Pattullo, CEO of CEVA Logistics, gave an upbeat assessment of the logistics market at a recent industry summit. He noted CEVA's record profits in the last quarter and said the economy was no longer in recession. Pattullo anticipated steady growth in the logistics market driven by outsourcing, global trade, and growth in China and India. However, he warned that rising protectionism could inhibit growth. Pattullo also said that while industry consolidation made sense, many past acquisitions had not created shareholder value, so there may be limited M&A activity in the next 2-3 years.

1. CEVA's Pattullo gives upbeat assessment of logistics market prospects
29/Nov/2010 by John Manners-Bell, CEO of Transport Intelligence
At Eyefortransport's recent 8th European 3PL Summit in
Brussels, John Pattullo, CEO of CEVA Logistics spoke on
stage with Jon Bumstead of Neutral Consulting about his
views on the state of the industry and its prospects for the
future.
Bumstead opened the interview by asking CEVA's CEO how
his business was performing. Pattullo commented that he was
very pleased with how things were progressing and pointed to
record profitability in the last quarter – he was certainly happier than a year before. In fact
overall Pattullo gave a very upbeat assessment of the market environment. He said the
economy was no longer in recession although few CEOs or analysts had the courage to speak
positively for fear of 'talking up' companies. He made reference to recent encouraging
economic data from the United States and highlighted China and India's role in driving the
global economy.
He went on to say that he anticipated growth in the year ahead for the logistics market, albeit
at a steady rather than dramatic rate. In his opinion high levels of debt, which many countries
had built up, would not inhibit growth, although it would make the global economy more
vulnerable to threats posed by crises in markets such as Ireland and Greece.
When asked whether general economic development would be sufficient to power growth in
his company, he replied positively. He believes that this growth would be driven by
continued out-sourcing of logistics services, trade liberalization and global sourcing.
However he warned that increasing levels of protectionism in some markets could inhibit this
growth.
Turning to mergers and acquisitions, he said that he believed that in theory the logistics
industry should see increased consolidation due to existing high levels of fragmentation.
However he commented that many acquisitions in the past had not delivered shareholder
value, and he thought that as a result there would not be much activity in the next 2-3 years.
The exception to this would be the development of Asian companies into global players, led
by Toll, the Australian-based logistics provider followed by Chinese-owned companies.
There may also be acquisitions which added real end-to-end supply chain capabilities to
existing logistics products.
Turning his attention to the issue of innovation, he admitted that there was a perception that
logistics providers lacked the ability to develop new ideas which added value to their clients'
supply chain operations. He countered that low margins and 'open book' contracts were a
barrier to innovation – the latter providing a disincentive to logistics companies as all benefits
were passed on to the client. He also stated that there was a risk that providers could become
'cheap labour shops' as their services became increasingly commoditised.
One way of preventing this would be to encourage a higher caliber of employee to the
industry. Pattullo suggested the creation of a new profession, 'Supply Chain Engineer', would
have a better chance of attracting and keeping top talent. However he commented that it was

2. easier getting finance for mergers and acquisitions than it was obtaining investment for
research and development.
In conclusion Pattullo stated that he was very upbeat about the prospects not just for his own
company but also for the sector as a whole.
Source: Transport Intelligence, November 29, 2010
(c) 2010 TI Briefing. All rights reserved. Republication or redistribution, including by
framing or similar means, is expressly prohibited without prior written consent. TI Briefing is
a service from Transport Intelligence Ltd. Transport Intelligence shall not be liable for
errors or delays in the content, or for any actions taken in reliance thereon.