2017 Top 50 3PLs: Investment and Consolidation Maintain Traction

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 · August 22, 2017

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. “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)

2016 Rank

Third-party Logistics Provider (3PL)

2016

Gross Logistics Revenue (USD Millions)

1

C.H. Robinson

13,144

2

XPO Logistics

8,638

3

UPS Supply Chain Solutions

6,793

4

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

6,181

5

Expeditors

6,098

6

Kuehne + Nagel (The Americas)

4,909

7

DHL Supply Chain North America

4,200

8

Burris Logistics

3,629

9

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

 


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

2016 Rank

Third-party Logistics Provider (3PL)

2016

Gross LogisticsRevenue (USD Millions)

1

DHL Supply Chain & Global Forwarding

26,105

2

Kuehne + Nagel

20,294

3

Nippon Express 16,976

4

DB Schenker

16,746

5

C.H. Robinson

13,144

6

DSV

10,073

7

XPO Logistics

8,638

8

Sinotrans

7,046

9

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

 

 

“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 CargoChief, and improved carrier management applications from industry stalwarts such as C.H. Robinson and Coyote Logistics,” he says.

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 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.

“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.

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.”

3PL: Cultural shift underway

Gartner analysts note that in the North American logistics market, most 3PLs started business by predominantly providing deep capabilities in one of three major logistics service roots: transportation services, warehousing and fulfillment services, or international freight forwarding and customs brokerage.

In fact, many providers today still predominantly offer services from just one of these main service lines or “root services.” Other providers, especially the larger ones, have expanded their offerings to include services from one or both of the other roots to have a more comprehensive offering.

The truckload brokerage business, for example, has been regarded as one of the stodgier business models in the logistics sector for some time. However, one firm that appears to be breaking out of that mode recently came to our attention when we learned of its “new age” culture and young leadership.

Nolan Transportation Group (NTG) is a company in this high-growth, fast-paced industry, providing third-party logistical services to over 8,000 customers across the United States, Canada and Mexico. Founded by Kevin Nolan in 2005 as a truckload brokerage with a box of cash and two employees, the company posted $278 million in revenue in 2016.

According to Nolan, it’s all about culture. He notes that the brokerage business is built on effective sales with a high volume of transactions happening every minute of every day. He’s built a successful sales organization by hiring recent graduates who believe in a high energy, collaborative work culture with ample opportunity for growth and promotion from within.

 

Logistics Management recently sat down with Nolan to gain his observations on the journey so far

Logistics Management (LM): Do you expect barriers to entry in the 3PL space to come down, or will it be tougher for new players to emerge?

Kevin Nolan: I believe the legal—bond, insurance and background—barriers to entry will stay consistent with current levels due to the new administration. However, the difficult barriers to compete with players of scale will grow as consolidation and investments continue. Examples of this are technology, hiring and paying vendors faster. 

LM: What advice can you give to new players breaking into this business?

Nolan: Balance…plain and simple. Being a 3PL means we’re in the middle of customer and vendor. Treat carriers and customers the same, because you can’t exist without either. It’s easy to gravitate to the customer side more, but the great 3PL sees both sides as equals. 

LM: How important is trust in the supply chain?

Nolan: For non-asset and asset light, trust is everything. Production, construction time lines, and end-user satisfaction are all based on delivery of product. If you don’t give correct information, the trickle down will ruin your reputation across their whole organization. In supply chain, surprises and breakdowns happen. You have to face these problems head on and communicate with all parties so they can plan accordingly as well.

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,” says Aimi. “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.”

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).

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.”

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


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]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
The Essential Guide to High Value, Low TCO WMS on the Fast Track
A warehouse could become your weakest link if you can’t execute with speed and accuracy. Your bottom line will be negatively impacted, so will your customer’s experience, and they are only one click away from buying from your competitors!
Download Today!
From the November 2017 Logistics Management Magazine Issue
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships into true, collaborative partnerships—and greatly strengthened its logistics and supply chain operations in the process.
34th Annual Quest for Quality Awards: 2017 Awards Dinner
Trucking Regulations: Washington U-Turns; States put hammer down
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Logistics Showcase: Rising to the same-day delivery challenge
Today’s delivery puzzles are very different than traditional DC to store or warehouse to DC puzzles. It’s not just the shorter time frame for delivery; the basic requirements are significantly different and more complex as well. In this session you'll learn how to address same day delivery challenges while also driving down costs and increasing customer satisfaction.
Register Today!
EDITORS' PICKS
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...
2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...

26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...