Warehouse News

Ongoing global revenue growth is in the cards for 3PLs, says Armstrong report

In 2016, the global third-party logistics market reached $802 billion and is on track to exceed $1.1 trillion in 2022.

Up, up, and away may be an appropriate way to describe the direction of the third-party logistics (3PL) market, based on data recently released by supply chain consultancy Armstrong & Associates.

This data, Armstrong said, is basically an extension of its annual 3PL market analysis that it released over the summer. And it is based on Armstrong’s developing of global logistics cost and 3PL revenue estimates that includes annual projections through fiscal year 2022 and represents seven major regions and 190 countries.

“In 2016, the global third-party logistics market reached $802 billion and is on track to exceed $1.1 trillion in 2022,” Armstrong said. “Global logistics costs were $8.2 trillion in 2016 and should surpass $11.1 trillion in 2022. Globally, the Asia Pacific region is the largest logistics market accounting for 39% of total global logistics costs and 38% of total global 3PL revenues.”

As for the years between now and fiscal year 2022, Armstrong’s data pointed to global 3PL cost estimates for fiscal years 2018 through 2021 coming in at $894 billion, $843 billion, $951 billion, $1.014 trillion, and $1.080 trillion, respectively.

This marks a steady upward growth pattern, unlike from fiscal year 2014 to fiscal year 2015, which saw a 5.5% decline from $834 million to $788 million, which Armstrong said was “primarily due to the U.S. dollar strengthening against other currencies and declining fuel costs.”

Not surprisingly, the highest 3PL revenues, on a regional basis, run in tandem with the world’s most powerful economies.

For 2016, Asia Pacific 3PL revenue led the pack at $305 billion followed by North America at $199.6 billion. Rounding out the top five were Greater China at $175.3 billion, Europe at $172.3 billion, and the United States at $166.8 billion.

Looking at some of these higher revenue regions, Armstrong noted European growth is a byproduct of it coming out of economic austerity driven recession, even though countries north of the Alps like Germany, Norway and the Netherlands are seeing higher financial growth than their geographical counterparts.

What’s more, Armstrong observed that European 3PLs-based on 2016 regional revenue-have penetrated around 25% of the total potential market, with the outsourcing of logistics still providing for growth over and above the over all economy.

“The best Europe-based 3PLs have made acquisitions to globalize their operations and participate in developing markets with higher rates of growth,” said Armstrong.

As for North America, Armstrong said 3PLs are benefitting from an improving U.S. economy with increasing manufacturing levels, the nearshoring of some manufacturing to Mexico, and newly addressable oil and gas operations in Canada and the U.S.

“Consumers in the U.S. bounced back from the great recession of 2009 and started to spend more especially on large ticket items,” explained Armstrong. “All of these factors are driving an improved 3PL market.”

Along with continued logistics outsourcing, the ongoing impact of e-commerce on the global 3PL market cannot be understated nor overlooked, something that is made very clear in the report.

“3PL revenues from e-commerce activity are growing faster than the overall 3PL market,” said Armstrong. “Of the $802.2 billion of total 3PL revenues globally, e-commerce related revenues are expected to grow from $40.6 billion in 2016 to $72.8 billion in 2020, making up 5.1% and 7.2% of total 3PL revenues, respectively. E-commerce 3PL business is generating a compound annual growth rate of 15.7% versus overall 3PL market growth of 6.0% for the same period.” 

E-commerce 3PL revenue is seeing the greatest traction in Asia, driven by increased consumer spending and cross-border purchasing, with Asia-Pacific e-commerce customers spending $22 billion on 3PL services in 2016. That number is expected to jump to $40.2 billion by 2020 based on a compound annual growth rate (CAGR) of 16.4%. China paces e-commerce growth in the Asia-Pacific at $17 billion, with an estimated annual CAGR of 16.3% through 2020.

The United States is also seeing the fruits of increased e-commerce activity, even with Amazon’s market share. Armstrong said U.S. e-commerce customers spent $8.7 billion with 3PLs in 2016, with revenues pegged to increase at a 19.1% CAGR through 2020 and hit $17.6 billion by then, with e-commerce expected to account for 8.5% of the U.S. 3PL market by 2020, which is 3.3% ahead of 2016.


Article Topics
Armstrong & Associates   All topics


Comments
You must be logged in to post a comment. Login.

About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
 
Latest Warehouse News
Five Keys to “Click and Collect” Order Fulfillment
To meet consumer demand for more convenient delivery options, many retailers have adopted the buy online and pick-up-in-store (BOPIS, or "click-and-collect") order fulfillment model.

5 Ways to Assess Your Warehouse Technology Needs
When looking to leverage new technology, each warehouse must assess their business and determine the solutions that offer not only best practices that are tried and true for today’s customers, but also…

Material Handling Tips For Maximizing Warehouse Space
Warehouse storage space is expensive, so it makes sense to make the most of your warehouse storage capacity in order to reduce carrying costs and increase material handling efficiency.

Swisslog Optimizes Efficiency at the North Pole
Swisslog automation and software is making Santa's job easy...


 

24|7 Pro Team

The 24|7 Team is your direct pipeline to solutions for your business challenges. It's your opportunity to have supply chain and logistics experts look at your specific challenges and needs, and give you free, no-obligation advice, solutions, and information.

The 24|7 Team will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

1
  Choose a topic for your RFP

Transportation RFP/RFI

The Transportation RFP is your direct pipeline to solutions for your transportation challenges. It's your opportunity to have logistics experts look at your specific transportation challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect software or system can be an indomitable challenge. Using this transportation/TMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your Request for Proposal list.

Warehouse/DC Management RFP/RFI

The Warehouse Management Systems (WMS) RFP is your direct pipeline to solutions for your WMS challenges. It's your opportunity to have logistics experts look at your specific WMS challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request.

Choosing the perfect WMS solution can be an indomitable challenge. Using this WMS RFP will simplify the task of creating a database of likely partners, building your knowledge base, and preparing your WMS Request for Proposal list.

Supply Chain RFP/RFI

The Supply Chain RFP is your opportunity to have logistics experts look at your specific challenges and needs, and receive free, no-obligation advice, solutions, and information. It simplifies finding a pool of likely partners, building your knowledge base, and preparing your Request for Proposal list. The companies in the Logistics Planner have agreed to respond to your request for in-depth information and follow-up, and your request is totally confidential.

Software/Technology RFP/RFI

The Software/Technology is your direct pipeline to solutions for your logistics information technology challenges. It's your opportunity to have logistics experts look at your specific technology challenges and needs, and give you free, no-obligation advice, solutions, and information specific to your request. Whether it's WMS, TMS, Mobile or Cloud, our pros can help.

The companies listed below have agreed to respond to your request for in-depth information and follow-up. Your request is totally confidential.

Executive Education RFI

The Logistics and Supply Chain Education RFI can help you identify the schools, coursework, continuing education, distance learning and certification opportunities available from leading logistics educational institutions.

Upgrade and improve your logistics and supply chain skillsets. Whatever route you choose—advanced degree, executive education, certification or distance learning—the time and money you invest in your education today can pay off in continued career success tomorrow. Contact leading universities and professional institutions for the information you need to prepare for the future.

Third Party Logistics RFP/RFI

This 3PL Request for Proposal (RFP)/Request for Information (RFI) can help you find the 3PL and 4PL providers that can meet your specific 3PL service challenges and needs. The 3PL companies below will provide free, no-obligation third-party logistics advice, solutions, and information.

Ask your 3PL questions, you'll get answers. Simply complete the information, and detail your 3PL challenges. Then, check off the third-party logistics companies that you want to review your request.

1. Choose an RFI topic.
2. Enter your contact information and challenge.
3. Select companies and optional categories.
4. Submit.


2

Your Information



Your Challenge, Problem or Request *

3

Select Transportation Companies

  • Select All

  • 3Gtms
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Kuebix
  • Landstar
  • Legacy Supply Chain Svs.
  • One Network
  • Pitt Ohio
  • Purolator
  • Quintiq
  • SEKO Logistics
  • SMC3


Select Relevent Categories

  • Air Freight
  • Intermodal
  • Motor Freight
  • Ocean Freight
  • Rail Freight
  • TMS

Select Warehouse/DC Management Companies

  • Select All

  • 3PL Central
  • Apex Supply Chain Tech.
  • Honeywell Intelligrated
  • Kuebix
  • Legacy Supply Chain Svs.
  • Swisslog
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Auto ID & Data Capture
  • Automation
  • Conveyors & Sortation
  • Lift Trucks
  • Packaging & Labeling
  • Pallets & Containers
  • Shelving & Racking
  • WMS

Select Supply Chain Companies

  • Select All

  • 3Gtms
  • 3PL Central
  • Amber Road
  • Apex Supply Chain Tech.
  • APICS
  • BluJay Solutions
  • CSX Trans. Intermodal
  • Frontier Business
  • Kuebix
  • Legacy Supply Chain Svs.
  • Logility
  • One Network
  • Purolator
  • Quintiq
  • SMC3
  • Synchrono
  • TAKE Supply Chain
  • Westfalia Technologies
  • Zebra Technologies


Select Relevent Categories

  • Global Trade
  • Inventory Management
  • Risk Management
  • Sustainability

Select Software/Technology Companies

  • Select All

  • 3GTMS
  • 3PL Central
  • Apex Supply Chain Tech.
  • BluJay Solutions
  • Honeywell Intelligrated
  • Frontier Business
  • Kuebix
  • Logility
  • One Network
  • Quintiq
  • SMC3
  • Swisslog Logistics
  • Synchrono
  • TAKE Supply Chain
  • Zebra Technologies


Select Relevent Categories

  • ERP
  • Sales & Operations
  • Sourcing/Procurement
  • Optimization
  • Transportation Mgmt
  • Warehouse Mgmt

Select Executive Education Choices

  • Select All

  • Graduate Courses
  • Online/Distance
  • Executive Education
  • Certifications
  • Undergraduate
  • Seminars
  • Associations
  • Conferences
  • Tradeshows


Select Third Party Logistics Companies

  • Select All

  • 3PL Central
  • Landstar
  • Legacy Supply Chain Svs.
  • Purolator
  • SEKO Logistics
  • Westfalia Technologies


4
 

24|7 Company Profiles