3PL Market Witnesses Slight Recovery in Q4 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 2.8 percent in revenues in the fourth quarter of 2016.  This growth was primarily driven by acquisitions.  Organic growth (without the effect of acquisitions) of 3PL market grew by 0.7 percent in Q4 16 but declined by 5.3 percent in the FY16.

Categories of 3PLs

The scope of coverage includes the following non-asset-based transportation and warehousing ser-vices (called contract logistics in Europe):

  • Non-asset-based domestic transportation services (broker-age/domestic freight forwarding and managed transportation services)
  • Non-asset-based international transportation services (freight for-warding, 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 is revenue 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.  If asset-based moves and non-asset-based moves are reported in the same category but more than half of revenues come from asset-based moves, they are excluded.  If asset-based moves and non-asset-based moves are reported in the same category but more than half of revenues come from non-asset-based moves, they are included.

When analyzing organic growth, it’s necessary to make certain assumptions (explained in the column titled “Impact of Acquisition”) with which all par-ties 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 saw a growth of 0.7 percent in Q4 2016.  While some parties might argue with this specific percentage, it’s absolutely clear that the market was nearly stable in Q4 compared with the same period last year.

Domestic Transportation Services

This segment includes revenues from brokerage/domestic freight forwarding and managed transportation services.  The segment experienced a year-over-year increase of 8.7 percent during the fourth quarter and a 3.1 percent increase during the year.  The domestic transportation services segment accounts for 18 percent of the total considered revenues for 3PLs during the quarter and 17.8 percent during the year.

International Transportation Services

This segment covers revenues from international freight forwarding and custom services.  The segment witnessed a year-over-year increase of 2.3 percent during the fourth quarter and 3.3 percent increase during the year.  Non-asset-based international segment accounted for 53.4 percent of the total considered revenues for 3PLs during the quarter and 53.2 percent during the year.

Warehousing or Contract Logistics Services

This segment consists of revenues from warehousing and other value-added services, such as packaging, light assembly, and sequencing goods for a factory line.  The segment witnessed a year-over-year growth of 0.4 percent for the quarter and an increase of 2.8 percent for the year.  Contract logistics or warehousing services is the second largest market segment and accounts for 28.7 percent of the total considered revenues for 3PLs during the quarter and 28.9 percent during the year.

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, Hitachi, Hyndai GLOVIS, JB Hunt, Kuehne + Nagel, Logwin, Panalpina, Ryder, UPS Supply Chain Solutions, and XPO Logistics.