Soft Market in Air and Ocean Freight and Fluctuating Currencies Inhibit the Growth for 3PLs in Third Quarter 2015

The 3PL market has declined significantly in the third quarter of 2015. Soft market environment in Air and Ocean freight was one of the major reasons for decline in addition to the currency fluctuations. The 3Pl market has also witnessed some major acquisitions during the quarter

  • Conway, whose Menlo divisions revenues have historically been party of this analysis, was acquired By XPO Logistics
  • UTi acquired by DSV

Some other relevant acquisitions which happened during the 9 months into FY15 are:

  • Norbert Dentressangle acquired by XPO Logistics acquired in April 2015
  • Coyote Logistics acquired by UPS in July 2015
  • ReTrans acquired by K+N in June 2015

Below is the list of y-o-y comparison of various currencies in which the 3PLs report their revenues.

Reporting Currency Y-O-Y Decline %
Danish Krone -16.3%
Euro -16.2%
Kuwait Dollars -6.0%
South Korean Won -12.3%
Swizz Franc -5.2%
Yen -15.1%

ARC Advisory Group tracks the quarterly revenue results of the most prominent publicly traded 3PLs on an ongoing basis. The report is published after all the companies on the list release their revenues. The off cycle earnings results by some large 3PLs is why we are reporting about 3Q 2015 revenues in December.

For this financial analysis, the scope of coverage includes non-asset based transportation and warehousing services (referred to as “contract logistics” in Europe):

  • Non-asset based domestic transportation services (brokerage and managed transportation services)
  • Non-asset based international transportation services (freight forwarding and customs services)
  • Warehousing services (warehousing and associated services such as packaging, light assembly, sequencing goods for a factory line)

The table below lists the three segments their y-o-y growth and the contribution (in %) to overall market.

Business Segment Contribution to the total market Y-O-Y Decline
Domestic 18.5% -7.1%
International 50.8% -12.8%
Contract 30.7% -7.1%

The 3Q15 revenues across the public firms covered in this analysis has declined by 10.1 percent year over year with almost all suppliers (except Norbert Dentressangle) experiencing either negative or flat growth over 3Q14

High flyers, based on year over year growth, include:

  • Norbert Dentressangle, up 3.8 percent
  • Ryder, up 0.4 percent
  • UPS Supply chain Soluions, up 0.1 percent

Companies witnessing decline in year over year revenues include:

  • Panalpina, down 19.4 percent
  • DSV down 17.9 percent
  • Logwin, down 16.9 percent

Remember, based on our definition, we are excluding asset-based transportation revenues from, DHL, DSV, J B Hunt and Norbert Dentressangle.

The table below lists the 3rd Quarter FY15 performance of the top seventeen publicly traded 3PLS of which two are acquired.

Supplier Q3 14
($M)
Q3 15
($M)
YoY % change Portion of Revenues Not Considered
Agility $942.4 $820.5 -12.9% Infrastructure Business
C.H. Robinson Worldwide $3,467.4 $3,419.3 -1.4%
CEVA Logistics $1,992.0 $1,699.0 -14.7%
DHL Supply Chain and Global Forwarding $9,901.6 $8,445.5 -14.7% Post, e-commerce, Parcel and Express
DSV $2,075.1 $1,702.8 -17.9% Solutions Business
Expeditors International of Washington $1,705.1 $1,651.3 -3.2%
Hitachi (2Q ends in September) $1,626.1 $1,397.8 -14.0%
Hyundai GLOVIS $3,364.7 $3,223.4 -4.2% Used Car Auction
JBHunt $546.0 $543.0 -0.5% Intermodal and Truckload are Asset Based
Kuehne + Nagel $5,206.7 $4,567.4 -12.3% Overland is Asset Based
Logwin $229.5 $190.8 -16.9% Solutions Business
Menlo/ Conway Acquired by By XPO Logistics
Norbert Dentressangle $869.0 $902.2 3.8% Transport is Asset Based/ Interdivision eliminations
Panalpina $1,889.3 $1,523.4 -19.4%
Ryder $732.0 $734.8 0.4% Lease rental and Fuel Services
UPS Supply chain Soluions (supply chian and freight) $2,416.0 $2,418.0 0.1% US Domestic and International Package
Uti Worldwide (3Q ends in October) Acquired by DSV
Total $36,962.9 $33,239.0 -10.1%

If you would like a complete copy of this analysis, including the results of the seventeen 3PLs covered, please contact chanf@arcweb.com.

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