3PL Market’s Organic Growth Shrinks Three Quarters in a Row in 2016

The third-party logistics (3PL) market − encompassing non-asset-based transportation, warehousing, and integrated supply chain services − experienced a year-over-year growth of 1.8 percent in revenues in the third quarter of 2016. The growth was mainly driven by acquisitions. Organic growth (without the effect of acquisitions) declined in all three quarters of FY2016 – by 8.9 percent in Q1, 6.9 percent in Q2, and 3.4 percent in Q3. This decline is mainly due to uncertain global economic environment especially in Europe, lower cost of transportation, and the continuous pressure on fuel rates.

When analyzing organic growth, it’s necessary to make certain assumptions 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, in terms of organic growth, the market has shrunk by 3.4 percent.  While some parties might argue with this specific percentage, it’s absolutely clear that the market is doing very poorly.

The scope of coverage includes non-asset based transportation, and warehousing services (called contract logistics in Europe) as follows:

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

Out of this report’s scope are revenues from asset-based transportation moves (truckload, less than truckload, parcel/express, rail, ocean, air, etc.).  The analysis is based on revenues reported by public companies on a quarterly basis that break out their revenues in the segments mentioned above.

If you are interested in the complete report, which analyses the growth of the industry in multiple segments, please contact Conrad Hanf (chanf@arcweb.com).  The companies included in the analysis include Agility, C.H. Robinson, CEVA Logistics, DHL Supply Chain and Global Forwarding, DSV, Expeditors International of Washington, Hyndai GLOVIS, JB Hunt, Kuehne + Nagel, Logwin, Panalpint, Ryder, UPS Supply Chain Solutions, and XPO Logistics.