In order to assess the strategies for logistics service providers, the matrix above places some major logistics service providers based on their gross profit and Conversion Rate (EBITDA/gross profit). Moreover, the circle size shows the growth in EBIT (in $ million) for these logistics service providers.
Either you are a focused service provider with core competences on selected, profitable businesses (upper left quadrant of the matrix), or you are a “full-service provider with global reach” (lower right quadrant). In that case, the company has to offer the full range of (profitable and less profitable) businesses and trade lanes. DHL, Kuehne Nagel and DB Schenker are located in this quadrant.
An example of a company in the upper left quadrant is Expeditors, as 28% of their total revenue is done with their profitable “customs brokerage” business.
After the UTI integraton, DSV‘s gross profit and EBIT increased. The Conversion Rate improved from 10.4% to 16.9% in 2017 and DSV entered the lower right quadrant of the matrix. This matrix can be used as a simple illustration of two distinct directions or strategies for logistics service providers in the global market.
