Mixed metrics are intact in TIA Q3 Benchmarking Report

Mixed metrics were a recurring theme in the most recent edition of the “Third Quarter 2016 3PL Benchmarking Report that was recently issued by the Transportation Intermediaries Association (TIA).

This is the 30th edition of this report, which is based on monthly data from TIA member companies who submit real operating data and respond to questions on business conditions impacting the 3PL sector. Types of questions that the member companies’ answers include: number of shipments by mode, total billing, and gross margins. Other data collected are customer-based forecasts to offer up expectations of near-term business volume.

Total third quarter invoice revenue for all TIA member study participants—at around $2.19 billion—was down 11 percent annually, and total shipments—at 1,272,945—decreased 4.3 percent. The average invoice per shipment of $1,722 fell 7.4 percent, with profit margin percentage up 90 basis points to 15.8 percent.

Key third quarter metrics by mode included: 
- Truckload: shipments down 6.7 percent annually at 851,173, with invoice amount per load down 7.6 percent at $1,436, profit margin per load down 3.8 percent at $229, and profit margin percentage up 70 basis points at 16.0 percent; 
-Less-than-truckload: shipments down 0.3 percent annually at 121,989, invoice amount per load down 5.9 percent at $389, profit margin per load down 5.6 percent at $72, and profit margin percentage down 10 basis points at 18.6 percent; and
-Intermodal: shipments—at 265,563—were up 3.6 percent annually, with invoice amount per load down 9.8 percent at $2,180, and profit margin percentage down 60 basis points at 9.4 percent

While annual comparisons largely showed declines, things were better sequentially, according to TIA data.  Total brokered freight shipments were down 0.9 percent from the second quarter to the third quarter, revenue was up 3.3 percent, invoice amount per shipment rose 4.2 percent, and profit margin dipped 20 basis points.

Mark Christos, a member of the TIA Board of Directors, Chair of the TIA 3PL Market Report and vice president at Matson Logistics, observed that the annual and sequential data readings read, in some ways, as very different stories, when looking at the subtle differences between 2016 and how it looked compared to 2015.

“In general, 2016 has been fairly stable and relatively consistent but when compared to 2015, in general, it has been a slowdown in terms of volume and activity, with fuel coming into play, as it impacts invoice amount per shipment in really all the modes and to a greater amount with truckload,” he said. “We typically hear that there is plentiful capacity, and freight demand is soft compared to prior years. 2016 has been soft all year, which is sort of why it looks normalized compared to 2015.”

There are two factors for the differences between 2015 and 2016, said Christos, with one being soft demand and the other being available capacity in the marketplaces having and effect on the current levels of volume and throughput, with it looking stable sequentially and with more variation annually.

“Truckload has continued to soften as a more accelerated rate than intermodal and LTL and is expressed with the downward decline in truckload accelerating in the third quarter, while intermodal had a bit more for annual gains and could be the beneficiary of that,” he said. “We know the railroads are offering more services and lanes but we don’t have the data to say what specifically shifted to intermodal, but it is safe to conclude some truckload volume did shift to intermodal, which is why intermodal is up nearly 4 percent (for shipments) and the highest volume quarter it has had in the last eight.”

Along with increasing services and lanes, Christos noted that the railroads are keenly focused on the 3PL-brokerage community and are actively advocating the value of intermodal, with most of these 3PLs typically having a strong truckload focus, and some natural modal shift occurring that is contributing to intermodal having a decent third quarter in this environment, with truckload struggling a bit. 

“On a macro level, freight is still soft, and there is still ample capacity out there,” said Christos.