Softening Global Trade Continues to Hurt the 3PL Market

The third-party logistics (3PL) market − encompassing non-asset-based transportation, warehousing, and integrated supply chain services − experienced a year-over-year growth of 4.6 percent in revenues in the second quarter of 2016. The growth was mainly driven by acquisitions. Organic growth (without the effect of acquisitions) declined by about 6.9 percent, mainly due to softening global trade.

The scope of this analysis includes non-asset based transportation, and warehousing services (called contract logistics in Europe). Out of scope for this report are revenues from asset-based transportation moves (truckload, less than truckload, parcel/express, rail, ocean, air, etc.). My analysis is based on revenues reported by public companies in their second quarter. The reporting period encompassing the second quarter differs company to company, and this is why this analysis, which is current, is occurring in August.

The table below compares Q2 2015 with Q2 2016 and year to date (YTD) 2015 with YTD 2016. Additionally the table highlights the growth rates during the quarter and the year. The table also shares the details of the portion of revenues not covered in the report. Below are some other noteworthy modifications from Q2 2015:

  • XPO Logistics was added to the list
  • Menlo Logistics (a Division of Con-way and Norbert Dentressangle), was deleted from the list as it was acquired by XPO Logistics
  • UTi was deleted from the list after being acquired by DSV
  • Hitachi Transport System, Ltd. taken off the list as it did not report its reconciled report at the time of release of this report
Supplier Q2 15 ($M) Q2 16 ($M) YoY % Change YTD 1H15 ($M) YTD 1H16 ($M) YoY % Change Portion of Revenues Not Considered
Agility $983.0 $890.7 -9.4% $1,936.7 $1,764.0 -8.9% Infrastructure Business
C.H. Robinson Worldwide $3,545.1 $3,299.7 -6.9% $6,846.0 $6,373.7 -6.9%
CEVA Logistics $1,763.0 $1,666.0 -5.5% $3,539.0 $3,232.0 -8.7%
DHL Supply Chain and Global Forwarding $8,652.4 $7,869.3 -9.1% $17,378.0 $15,275.2 -12.1% Post, e-commerce, Parcel and Express
DSV $1,778.2 $2,396.8 34.8% $3,528.7 $4,423.6 25.4% Solutions Business
Expeditors International of Washington $1,691.6 $1,475.2 -12.8% $3,369.1 $2,893.6 -14.1%
Hyundai GLOVIS $3,295.0 $3,209.3 -2.6% $6,306.9 $6,313.4 0.1% Used Car Auction
JBHunt $541.0 $587.0 8.5% $1,049.0 $1,128.0 7.5% Intermodal and Truckload are Asset Based
Kuehne + Nagel $4,616.1 $4,315.5 -6.5% $9,183.4 $8,457.3 -7.9% Overland is Asset Based
Logwin $186.3 $164.4 -11.8% $380.5 $330.9 -13.0% Solutions Business
Panalpina $1,527.5 $1,328.6 -13.0% $3,108.3 $2,644.4 -14.9%
Ryder $737.2 $785.8 6.6% $1,430.9 $1,544.9 8.0% Lease rental and Fuel Services
UPS Supply Chain Solutions $2,242.0 $2,537.0 13.2% $4,435.0 $4,957.0 11.8% US Domestic and International Package
XPO Logistics $1,220.8 $3,750.9 207.2% $1,923.9 $7,309.0 279.9%
Total $32,779.2 $34,276.1 4.6% $64,415.4 $66,647.1 3.5%  

Overall Market (Including Impact of Acquisitions)

When analyzing organic growth, it’s necessary to make certain assumptions (explained in the column titled “Impact of Acquisition”) with which all parties might not fully agree. Unfortunately, this cannot be avoided and it’s important to keep in mind that 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. Based on the available data and the aforementioned assumptions, ARC estimates that the market has shrunk by 6.9 percent.  While some parties might argue with this specific percentage, it’s absolutely clear that the market is doing very poorly.

ARC will publish the full report later this week which includes analysis of the growth occurring in the international transportation services, domestic transportation services, and warehousing services segments. The report also includes analysis of what is driving or impeding growth at the companies listed in this report.  If you are interested in receiving a copy of this report, you can contact Conrad Hanf (chanf@arcweb.com).

 

 

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