June 04, 2013
One of the key takeaways from this year’s list of Top 50 Global third-party logistics providers (3PLs) - compiled by market consultancy Armstrong & Associates - is that business forecasting is becoming increasingly important to shippers when choosing the provider that best fits their needs.
This notion becomes even more urgent when one considers that the 3PL market compound annual growth rate (CAGR) from 1996 to 2012 fell 0.3 percent to 10 percent.
Domestic transportation management (DTM) led financial results for 3PL segments again in 2012. Gross revenues were up 9.2%, and at the same time, the cost of purchasing transportation, increased competition, and slackened demand are pressuring DTM gross margins and net revenues.
As a result, net revenues increased by only 5.4 percent. Overall gross margins were 14.6 percent—in 2011 they were 15.2 percent. However, overall 3PL earnings before interest, tax, and net income margins remained strong, ringing in at 33.2 percent and 20.3 percent of net revenue respectively.
The key to sustaining that net income trend appears to be in the top provider’s ability to anticipate market trends, say analysts.
“Third party logistics providers are good at modeling transportation and distribution networks and identifying overall shifts in demand,” notes Evan Armstrong, the consultancy’s president. “But they also have the forecasting tools associated with integrated warehousing and transportation management.”
According to Armstrong, the leading players in the value-added area of forecasting are Menlo Worldwide, Ryder SCS, APL Logistics, Genco, UTi, and DB Schenker. “Based on our findings,” he says, “these companies can be leveraged by shippers to identify key inventory deployment locations and lower-cost transportation lanes.”
Armstrong & Associates Top 50 Global 3PLs
DHL Supply Chain & Global Forwarding
$22,141Kuehne + Nagel
DB Schenker Logistics
C.H. Robinson Worldwide
UPS Supply Chain Solutions
SDV (Bolloré Group)
Expeditors International of Washington
$3,593Hellmann Worldwide Logistics
Kintetsu World Express
Schneider Logistics & Dedicated
Ryder Supply Chain Solutions
Neovia Logistics Services
Menlo Worldwide Logistics
Nissin Corporation/Nissin Group
BLG Logistics Group
J.B. Hunt Dedicated Contract Services & Integrated Capacity Solutions
Total Quality Logistics
Transplace (View all Transplace Resources)
Werner Enterprises Dedicated & Logistics
*Revenues are company reported or Armstrong & Associates, Inc. estimates and have been converted to USD using the average exchange rate in order to make non-currency related growth comparisons.
Armstrong & Associates Top 30 U.S. Domestic 3PLs on the next page.
About the author
Patrick Burnson is executive editor for Logistics Management
and Supply Chain Management Review
. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson