Critical Inventory Logistics Forward Stocking Location (FSL) network supports same-day
local delivery in as little as two hours, or order availability for pickup within 30 minutes. FSLs can be
auto-replenished, and orders can source from multiple locations.

©2022 Armstrong & Associates 17

 FEDEX

FedEx’s Forward Stocking Location and Distribution Center Network

Forward Global Regional
Stocking Distribution Distribution
Locations Center Center
North America 216 2
Europe 196 1 2
Latin America 191 55
Asia Pacific 151 20
Middle East, India, & Africa 81 17

Services
FedEx Critical Inventory Logistics supports a variety of industries, from Healthcare to Industrial to
Technology. Industry-specific value-added services include inspection, testing, packaging, and labeling
for the healthcare sector. For the technology sector, FedEx offers testing, kitting, repackaging, and
relabeling.

Returns services include asset exchange, returns monitoring, inspection, and validation. FedEx supports
returns with a network of over 50,000 drop-off locations, including:

• FedEx drop-off and pickup available in over 14,100 locations including Walgreens, Dollar General,
Kroger and Albertsons
• FedEx Ship Center® and FedEx Authorized ShipCenter® locations
• 33,900 FedEx® Drop Box locations
• FedEx Office locations in Walmart stores

©2022 Armstrong & Associates 18

 HORIZON AIR FREIGHT

Horizon Air Freight

Another, although smaller player, in the marine industry is Horizon Air Freight. Founded in 1970 and
based in Jamaica, New York, about 10 minutes from the JFK Airport, Horizon provides air freight forward-
ing, spare parts logistics and related services to its maritime customers supporting:
• U.S. Military Mission Support Vessels
• Container Ships
• Cruise Ships
• Tankers
• Roll-On/Roll-Off Vessels
• Heavy Lift and General Cargo Ships
• Bulk Carriers
• Offshore Vessels and Rigs
• Specialty, Research and Fishing Vessels
• Dredgers
• Shipyards

HAF serves more than 3,000 vessels worldwide. Crowley Maritime, Keystone Shipping, Matson and
Windstar Cruises are customers.

Although focused on the maritime industry since its founding, other industries with urgent shipping
needs it serves include: pharmaceuticals and medical devices, high-value perishables, entertainment,
and automotive or electronic parts.

©2022 Armstrong & Associates 19

 KUEHNE + NAGEL

Kuehne + Nagel
Kuehne + Nagel is one of the world’s leading logistics companies providing services at more than 1,300
locations in over 100 countries. It has strong market positions in the sea freight, air freight, contract
logistics and overland businesses. Leveraging its forwarding and contract logistics capabilities, Kuehne
+ Nagel has built good global spare parts logistics and cold chain capabilities.

Kuehne + Nagel’s spare parts logistics covers:

• Integrated global contract logistics services, including all aspects of logistics planning, control
and implementation
• Scalable standard components: warehousing operations and management, spares service
centers, stock and inventory management, distribution concepts, and reverse management
• Value-added services such as customized pick/pack strategies, promotional packaging, quality
and technical inspections, service center activities, and fulfilment of various customer
requirements
• Standardized process and controls for consistency
• Accurate management and processing of all necessary import and export documentation,
licenses and customs clearance procedures for compliance with international and local
regulations
• Optimizing and balancing stock levels for all spare parts hubs as well as general inventory
management
• 24/7 availability and real-time visibility

Aerospace is a key market for Kuehne + Nagel, which has developed an integrated range of logistics
services within its “Supply the Sky” portfolio. “Supply the Sky” covers the entire aircraft lifecycle from
aircraft-on-ground (AOG) management through performance-based supply chain solutions. Kuehne +
Nagel delivers these services across a global network of over 65 gateways served by more than 3,000
dedicated aerospace staff. Solutions specific to SPL include:

• KN InteriorChain – a dedicated aircraft interiors supply chain service for line fits, retrofits and
aftermarket support.
• KN EngineChain – an integrated, end-to-end solution for aircraft engines with three services
levels: AOG, Critical and Routine.
• KN SparesChain – an aerospace aftermarket solution that uses certified processes (EN/AS9100)
for the management of spare parts.
• Production logistics – provides engineering solutions to maintain aircraft and aircraft parts
production, and small or heavy and oversized components’ handling.
• AOG Service – provides customized solutions to support critical demand. Services include total
project visibility to cope with the time restraints and access to valuable information via leading
IT systems, connecting the airline, ground-handling teams and internal experts. Its AOG service
network is mapped out below.

©2022 Armstrong & Associates 20

 KUEHNE + NAGEL

Kuehne + Nagel’s AOG Network

Its distribution solutions support everything from ordering to routine critical and AOG shipments for all
types of materials, including dangerous goods.

©2022 Armstrong & Associates 21

 MNX GLOBAL LOGISTICS

MNX Global Logistics

MNX Global Logistics is a service parts logistics specialist. Its emphasis is on Next Flight Out and On
Demand Courier services for high-tech, life sciences and aerospace customers. The company has a
proprietary logistics platform developed specifically for mission-critical logistics.

Headquartered in Long Beach, California, MNX’s revenues are ~$300 million a year. It has 850
employees worldwide concentrated in the United States, Europe and Southeast Asia. The U.S. is the
origin/destination for 60% of shipments. Shipments are delivered on-time 98.6% of the time. MNX works
work with 2,400 service partners. There are 190 counties in MNX’s network with 2,400+ service partners.
MNX has 21 facilities of its own worldwide.

MNX’s Global Network

MNX operates with more than 220 forward stocking locations (FSLs) in the US. There are three control
towers in the U.S. located in Atlanta, GA, Columbus, OH and Denver, CO. Temperature controlled ware-
housing is standard practice. Outside of the U.S., it has control towers in London, Amsterdam, Singapore,
and Melbourne.

MNX was founded in 1971 as Network Global Logistics as a pioneering next flight out service.

©2022 Armstrong & Associates 22

 MNX GLOBAL LOGISTICS

MNX’s Global Services Portfolio

MNX was ISO-9001 certified in 2015. GPS tracking, RFID and micro-FSLs are standard. A sample of MNX
customers broken down by vertical and sub industry is shown below.

Major carriers used are UPS, DHL, FedEx, Canada Post and SF Express. Data providers and services uti-
lized are Google Navigation, Google Places, FlightStats and Parts Planning. Courier dispatching is done
with CXT, Xcelerator and eCourier.

On December 13 2021, private-equity firm Quad-C Management announced the acquisition of MNX,
a portfolio company of Audax Private Equity, in an effort to broaden MNX’s solution offerings, pursue
strategic acquisitions, accelerate its organic growth strategy into new and existing industry verticals and
geographies, and ultimately advance MNX’s leadership in the time-critical logistics market.

©2022 Armstrong & Associates 23

 PENSKE LOGISTICS

Penske Logistics
Penske Logistics is a major automotive logistics player. It has been Ford’s lead logistics provider and
provides significant services for General Motors, Daimler and tier-one suppliers. Penske Logistics is
one of five major automotive 3PLs with over $200 million per year in automotive revenues. It has made
significant strides in leveraging its automotive experience to other verticals.

Penske Logistics provides inbound supply chain management, cross-docking, sequencing, just-in-time
support and dedicated contract carriage and is divided into three regional groups. As a result, DCC,
value-added warehousing and distribution, and transportation management are often overlapping and
integrated.

Its spare parts logistics operations are limited to an extensive automotive support network in the U.S.
servicing after-sales auto parts. Consideration is being given to a logical extension into Canada. There
are 14 cross docks, 104 terminals and 269 relay points.

Penske’s U.S. SPL network

Penske’s proprietary “ClearChain Fleet Manager” platform, powered by Oracle, is used for fleet manage-
ment.

©2022 Armstrong & Associates 24

 RYDER

Ryder Spare Parts Operations

Ryder, one of the most recognizable 3PL brand names, is a big-5 logistics 3PL. Ryder is a lead logistics
provider for most General Motors plants and services Chrysler/Fiat, Toyota, Honda plus a multitude of
tier-one suppliers. Ryder runs inbound supply chain management, sequencing centers, just-in-time and
dedicated contract carriage operations.

Ryder’s extensive Spare Parts Operations (SPO) in North America are centered on automotive support.
Customers primarily use Ryder’s Service Parts Dedicated Delivery Solutions (DDS) when service levels
are top priority. The solution provides dedicated routes and equipment with less “touch points” than LTL.
Its most notable benefits include:

• Earliest, most consistent delivery times

• Highest level of on-time performance
• Lowest level of damage claim rates
• Predictable cost levels / easy to measure metrics
• Returns travel “free”

Unattended delivery is the most requested and valuable feature, allowing for:

• Deliveries to be made overnight, during off hours

• Later order cut-off times
• Improved order response times
• Less interruption to dealer’s business

Below is an illustration of a typical DDS route.

©2022 Armstrong & Associates 25

 RYDER

DDS was formerly a high value-add service with low price sensitivity. It has since turned into a
commodity with special emphasis on “shared services” and “premium LTL” carriers.

Serving the automotive service parts market since 2001, Ryder’s SPO within Mexico are extensive. Here’s
an overview.

Ryder’s Mexico Service Parts Overview

Ryder continued its long-standing SPO/OEM relationships in Mexico through the pandemic. Toyota has
been an SPL customer in Mexico for 20 years.

Ryder SPO OEM Relationships in Mexico

Ryder’s SPO network, infrastructure, customer base and delivery points have expanded significantly in
Mexico since 2012 as detailed below.

©2022 Armstrong & Associates 26

 RYDER

Ryder’s Service Parts Coverage and Infrastructure (Q3-2021)

Success Story – Toyota SPO

Ryder’s relationship with Toyota Mexico started in 2001. Services include warehouse management,
transportation management, and supply chain solutions as detailed below.

Operational Environment

Warehouse

• 21 employees managing 1,000+ sq. mt. and pass through rack operation (for receiving, picking
and shipping service parts) within Toyota PDC in Tepotzotlan
• Cross docks in Monterrey, Mexico City, Guadalajara, SLP, Puebla, Villahermosa, Ramos Arizpe
and Culiacan
• Warehouse management and inventory control
• Returnable containers management (cages and totes)

Transportation

• Dedicated Contract Carrier outbound operation

• Network design and optimization
• Shipment planning and execution
• Routing and scheduling TMS – Route planning system
• Defined routes with scheduled appointments

©2022 Armstrong & Associates 27

 RYDER

Supply Chain Solutions

• Inbound flows from Toyota’s US PDC to MX PDC: border drayage with Ryder equipment in LRD /
NLD for dedicated circuit
• Outbound flows from Toyota’s MX PDC to Toyota dealers
• Control Tower: track and trace of every shipment
• C-TPAT inspection for all import/export loads
• Border management support

Value to Toyota

• Outstanding operative performance:

✓ 100% Inventory Accuracy
✓ 19.4 Hours Average Lead Time to Dealers
✓ 99% Shipment Accuracy
✓ 99% On-time Delivery
• Low personnel turnover
• Active participation on continuous improvement projects following TPMS & Ryder
methodologies
• Scanning system for immediate POD recovery, materials tracking & product visibility for dealers
and customers
• Additional operational support: nickel & lithium battery collection and storage; accessories
delivery to Ports and Toyota import vehicle yards

Upcoming Projects

• Implement Tijuana border cross for California loads by Q2 2022

In addition, Ryder:

• Has 6 inbound/outbound loads per week for the dedicated circuit (Hebron, KY – MX)
• Supports 90+ Toyota dealerships nationwide with 180,000+ parts per month
• Supports the air bag campaign: collection, pallet building, storage and disposal
• Uses a specialized IT system for outbound real-time tracking, automatic reporting and invoicing

©2022 Armstrong & Associates 28

 UPS

UPS Service Parts Logistics

UPS Service Parts Logistics is part of the Supply Chain & Freight division of UPS. It operates four
global central stocking locations (CSLs) to run its network complimented by 850+ global field stocking
locations (FSLs) which serve as local inventory sites and 24/7/365 in-region customer support centers.
The CSLs, which replenish the FSLs or quickly ship direct via its global air operations, are located in:

1. Louisville, Kentucky (serving the U.S., Canada, and Latin America)

2. Singapore (serving the Asia Pacific)
3. Roermond, Netherlands (serving Europe)
4. Dubai, United Arab Emirates (serving the Indian Sub-Continent, Middle East and Africa)

The UPS Service Parts Logistics network, which serves over 125 countries, is leveraged to ensure that
the right type and quantity of parts are in optimal locations to best meet the needs of its customers’
end-clients in order to maximize service while reducing costs. The table below lists UPS’ primary SPL
capabilities by region.

UPS Service Parts Logistics Capabilities by Major Region

United States Asia Pacific EMEA
 FSLs covering 80% of U.S.  Delivery to major cities in Asia  Ability to deliver to and service
population within a 2-hour drive within the next business day, as 96% of Europe’s GDP in less
and 99% within 4 hours early as 9 A.M. than 2 hours
 Louisville central stocking “Late  In-country delivery services as  UPS Access Point® Network of
Order Cutoff Service” for parts fast as 2 hours and customizable over 18,000 EMEA-based
orders received up to midnight according to your needs locations for parts pickup, drop-
and providing next-day delivery  Access to more than 100 offs, and returns
as early as 8:30 A.M. operating facilities across the  End of Runway (EOR) Technical
 UPS Access Point® Network of Asia Pacific region Services Center for on-site
over 21,000 U.S. based locations  Localized industry expertise to repairs, refurbishment and
for parts pickup, drop-offs and help navigate the complex Asia recycling
returns Pacific market  In-night delivery of parts into
 Service Parts Returns solution to  Importer of Record/Exporter of your technicians' vehicles (pre-7
dynamically route used or Record services enable the A.M., UK only)
unused parts via UPS to their entry into new APAC markets
optimal destination, minimizing while mitigating trade liability
transit time and reverse logistics risks and tasks associated with
costs acting as the IOR/EOR

UPS has SPL clients across many segments but specializes in high-tech networking equipment, semi-
conductors, medical equipment/devices, telecom/cell phone equipment, laptops/PCs and servers. UPS
has a multi-functional global group 100% dedicated to managing this business within the larger Supply
Chain organization including clearly defining the strategy and mission.

©2022 Armstrong & Associates 29

 UPS

UPS Post Sales Services

UPS’s Post Sales core services are:

1. Critical Parts Fulfillment

2. Parts and Network Planning
3. Reverse Logistics Solutions
4. Importer of Record/Exporter of Record (IOR/EOR) Services
5. Test, Repair, Refurbish

However, these five service categories don’t summarize all the solutions UPS can offer clients. For
example, UPS also offers a proprietary “Service Parts Returns Solution” that can dynamically route parts
from a service technician back to their optimal final destination (return-to-stock, repair vendor, recycler,
etc.) saving days in transit and transportation legs and reducing truck stock. And the company’s “Fast
Turn” implementation can get new customers on-boarded and running in 30-60 days depending on
solution complexity.

Integration with UPS Transportation Services

A unique value of the Post Sales solution is how UPS integrates both UPS transportation capabilities and
the UPS global network of operating facilities to provide customers’ service supply chain efficiencies. An
example of this is how Service Technicians can leverage this network similar to how consumers can for
small package pickups and returns. Technicians can pick-up and drop-off parts at locations most conve-
nient for them like the UPS Access Point® Network locations that include 4,400 UPS Store locations and
over 27,000 global locations.

Another example is storing inventory at the Louisville CSL that is just a few miles from the UPS World-
port transportation hub so that orders can be placed as late as midnight for next-morning delivery via
UPS Next Day Air services.

Technology

UPS’ global SPL IT platform “SPLUS” is comprised of various applications. The application was built by
UPS and supplemented with the Softeon WMS and MercuryGate TMS. The system provides consistent
global order placement, visibility and control to help customers and UPS efficiently manage a service lo-
gistics network. A dedicated IT group manages this global system. The system provides extensive online
real-time information and research design. Customer orders and advanced ship notices feed the inven-
tory management module which is supported by order management, warehouse management, parts
return, shipping and reporting including receipt confirmation.

Automated warehouse solutions, same-day delivery GPS tracking, and the UPS Supply Chain Symphony
visibility platform are also utilized to collect, manage and integrate service supply chain data.

©2022 Armstrong & Associates 30

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The Business of
TRENDS
WarehousingIN
in
3PL /America
North CUSTOMERin the
E-Commerce Era
RELATIONSHIPS
Market Size, Major 3PLs, Benchmarking Costs,
Prices and Practices

January 2021
November 2016

Phone: +1-800-525-3915
Website: www.3PLogistics.com
Email: [email protected]

Dedicated Contract The Business of Seeking Zen –

Carriage vs. Dedicated Warehousing in North Latest Third-Party Logistics
Truckload Capacity – The America – 2021 Market Size, Market Results and Trends for
Search for Untapped Capacity Major 3PLs, Benchmarking 2021 Including Estimates for 190
Costs, Prices and Practices Countries
This report provides background This definitive analysis explores the latest
This major market research report on North American
information on the history of the dedicated trends in the third-party logistics industry
warehousing provides updates on facility sizes, capacity,
transportation market and growth trends. and its major segments. 2020 results and
revenues, pricing (including e-commerce rates), and
The Dedicated Contract Carriage (DCC) estimates for 2021 are included. Historical
commodities handled. Operating margins are provided
and Dedicated Truckload Capacity (DTC) trends and growth by 3PL segment are
for contract warehousing operations. Expected operating
segments are compared and contrasted. detailed. A&A’s latest Global 3PL market
margins and profitability measures are compared to
The report covers historical and projected estimates, covering seven major regions
actual results. Statistical analyses detail the effects of
estimates for DCC and DTC (2010-2023E), comprising 190 countries, are provided.
open book relationships and leasing, versus ownership
the different characteristics by segment, Total and segment 3PL revenues and
on overall warehouse profitability. E-commerce logistics
contract terms, profitability, power units, logistics spend by country and region
costs, 3PL revenue, growth rates, and for the first time,
equipment assignment, industries served, are included. The report also contains
e-commerce fulfillment benchmark rates are also
lease versus truckload providers, the 25 A&A’s lists of the Top 50 Global 3PLs, Top
covered. In addition, warehouse rents and vacancy rates,
largest U.S. DCC providers and more. 50 U.S. 3PLs and Top 25 Global Freight
customer service trends, key performance indicators,
Forwarders for 2020.
value-added services and warehouse management
systems used and A&A’s list of Top 50 North American
New to the report this year is a year-
Value-Added Warehousing and Distribution (VAWD)
over-year comparison of 12 of the top 25
third-party logistics providers list is included.
global freight forwarders and how they
fared in 2020 compared to 2019.

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