SlideShare une entreprise Scribd logo
1  sur  15
Télécharger pour lire hors ligne
3rd Party Logistics Providers - The value
of their presence in your community
Questions for you…

1.   How many communities represented here have closed a deal with a 3PL in
     2012?


2.   What is the average size of 3PL deals done in the U.S. in 2012?


3.   Which companies are using 3PLs?


4.   What drives demand in 3PLs?


5.   What are some challenges in incentivizing 3PLs?



                                                                              2
Discussion agenda

• 3PL market and recent activity


• 3PLs today


• Real estate trends, requirements and challenges


• Incentive challenges with 3PLs


• Opportunities to attract 3PLs




                                                    3
3PL market and impact on economy

 • The U.S. 3PL industry continues to experience significant growth and has
 experienced a strong rebound from the economic downturn in 2009.

 • U.S. 3PL market’s gross revenue for 2011 was $133.8 Billion and was three
 times the growth in U.S. gross domestic product (GDP).

 • 1996 – 2011 CAGR = 10.3%.

 • 3PL demand has been strong all year; 3PLs have been the most active user
 segment in 2012 both in the US and Europe.

 • 3PLs are benefitting from uncertainty
      • An uncertain environment drives need to shift risk
      • 3PLs provide flexibility and scalability

                                                             2013 Armstrong & Associates, Inc



                                                                                                4
Recent big box deals – 3PL
      Inland Empire, Los Angeles   Company              Size (s.f.)    Industry

      Q2’12                        Ontrac               403,444        3PL & Logistics

      Indianapolis                 Company              Size (s.f.)    Industry

      Q2’12                        Carrier Corp         436,000        3PL & Logistics

      Q1’12                        Prime Distribution   403,000        3PL &Logistics

      Q2’12                        Jacobson Companies   334,000        3PL & Logistics


      Chicago                                           Size (s.f.)    Industry
      Q2’12                        M Block & Sons       915,643        3PL & Logistics

      Philadelphia                                      Size (s.f.)     Industry
      Q2’12                        Ceva Logistics       600,000         3PL & Logistics


      St. Louis, Kansas City                             Size (s.f.)      Industry
      Q2’12                         OHL                  412,000          3PL & Logistics



                                                                                            5
United States focus on…
   Dispersion by industry 2012                               Dispersion by size 2012




                                 2013 Armstrong & Associates, Inc



                                                                                       6
Distribution of tenants in the market
   3PL & Logistics most matches the overall distribution of tenants in the market
   due to the wide variety of industries these firms serve.
     Size        Consumer        Food &        3PL &      Manufacturing              All
                Goods/ Retail   Beverage      Logistics                           Industries
  100-199KSF        20%            32%          31%            52%                     35%
  200-299KSF        21%            15%          22%            22%                     20%
  300-399KSF        12%            17%          16%             5%                     14%
  400-499KSF         7%             6%          12%             8%                      8%
  500-749KSF        19%            17%          12%             5%                     12%
  750-999KSF         5%             2%           3%             5%                      3%
  >1 MSF            16%            11%           4%             3%                      8%


                                                                     2013 Armstrong & Associates, Inc



                                                                                                        7
3PL Perception vs. Reality
Traditional View                         3PLs Today
•Inexpensive, older buildings            •Frequently in market for large, 32’/36’ clear,
                                         cross dock facilities, focused on class A.
•Low tech                                •Often running mechanized facilities;
  • MHE                                  leveraging IT acumen.
  • IT
•Most 3PLs are not credit worthy.        •Many 3PLs are financially strong-higher
                                         percentage of deals have the 3PL on lease.
•Compete on price.                       •Still a price sensitive business, but error-free
                                         performance and safety are critical to many
                                         customers.
•Heavy penetration in apparel;           •3PL customer mix matches overall user
automotive. Some industries do not use   profile.
3PLs.

                                                                                             8
3PL Real Estate Trends and Requirements
• Lease length tied to length of contract
     • Spec buildings may offer landlord more flexibility on lease length

• Need to react quickly
     • Often have to turn around an RFP in a short period of time
     • Need to be cognizant of buildings/space immediately
     • Need to be able to quantify operating costs

• Lots of dock capacity

• Access to highways
     • Frequently the “final mile” logistics is outsourced to 3PLs

• 3PLs remain focused on securing high quality class A product
     • The trend in the U.S. is towards 36’ clear heights



                                                                            9
3PL Real Estate Challenges
• Immediate occupancy

• Multi-channel distribution

• Lack of cross-dock facilities in major markets

• 3PLs need quality space and lower prices

• Who controls the lease?
    • The 3PL?
    • Their customer?




                                                   10
3PL State and Local Incentive Challenges
• Timing to respond to RFP
     • Can the 3PL create competitive leverage by reducing their costs through
     incentives?
     • Can incentives be pre-negotiated with offer to remain for a fixed period of time?

•Who controls the capital investment?
    • The 3PL?
    • Their customer?

• Who owns the employees?
    • The 3PL? or Their customer?
    • Are the employees considered contract employees?




                                                                                           11
3PL State and Local Incentive Challenges
• Timing to respond to RFP
     • Can the 3PL create competitive leverage by reducing their costs through
     incentives?

•Who controls the capital investment?
    • The 3PL?
    • Their customer?

• Who owns the employees?
    • The 3PL? or Their customer?
    • Are the employees considered contract employees?

• Short-term leases
     •Can incentives be negotiated for shorter periods? Most 3PLs are not signing
     leases greater than 5 years.



                                                                                    12
3PL State and Local Incentive Opportunities
Need to find a way to incent 3PLs for the period of time they are adding value to the
state/community.

     • If the incenting entity utilizes a 10-year ROI calculation, how can that be adjusted
     for shorter leases?

     • Can incentives be approved with a phased approach to accommodate lease
     extensions and renewals?

     • If the lease and employees are not held by the same taxing entity; how can
     benefits be realized?

     • Can incentives be pre-negotiated with offer to remain for a fixed period of time to
     assist 3PL with responding to RFP?




                                                                                              13
Same questions as earlier… for your consideration


 1.   What is the average size of 3PL deals done in the U.S. in 2012?
 2.   Which companies are using 3PLs?
 3.   What drives demand in 3PLs?
 4.   What are some challenges in incentivizing 3PLs?




                                                                        14
In conclusion

3PLs are an industry that bring significant value to the states and communities in which
they locate; however, unlike their customers, the 3PL’s investment and employment
often does not quality for state and local support.
   • 3PLs are the fastest growing segment – in terms of occupiers of industrial real
     estate.
   • 3PLs have gained penetration in a wide variety of industries, and now mirror the
     overall market.
   • States and communities must find a way to help offset the risk for the 3PLs just as
     they do for other industries
      • Address timing
      • Lease term
      • Contract employees


                                                                                           15

Contenu connexe

Tendances

Keynote iata build.key
Keynote iata  build.keyKeynote iata  build.key
Keynote iata build.keybtckevin
 
Outsourcing: A survival tool for logistics companies in uncertain times
Outsourcing: A survival tool for logistics companies in uncertain timesOutsourcing: A survival tool for logistics companies in uncertain times
Outsourcing: A survival tool for logistics companies in uncertain timesWNS Global Services
 
Short Dycom Perennially NPV Negative, 60% Downside To Fair Value
Short Dycom Perennially NPV Negative, 60% Downside To Fair ValueShort Dycom Perennially NPV Negative, 60% Downside To Fair Value
Short Dycom Perennially NPV Negative, 60% Downside To Fair ValueLester Goh
 
5 New Rules of Transportation
5 New Rules of Transportation5 New Rules of Transportation
5 New Rules of TransportationElemica
 

Tendances (8)

Keynote iata build.key
Keynote iata  build.keyKeynote iata  build.key
Keynote iata build.key
 
Feasibility Report
Feasibility ReportFeasibility Report
Feasibility Report
 
Dorado Trend Watch Q4 2011
Dorado Trend Watch Q4 2011Dorado Trend Watch Q4 2011
Dorado Trend Watch Q4 2011
 
Thorntons Presentation
Thorntons PresentationThorntons Presentation
Thorntons Presentation
 
Outsourcing: A survival tool for logistics companies in uncertain times
Outsourcing: A survival tool for logistics companies in uncertain timesOutsourcing: A survival tool for logistics companies in uncertain times
Outsourcing: A survival tool for logistics companies in uncertain times
 
Report
ReportReport
Report
 
Short Dycom Perennially NPV Negative, 60% Downside To Fair Value
Short Dycom Perennially NPV Negative, 60% Downside To Fair ValueShort Dycom Perennially NPV Negative, 60% Downside To Fair Value
Short Dycom Perennially NPV Negative, 60% Downside To Fair Value
 
5 New Rules of Transportation
5 New Rules of Transportation5 New Rules of Transportation
5 New Rules of Transportation
 

Similaire à 3rd Party Logistic Providers_Gerber

Challenges Faced by 3PL CEOs and Leaders - an Anchanto Document
Challenges Faced by 3PL CEOs and Leaders - an Anchanto Document Challenges Faced by 3PL CEOs and Leaders - an Anchanto Document
Challenges Faced by 3PL CEOs and Leaders - an Anchanto Document devin simon
 
What keeps 3pl ceos and leaders awake at night whitepaper
What keeps 3pl ceos and leaders awake at night whitepaperWhat keeps 3pl ceos and leaders awake at night whitepaper
What keeps 3pl ceos and leaders awake at night whitepaperdevin simon
 
Overcoming growth challenges in the IT services industry - focus on SMEs
Overcoming growth challenges in the IT services industry - focus on SMEsOvercoming growth challenges in the IT services industry - focus on SMEs
Overcoming growth challenges in the IT services industry - focus on SMEs3nayan Publishing
 
Automotive Retail Network 2014 Study - The Next Challenge Of The US Auto Indu...
Automotive Retail Network 2014 Study - The Next Challenge Of The US Auto Indu...Automotive Retail Network 2014 Study - The Next Challenge Of The US Auto Indu...
Automotive Retail Network 2014 Study - The Next Challenge Of The US Auto Indu...SL Ecommerce and ReviewsReputation.com
 
2003 closes out as planned rays of sunshine for it market in 2004
2003 closes out as planned rays of sunshine for it market in 20042003 closes out as planned rays of sunshine for it market in 2004
2003 closes out as planned rays of sunshine for it market in 2004ARC Advisory Group
 
Deloitte US CRE Outlook 2016
Deloitte US CRE Outlook 2016Deloitte US CRE Outlook 2016
Deloitte US CRE Outlook 2016Justin B. Smith
 
Commercialisation strategy for early stage companies.
Commercialisation strategy for early stage companies.Commercialisation strategy for early stage companies.
Commercialisation strategy for early stage companies.philnewman100
 
Evan Armstrong from Armstrong & Associates on ‘Examining the State of Third P...
Evan Armstrong from Armstrong & Associates on ‘Examining the State of Third P...Evan Armstrong from Armstrong & Associates on ‘Examining the State of Third P...
Evan Armstrong from Armstrong & Associates on ‘Examining the State of Third P...eyefortransport
 
AkshaySingh_Livguard 1st.pptx
AkshaySingh_Livguard 1st.pptxAkshaySingh_Livguard 1st.pptx
AkshaySingh_Livguard 1st.pptxakshay774708
 
Early Lessons Learned in Deploying Cloud Infrastructure
Early Lessons Learned in Deploying Cloud InfrastructureEarly Lessons Learned in Deploying Cloud Infrastructure
Early Lessons Learned in Deploying Cloud InfrastructureFrancisco "Cocoy" Claravall
 
The Business Propositions For Woodmere
The Business Propositions For WoodmereThe Business Propositions For Woodmere
The Business Propositions For WoodmereNina Vazquez
 
Rgp conflict minerals overview usa
Rgp conflict minerals overview usaRgp conflict minerals overview usa
Rgp conflict minerals overview usaBill Selers
 
BoyarMiller "The Energy Industry 2016" eBook
BoyarMiller "The Energy Industry 2016" eBookBoyarMiller "The Energy Industry 2016" eBook
BoyarMiller "The Energy Industry 2016" eBookBoyarMiller
 
Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to...
Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to...Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to...
Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to...Global Business Events
 
For dying companies in dying industries – needing a turnaround strategy
For dying companies in dying industries – needing a turnaround strategyFor dying companies in dying industries – needing a turnaround strategy
For dying companies in dying industries – needing a turnaround strategyRon McFarland
 
Motorola two way radio construction guide
Motorola two way radio construction guideMotorola two way radio construction guide
Motorola two way radio construction guideDavid Martin
 
PVSEC - Business Forum - Keynote Speech - Paul Brody
PVSEC - Business Forum - Keynote Speech - Paul BrodyPVSEC - Business Forum - Keynote Speech - Paul Brody
PVSEC - Business Forum - Keynote Speech - Paul BrodyPaul Brody
 
Working capital management
Working capital managementWorking capital management
Working capital managementBabasab Patil
 
Working capital management
Working capital managementWorking capital management
Working capital managementBabasab Patil
 

Similaire à 3rd Party Logistic Providers_Gerber (20)

Challenges Faced by 3PL CEOs and Leaders - an Anchanto Document
Challenges Faced by 3PL CEOs and Leaders - an Anchanto Document Challenges Faced by 3PL CEOs and Leaders - an Anchanto Document
Challenges Faced by 3PL CEOs and Leaders - an Anchanto Document
 
What keeps 3pl ceos and leaders awake at night whitepaper
What keeps 3pl ceos and leaders awake at night whitepaperWhat keeps 3pl ceos and leaders awake at night whitepaper
What keeps 3pl ceos and leaders awake at night whitepaper
 
Overcoming growth challenges in the IT services industry - focus on SMEs
Overcoming growth challenges in the IT services industry - focus on SMEsOvercoming growth challenges in the IT services industry - focus on SMEs
Overcoming growth challenges in the IT services industry - focus on SMEs
 
Automotive Retail Network 2014 Study - The Next Challenge Of The US Auto Indu...
Automotive Retail Network 2014 Study - The Next Challenge Of The US Auto Indu...Automotive Retail Network 2014 Study - The Next Challenge Of The US Auto Indu...
Automotive Retail Network 2014 Study - The Next Challenge Of The US Auto Indu...
 
2003 closes out as planned rays of sunshine for it market in 2004
2003 closes out as planned rays of sunshine for it market in 20042003 closes out as planned rays of sunshine for it market in 2004
2003 closes out as planned rays of sunshine for it market in 2004
 
Deloitte US CRE Outlook 2016
Deloitte US CRE Outlook 2016Deloitte US CRE Outlook 2016
Deloitte US CRE Outlook 2016
 
Commercialisation strategy for early stage companies.
Commercialisation strategy for early stage companies.Commercialisation strategy for early stage companies.
Commercialisation strategy for early stage companies.
 
Evan Armstrong from Armstrong & Associates on ‘Examining the State of Third P...
Evan Armstrong from Armstrong & Associates on ‘Examining the State of Third P...Evan Armstrong from Armstrong & Associates on ‘Examining the State of Third P...
Evan Armstrong from Armstrong & Associates on ‘Examining the State of Third P...
 
AkshaySingh_Livguard 1st.pptx
AkshaySingh_Livguard 1st.pptxAkshaySingh_Livguard 1st.pptx
AkshaySingh_Livguard 1st.pptx
 
The Trucking Industry
The Trucking IndustryThe Trucking Industry
The Trucking Industry
 
Early Lessons Learned in Deploying Cloud Infrastructure
Early Lessons Learned in Deploying Cloud InfrastructureEarly Lessons Learned in Deploying Cloud Infrastructure
Early Lessons Learned in Deploying Cloud Infrastructure
 
The Business Propositions For Woodmere
The Business Propositions For WoodmereThe Business Propositions For Woodmere
The Business Propositions For Woodmere
 
Rgp conflict minerals overview usa
Rgp conflict minerals overview usaRgp conflict minerals overview usa
Rgp conflict minerals overview usa
 
BoyarMiller "The Energy Industry 2016" eBook
BoyarMiller "The Energy Industry 2016" eBookBoyarMiller "The Energy Industry 2016" eBook
BoyarMiller "The Energy Industry 2016" eBook
 
Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to...
Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to...Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to...
Martin McKie, Director EMEA Supply Chain at Arris - Collaboration: The key to...
 
For dying companies in dying industries – needing a turnaround strategy
For dying companies in dying industries – needing a turnaround strategyFor dying companies in dying industries – needing a turnaround strategy
For dying companies in dying industries – needing a turnaround strategy
 
Motorola two way radio construction guide
Motorola two way radio construction guideMotorola two way radio construction guide
Motorola two way radio construction guide
 
PVSEC - Business Forum - Keynote Speech - Paul Brody
PVSEC - Business Forum - Keynote Speech - Paul BrodyPVSEC - Business Forum - Keynote Speech - Paul Brody
PVSEC - Business Forum - Keynote Speech - Paul Brody
 
Working capital management
Working capital managementWorking capital management
Working capital management
 
Working capital management
Working capital managementWorking capital management
Working capital management
 

Plus de EMRoundtable

Cutri- Competing for New Investment
Cutri- Competing for New Investment Cutri- Competing for New Investment
Cutri- Competing for New Investment EMRoundtable
 
Fisher- An Insider's View of Site Selection
Fisher-  An Insider's View of Site Selection Fisher-  An Insider's View of Site Selection
Fisher- An Insider's View of Site Selection EMRoundtable
 
Simmons- Leaders in North American Site Selection & Economic Development
Simmons- Leaders in North American Site Selection & Economic DevelopmentSimmons- Leaders in North American Site Selection & Economic Development
Simmons- Leaders in North American Site Selection & Economic DevelopmentEMRoundtable
 
Glerin- Integrated Marketing
Glerin- Integrated MarketingGlerin- Integrated Marketing
Glerin- Integrated MarketingEMRoundtable
 
Schutez- Where Are All The New Jobs Coming From?
Schutez- Where Are All The New Jobs Coming From?Schutez- Where Are All The New Jobs Coming From?
Schutez- Where Are All The New Jobs Coming From?EMRoundtable
 
Curley- Manufacturing in the U.S.- What is the future?
Curley- Manufacturing in the U.S.- What is the future?Curley- Manufacturing in the U.S.- What is the future?
Curley- Manufacturing in the U.S.- What is the future?EMRoundtable
 
Gemmen- Industrial Site Certification & Site Readiness
Gemmen- Industrial Site Certification & Site ReadinessGemmen- Industrial Site Certification & Site Readiness
Gemmen- Industrial Site Certification & Site ReadinessEMRoundtable
 
Baetsen- The Workforce Dilemma
Baetsen- The Workforce DilemmaBaetsen- The Workforce Dilemma
Baetsen- The Workforce DilemmaEMRoundtable
 

Plus de EMRoundtable (8)

Cutri- Competing for New Investment
Cutri- Competing for New Investment Cutri- Competing for New Investment
Cutri- Competing for New Investment
 
Fisher- An Insider's View of Site Selection
Fisher-  An Insider's View of Site Selection Fisher-  An Insider's View of Site Selection
Fisher- An Insider's View of Site Selection
 
Simmons- Leaders in North American Site Selection & Economic Development
Simmons- Leaders in North American Site Selection & Economic DevelopmentSimmons- Leaders in North American Site Selection & Economic Development
Simmons- Leaders in North American Site Selection & Economic Development
 
Glerin- Integrated Marketing
Glerin- Integrated MarketingGlerin- Integrated Marketing
Glerin- Integrated Marketing
 
Schutez- Where Are All The New Jobs Coming From?
Schutez- Where Are All The New Jobs Coming From?Schutez- Where Are All The New Jobs Coming From?
Schutez- Where Are All The New Jobs Coming From?
 
Curley- Manufacturing in the U.S.- What is the future?
Curley- Manufacturing in the U.S.- What is the future?Curley- Manufacturing in the U.S.- What is the future?
Curley- Manufacturing in the U.S.- What is the future?
 
Gemmen- Industrial Site Certification & Site Readiness
Gemmen- Industrial Site Certification & Site ReadinessGemmen- Industrial Site Certification & Site Readiness
Gemmen- Industrial Site Certification & Site Readiness
 
Baetsen- The Workforce Dilemma
Baetsen- The Workforce DilemmaBaetsen- The Workforce Dilemma
Baetsen- The Workforce Dilemma
 

3rd Party Logistic Providers_Gerber

  • 1. 3rd Party Logistics Providers - The value of their presence in your community
  • 2. Questions for you… 1. How many communities represented here have closed a deal with a 3PL in 2012? 2. What is the average size of 3PL deals done in the U.S. in 2012? 3. Which companies are using 3PLs? 4. What drives demand in 3PLs? 5. What are some challenges in incentivizing 3PLs? 2
  • 3. Discussion agenda • 3PL market and recent activity • 3PLs today • Real estate trends, requirements and challenges • Incentive challenges with 3PLs • Opportunities to attract 3PLs 3
  • 4. 3PL market and impact on economy • The U.S. 3PL industry continues to experience significant growth and has experienced a strong rebound from the economic downturn in 2009. • U.S. 3PL market’s gross revenue for 2011 was $133.8 Billion and was three times the growth in U.S. gross domestic product (GDP). • 1996 – 2011 CAGR = 10.3%. • 3PL demand has been strong all year; 3PLs have been the most active user segment in 2012 both in the US and Europe. • 3PLs are benefitting from uncertainty • An uncertain environment drives need to shift risk • 3PLs provide flexibility and scalability 2013 Armstrong & Associates, Inc 4
  • 5. Recent big box deals – 3PL Inland Empire, Los Angeles Company Size (s.f.) Industry Q2’12 Ontrac 403,444 3PL & Logistics Indianapolis Company Size (s.f.) Industry Q2’12 Carrier Corp 436,000 3PL & Logistics Q1’12 Prime Distribution 403,000 3PL &Logistics Q2’12 Jacobson Companies 334,000 3PL & Logistics Chicago Size (s.f.) Industry Q2’12 M Block & Sons 915,643 3PL & Logistics Philadelphia Size (s.f.) Industry Q2’12 Ceva Logistics 600,000 3PL & Logistics St. Louis, Kansas City Size (s.f.) Industry Q2’12 OHL 412,000 3PL & Logistics 5
  • 6. United States focus on… Dispersion by industry 2012 Dispersion by size 2012 2013 Armstrong & Associates, Inc 6
  • 7. Distribution of tenants in the market 3PL & Logistics most matches the overall distribution of tenants in the market due to the wide variety of industries these firms serve. Size Consumer Food & 3PL & Manufacturing All Goods/ Retail Beverage Logistics Industries 100-199KSF 20% 32% 31% 52% 35% 200-299KSF 21% 15% 22% 22% 20% 300-399KSF 12% 17% 16% 5% 14% 400-499KSF 7% 6% 12% 8% 8% 500-749KSF 19% 17% 12% 5% 12% 750-999KSF 5% 2% 3% 5% 3% >1 MSF 16% 11% 4% 3% 8% 2013 Armstrong & Associates, Inc 7
  • 8. 3PL Perception vs. Reality Traditional View 3PLs Today •Inexpensive, older buildings •Frequently in market for large, 32’/36’ clear, cross dock facilities, focused on class A. •Low tech •Often running mechanized facilities; • MHE leveraging IT acumen. • IT •Most 3PLs are not credit worthy. •Many 3PLs are financially strong-higher percentage of deals have the 3PL on lease. •Compete on price. •Still a price sensitive business, but error-free performance and safety are critical to many customers. •Heavy penetration in apparel; •3PL customer mix matches overall user automotive. Some industries do not use profile. 3PLs. 8
  • 9. 3PL Real Estate Trends and Requirements • Lease length tied to length of contract • Spec buildings may offer landlord more flexibility on lease length • Need to react quickly • Often have to turn around an RFP in a short period of time • Need to be cognizant of buildings/space immediately • Need to be able to quantify operating costs • Lots of dock capacity • Access to highways • Frequently the “final mile” logistics is outsourced to 3PLs • 3PLs remain focused on securing high quality class A product • The trend in the U.S. is towards 36’ clear heights 9
  • 10. 3PL Real Estate Challenges • Immediate occupancy • Multi-channel distribution • Lack of cross-dock facilities in major markets • 3PLs need quality space and lower prices • Who controls the lease? • The 3PL? • Their customer? 10
  • 11. 3PL State and Local Incentive Challenges • Timing to respond to RFP • Can the 3PL create competitive leverage by reducing their costs through incentives? • Can incentives be pre-negotiated with offer to remain for a fixed period of time? •Who controls the capital investment? • The 3PL? • Their customer? • Who owns the employees? • The 3PL? or Their customer? • Are the employees considered contract employees? 11
  • 12. 3PL State and Local Incentive Challenges • Timing to respond to RFP • Can the 3PL create competitive leverage by reducing their costs through incentives? •Who controls the capital investment? • The 3PL? • Their customer? • Who owns the employees? • The 3PL? or Their customer? • Are the employees considered contract employees? • Short-term leases •Can incentives be negotiated for shorter periods? Most 3PLs are not signing leases greater than 5 years. 12
  • 13. 3PL State and Local Incentive Opportunities Need to find a way to incent 3PLs for the period of time they are adding value to the state/community. • If the incenting entity utilizes a 10-year ROI calculation, how can that be adjusted for shorter leases? • Can incentives be approved with a phased approach to accommodate lease extensions and renewals? • If the lease and employees are not held by the same taxing entity; how can benefits be realized? • Can incentives be pre-negotiated with offer to remain for a fixed period of time to assist 3PL with responding to RFP? 13
  • 14. Same questions as earlier… for your consideration 1. What is the average size of 3PL deals done in the U.S. in 2012? 2. Which companies are using 3PLs? 3. What drives demand in 3PLs? 4. What are some challenges in incentivizing 3PLs? 14
  • 15. In conclusion 3PLs are an industry that bring significant value to the states and communities in which they locate; however, unlike their customers, the 3PL’s investment and employment often does not quality for state and local support. • 3PLs are the fastest growing segment – in terms of occupiers of industrial real estate. • 3PLs have gained penetration in a wide variety of industries, and now mirror the overall market. • States and communities must find a way to help offset the risk for the 3PLs just as they do for other industries • Address timing • Lease term • Contract employees 15