Holding Steady: Top 20 3PL Warehouses 2016

Each issue, Modern explores life in the nation’s warehouses as we cover trends and solutions inside the four walls. To give us some perspective, each year we take a look at the square footage of top third-party logistics (3PL) warehouses and public refrigerated warehouses.

(Check out the 2016 Top 20 refrigerated warehouses here)

The public warehousing market continues to grow at a steady clip and is projected to add single-digit percentages at roughly twice the gross domestic product GDP in years to come.

These are among the findings of an annual ranking of the Top 20 3PL warehouses supplied to Modern by Armstrong & Associates, a consulting firm specializing in logistics outsourcing. This year, Dick Armstrong, chair of Armstrong & Associates, notes enhanced sophistication and capabilities among nearly all companies on the list.

“The quality of the information technology involved is significantly higher as they hone the ability to deliver things across the supply chain, and most can tell you where something is and how much of it they have,” he says. “Even five years ago, a lot of times the warehouse management system (WMS) was strictly used for the warehouse where it had been installed, and not everyone had this automatic capability to check inventories across all warehouses. Now if there’s a stock-out, they can simply check other warehouses pretty directly.”

Armstrong adds that all the listed companies have e-commerce business to some degree and all have lean logistics and process improvement capabilities. In addition to higher-quality WMS, many also have software to handle labor management. This is increasingly important when responding to peaks and managing the roughly one third of employees that are temporary workers. Salaries run between $10 and $15 per hour, Armstrong says, averaging $12 overall. “These companies have gotten better about flexing the workforce and retaining it,” he adds. “Normally, the better temps eventually become permanent employees.”

Labor management is one solution to the talent shortage, but each company is aggressively pursuing all challenges and opportunities.

“Whatever their ranking this year,” Armstrong says, “there’s no slippage in capability.”

The Top 10

DHL Supply Chain North America (Exel) retains its No. 1 spot on the list with 115 million square feet, a 5.5% increase despite methodological changes to reporting criteria.

In second place is newcomer XPO Logistics, which acquired Menlo Logistics in late 2015. Menlo ranked 14th in last year’s list, with 21 million square feet. XPO also acquired last year’s 3rd-place finisher Norbert Dentressangle, which in turn acquired Jacobson Companies in mid-2014. Dentressangle’s last independent report indicated 40 million square feet under management.

“Their big challenge is putting the pieces together,” says Armstrong of XPO’s acquisitions.

Square footage reported by Ryder Supply Chain Solutions grew nearly 13% since last year, enough to bump it from 5th to 3rd place with almost 40 million square feet.

Genco is in fourth place following its acquisition by FedEx in early 2015. Armstrong referred to the deal as a successful one, saying that FedEx is “leaving Genco alone from an organizational perspective, which is a good thing.” That said, FedEx continues to generate opportunities for Genco, Armstrong says, which is taking advantage of those opportunities and bringing a skill set to FedEx “they badly needed.”

In 5th place, French shipping company Geodis reflects the acquisition of OHL, which ranked 7th last year.

Americold now holds 6th place and remains the top-ranked cold chain specialist with 38 million square feet. This year’s list also includes cold storage provider Lineage Logistics, which joins the list at 9th place with 26 million square feet. Armstrong says the current CEO and COO of Lineage come from Con-Way, which is important because “as the company has grown and private equity investors have more to say, they have picked up some people who are pretty modern about their approaches to things.”

“Cold storage is mostly a sideline for most of these players,” Armstrong says. “It’s very spotty for some of them, who might have a cold box, usually very small, or some refrigerated capabilities, but when it comes to dealing with frozen commodities, the list is pretty short. Americold continues to lead the space.”

Kenco Logistic Services held at 31 million square feet, enough to claim the 7th spot on the list.

In 8th, NFI Logistics tied last year with DSC Logistics, which now sits just outside the Top 10 with 23 million square feet. NFI, meanwhile, added 4.5 million square feet, a nearly 20% increase to finish at 27.5 million.

Despite a small drop in space as a result of the new list’s focus on North American locations, DB Schenker rounds out the Top 10 with 23.7 million square feet.

Notable developments
Armstrong noted the late 2014 news of Goldman-Sachs Group’s acquisition of Neovia Logistics, which missed this year’s list after finishing No. 12 in 2015.

The 12th-place spot is now claimed by CEVA, which was previously a Top 10 finisher before the list’s restructuring. Penske’s 13th-place finish reflects the removal of facilities from its total following Armstrong’s elimination of several transportation or depot locations. The same is true for UPS Supply Chain Solutions at No. 14. Saddle Creek posted 7% gains to reach 15th place, up one spot from last year.

In late 2015, Denmark-based global 3PL DSV acquired UTi, which is listed as UTi Worldwide in 16th place. Kuehne + Nagel posted modest gains to retain 17th place, and is followed by Top 20 newcomers APL Logistics and Warehouse Services, each of which manages 14 million square feet.

A look inside the 3PL list

This year’s list reflects each company’s square footage located in North America, as opposed to space under management that is based in North America. This methodological change has reordered the rankings, and reduced the list’s combined total square footage by 3.3%, but Armstrong says the market continues to grow at 2.4%.

Modern’s Top 20 list is part of Armstrong & Associates’ Top 60 list, which includes 3,540 facilities with 763 million square feet, with the average company managing 59 warehouses averaging 215,456 square feet. The full 3PL listings reflect 9,000 U.S. commercial warehousing facilities with 1.9 billion square feet of space under management. As of this publication, Armstrong estimates the total U.S. warehousing market will be valued at $141 billion through 2015.