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Armstrong & Associates 2017 Top 50 U.S. and Global Third-Party Logistics Providers

The trend set over the past few years for mergers and acquisitions has hardly subsided, and a fresh injection of equity investment is transforming the marketplace, at the same time, shippers may expect to see 3PLs continue to purchase high-tech “solutions” and hire young professionals for implementation. By Patrick Burnson



Leading industry analysts maintain that the “mega-deals” witnessed over the past two years in the third-party logistics provider (3PL) sector have abated, but that certainly doesn’t mean that mergers and acquisitions (M&A) will fall out of the picture.

According to Evan Armstrong, president of the consultancy Armstrong & Associates, the 3PL market is also still ripe for equity investment.

Evan Armstrong, president of the consultancy Armstrong & Associates

“The 3PL market is still ripe for equity investment”Evan Armstrong, president, Armstrong & Associates

“The one outstanding example of this was when Aerospace, Transportation and Logistics [ATL Partners] bought a controlling share of Pilot Freight Services late last year,” he says.

“We also anticipate more M&A activity as 3PLs strive to expand geographic scale and provide integrated solution offerings.”

At the same time, says Armstrong, technological changes are having a dramatic impact on 3PL operations.

Companies such as project44, MacroPoint and others are driving improved transit status data and carrier capacity information from transportation providers to lead logistics companies.

“This year’s electric logging devices [ELD] mandate could also be a boon for shipment tracking and carrier capacity monitoring information,” says Armstrong.

“These types of advances allow for more process automation and increased operational efficiencies. They’re also increasing the quality of information available to customers of non-asset based transportation managers.”

Specifically, industries such as pharmaceuticals are increasing their digitalization needs, Armstrong’s research reveals, putting more emphasis on 3PLs to match these new technological demands.

To better ensure counterfeit products are not being sold within established sales channels, for example, the pharmaceuticals industry has a 2017 mandate to begin capturing product serial numbers across its supply chains.

“While this mandate has presented a challenge for many value-added warehousing 3PL operations, the ones we’ve met with are implementing the required operations changes and will meet the deadline,” says Armstrong.

Armstrong & Associates Top 50 U.S. 3PLs (April 2017)

Rank

Third-party Logistics Provider

Revenue

01

C.H. Robinson

13,144

02

XPO Logistics

8,638

03

UPS Supply Chain Solutions

6,793

04

J.B. Hunt (JBI, DCS & ICS)

6,181

05

Expeditors

6,098

06

Kuehne + Nagel (The Americas)

4,909

07

DHL Supply Chain North America

4,200

08

Burris Logistics

3,629

09

Hub Group

3,573

10

FedEx Trade Networks/SupplyChain Systems/GENCO

2,916

11

Ryder Supply Chain Solutions

2,659

12

DB Schenker (The Americas)

2,630

13

Coyote Logistics

2,360

14

Total Quality Logistics

2,321

15

CEVA Logistics (The Americas)

2,310

16

Panalpina (The Americas)

2,209

17

GEODIS (The Americas)

2,200

18

Schneider Logistics & Dedicated

2,125

19

DSV (The Americas)

1,798

20

Echo Global Logistics

1,716

21

Transportation Insight

1,710

22

Landstar

1,632

23

Transplace

1,620

24

Americold

1,555

25

Penske Logistics

1,500

26

Swift Transportation

1,431

27

NFI

1,250

28

Werner Enterprises Dedicated & Logistics

1,156

29

OIA Global

1,150

30

BDP International

1,090

31

APL Logistics Americas

1,055

32

Yusen Logistics (Americas)

1,044

33

Cardinal Logistics Management

1,006

34

Mode Transportation

949

35

SunteckTTS

900

36

syncreon

900

37

Lineage Logistics

900

38

Radial

800

39

TransGroup Global Logistics

800

40

Ruan

796

41

Nippon Express (The Americas)

790

42

Radiant Logistics

783

43

Damco (The Americas)

773

44

Neovia Logistics Services

763

45

Worldwide Express

750

46

ArcBest

677

47

Odyssey Logistics & Technology

650

48

Hellmann Worldwide Logistics (The Americas)

640

49

Kenco Logistic Services

626

50

Crane Worldwide Logistics

616

*Revenues are 2016 Gross Logistics Revenue (USD Millions) company reported or Armstrong & Associates, Inc. estimates and have been converted to US$ using the average annual exchange rate in order to make non-currency related growth comparisons. Copyright © 2017 Armstrong & Associates, Inc.

“Adapt or Die”
Logistics managers should also expect more 3PL consolidation, says Armstrong, pointing out that the global market is finding it exceedingly hard “to grow and scale” their networks organically.

“Acquisitions are required to leapfrog into and move upward within the Top 50 Global 3PL rankings,” says Armstrong. “This will continue to drive acquisitions like we have seen with DSV/UTi; XPO/Norbert Dentressangle, and Con-way with Geodis/OHL.”

Finally, the “adapt or die” imperative is still with us - and will be for the foreseeable future. To keep pace with omni-channel fulfillment and disruptive technologies like drones, 3D printing, Internet of Things, driverless vehicles, advanced robotics and wearable technology, it’s become painfully clear that 3PLs must constantly evolve to anticipate shipper demands.

“Fortunately, 3PLs are amazingly good at embracing change,” says Armstrong. “For example, we’ve been in operations utilizing PINC Solution’s drones for improved trailer yard management and Google glasses for warehouse picking. In addition, many applications, such as HubTran, are adapting machine learning to automate mundane freight bill payment tasks.”

In the meantime, Armstrong adds that 3D printing remains mired in its growth stage, but will continue to impact spare and service parts logistics operations. “However, we will see some type of human-overseen driverless vehicles hit the streets in the near term, and that could be especially beneficial in long-haul trucking operations.”

For Armstrong, the “Uberization” of trucking, or what he prefers to call “digital freight matching,” is still trying to find its legs. “However, we see that there’s significant progress being made to build improved real-time lane pricing information with companies such as Cargo Chief, and improved carrier management applications from industry stalwarts such as C.H. Robinson and Coyote Logistics,” he says.

Armstrong & Associates Top 50 Global 3PLs (April 2017)

Rank

Third-party Logistics Provider

Revenue

01

DHL Supply Chain & Global Forwarding

26,105

02

Kuehne + Nagel

20,294

03

Nippon Express 16,976

04

DB Schenker

16,746

05

C.H. Robinson

13,144

06

DSV

10,073

07

XPO Logistics

8,638

08

Sinotrans

7,046

09

GEODIS

6,830

10

UPS Supply Chain Solutions

6,793

11

CEVA Logistics

6,646

12

DACHSER 6,320

13

Hitachi Transport System

6,273

14

J.B. Hunt (JBI, DCS & ICS)

6,181

15

Expeditors

6,098

16

Toll Group

5,822

17

Panalpina

5,276

18

GEFCO

4,800

19

Bolloré Logistics

4,670

20

Kintetsu World Express

4,415

21

Yusen Logistics 4,169  

22

CJ Logistics

3,662

23

Burris Logistics

3,629

24

Agility

3,576

25

Hub Group

3,573

26

Hellmann Worldwide Logistics

3,443

27

IMPERIAL Logistics

3,352

28

Kerry Logistics

3,097

29

FedEx Trade Networks/SupplyChain Systems/GENCO

2,916

30

Ryder Supply Chain Solutions

2,659

31

Damco

2,500

32

Coyote Logistics

2,360

33

Total Quality Logistics

2,321

34

Sankyu

2,275

35

Schneider Logistics & Dedicated

2,125

36

Wincanton

1,720

37

Echo Global Logistics

1,716

38

Transportation Insight

1,710

39

APL Logistics

1,700

40

NNR Global Logistics

1,676

41

Mainfreight

1,640

42

Landstar 1,632

43

Transplace

1,620

44

Arvato

1,615

45

Americold

1,555

46

Fiege

1,550

47

Penske Logistics

1,500

48

Swift Transportation

1,431

49

Groupe CAT 1,328

50

NFI

1,250

*Revenues are 2016 Gross Logistics Revenue (USD Millions) company reported or Armstrong & Associates, Inc. estimates and have been converted to US$ using the average annual exchange rate in order to make non-currency related growth comparisons. Copyright © 2017 Armstrong & Associates, Inc.

Building a Portfolio
Many of the same observations are shared in Gartner’s annual “Magic Quadrant” report that was released last month at its supply chain conference in Phoenix.

The aim of the report is to provide a qualitative analysis of the market, its direction, maturity and its participants.

Greg Aimi, Gartner’s director of supply chain research

“The technology for 3PLs is just getting started”Greg Aimi, Gartner’s director of supply chain research

Greg Aimi, Gartner’s director of supply chain research and co-author of the “Magic Quadrant,” says that logistics managers are still pressing for consolidation in their 3PL portfolios, but not until providers can demonstrate that they have a truly global network.

“For this to happen,” says Aimi, “there must be a significant air and forwarding capability. Furthermore, 3PLs in the Asia Pacific region have yet to get started with western acquisitions - but I assume they will.” He adds that the report revealed that logistics managers are seeking out a high-degree of industry vertical expertise and specialized solutions, thereby driving a number of “tuck-in” M&As.

Read Gartner: Reviews for Third-Party Logistics, North America

“At the same time, the technology area for 3PLs is just getting started,” adds Aimi. “Let’s just forget that they were laggards when it came to unifying software systems to a single global platform in the past. Today, global operational transparency requirements and digital business drivers from their shipper customers are just going to increase the need for 3PLs to be top dogs when it comes to tech and innovation.”

New Journey
According to Aimi, this is the second iteration of the “Magic Quadrant” for North American 3PLs. Since the first report, Gartner made significant changes in the criteria definitions to better identify what makes a 3PL valuable to shippers seeking a North American regional provider.

Researchers note that the 3PL industry is “progressing along a maturity spectrum,” and trying hard to accommodate increasing shipper requirements through a combination of acquisition and organic growth strategies. However, not all are at the same place in their journey.

Gartner Magic Quadrant for Third-Party Logistics, North America

According to Gartner, there’s a transformation underway across today’s logistics industry, and perceptions of logistics service providers are changing. Relationships historically have been transactional, pragmatic and “physical activity oriented.”

Researchers note that 3PLs contributed by competing head-to-head in low-margin pricing wars and assumed the role of an interchangeable commodity. Consequently, the idea of leveraging specialized services seemed out-of-reach - until recently.

“As acceptance has grown for an increased amount of logistics outsourcing, companies are realizing that their performance is more dependent on not only their 3PL providers’ capabilities and execution, but also the manner in which they are managed.” 

“This mandates a transition in the roles and responsibilities of tomorrow’s logistics professional from being a master of logistics execution to a master of provider orchestration; and it puts an importance on the relationship between customer and 3PL,” says Aimi.

Shareholder Pressure
Interestingly, while the importance of resource integration is widely acknowledged, it’s not uncommon for logistics companies to continue to operate their systems separately, notes John Manners-Bell, chief executive of the London-based consultancy Transport Intelligence (Ti).

John Manners-Bell, chief executive of the London-based consultancy Transport Intelligence

“Outlook for consolidation activity in the industry remains positive”John Manners-Bell, chief executive Transport Intelligence

For example, Manners-Bell notes that companies like DHL, UPS, Deutsche Bahn and SNCF continue to operate despite the fact that there is little integration between many of their operations or functions. He maintains, however, that this is a less than optimal situation and has often led to a significant lag in the realization of costs savings or to the absence of expected cooperation.

“What’s more,” says Manners-Bell, “this lack of cooperation makes disposals likely if and when management comes under pressure from shareholders. While contract logistics companies typically integrate well, due to their asset-light nature, they still need to work on the daunting challenge of integrating the IT systems of the acquired company.”

Ti researchers say that the logistics industry maintains the consolidation trend, suggesting that acquisition remains the most favored route towards building global portfolios of integrated services. Their analysts agree with Armstrong and Gartner that the level of consolidation in 2017 is estimated to drop compared to 2016, both in terms of total deal value and volume.

“However, looking ahead, the outlook for consolidation activity in the industry remains positive,” says Manners-Bell.

“In addition to being driven by the search for growth through global presence and expertise in high-margin sectors, the continued growth of e-commerce will also drive M&A activity in the logistics industry.”

Examples of major contracts in early 2017


Source: Ti database of major contracts

John Langley, Jr., Ph.D., clinical professor of supply chain management at Penn State University

“Consider disruption and risk when choosing a global 3PL”John Langley, Jr., Ph.D.,
Penn State University

John Langley, Jr., Ph.D., clinical professor of supply chain management at Penn State University, agrees with many of the points raised by Armstrong, Gartner, and Ti, but concludes that logistics managers must be aware of other imperatives as well.

“Three factors will contribute to a greater reliance on technology as 3D or additive manufacturing comes into play,” says Langley.

“We have the same forecast for issues related to block chain, visibility, and optimization.”

At the same time, Langley cautions managers to consider disruption and risk when choosing a global 3PL, particularly if they’re operating in a politically unstable environment.

“Also of significance is that the ‘Amazon concept’ is resulting in a great need for providers of all types to reassess their existing capabilities and essentially transform their strategies and operations to better fit into the future needs of shippers,” says Langley.

“Logistics managers should be ever mindful that 3PLs are partners who are re-examining their supply chains and looking for useful ways to innovate and transform.”

View All Previous Top 50 U.S. & Global Third-Party Logistics Providers

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About the author
Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering 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. You can reach him directly at [email protected]







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