2016 State of Logistics: Third-party logistics

New value proposition needed

By ·

This year’s “State of Logistics” (SoL) report falls in line with research conducted by LM earlier this year. Researchers maintain that shippers, carriers and third-party logistics providers (3PLs) need to take a collaborative, problem-solving approach to service and cost as the industry moves toward bringing value-creating ideas to the table—not just capacity. 3PL analyst and advisory firm Armstrong & Associates observes that approximately 11% of U.S. logistics spend in 2015 was outsourced to third-party logistics providers. Armstrong also notes that the U.S. 3PL market grew by roughly 7.5% annually between 2009 and 2014, driven by an increase in the outsourcing of both core and non-core logistics management activities.

The industries with the greatest proportion of outsourced logistics operations over the time period were high tech, retail, and food and groceries. Logistics outsourcing is growing the fastest, however, in the e-commerce and healthcare sectors. And as the 3PL market grows, the competitive landscape is also changing, note the authors of the SoL report. The top providers are refining their market positioning to become one-stop 3PLs and targeting specific industries. In support of these goals, Armstrong reports that 2015 merger and acquisition spending reached nearly $18.9 billion, including 11 transactions worth more than $100 million last year.

The market has also seen an increase in shipper demand for visibility and control into all transportation management activities and assets in order to enable their optimization.

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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