The third-party logistics (3PL) market – encompassing non-asset-based transportation, warehousing, and integrated supply chain services – witnessed a decline of 8.9 percent in organic growth. Organic growth is the growth that would occur absent the effect of acquisitions. The analysis compares first quarter 2016 revenues to first quarter 2015 revenues.
When doing an analysis of organic growth, certain assumptions must be made. Those assumptions are explained in the column titled “Impact of Acquisition.” The companies having made these acquisitions – DSV, UPS Supply Chain Solutions, and XPO Logistics – may disagree with those assumptions. We would not argue with them if they said our assumptions were not fully accurate. The goal of this analysis is not to report on how individual companies are doing, but to show whether the 3PL market is continuing to grow organically. So while we can’t claim precision around our estimate that the market has shrank by 8.9 percent, there is absolutely no doubt that the market is doing very poorly.
It is also worth noting that we translate financial results reported in foreign currencies to US dollars using an average exchange rate for the given reporting period. Owing to the currency effect, some companies reporting growth in their quarterly reports may show negative growth in our analysis.
ARC’s definition of the 3PL market does not include revenues from asset-based transportation moves (truckload, less than truckload, parcel/express, rail, ocean, air, etc.). Also, please note, several 3PLs financial calendars do not start on January 1st and end on December 31st, which explains why a report on first quarter revenues occurs in June.
In terms of categories included in our definition, domestic transportation services – which includes brokerage /domestic freight forwarding, and managed transportation services – shrank by 3.5 percent. The warehousing services segment shrank by 5.7 percent. And finally, the international transportation services segment – which includes international freight forwarding and custom services – shrank by 9.5 percent.
In short, the 3PL market continues to struggle.
Does this article take into consideration the drop in FSC and the rate drops in both air & ocean? Considering Fuel costs were higher in 2015 and that rates have dropped considerably. You should look at volumes rather than top line revenues or Gross Profit.
The main reason for this is because of despatched x Asian countries direct to the end user and the online parcel service