3PL revenues see annual gain in first quarter, according to TIA report

As a whole, market conditions in the third-party logistics (3PL) sector appear to be holding up well, despite the uneven nature of the economy, according to the 1st Quarter 2012 TIA 3PL Market Report by the Transportation Intermediaries Association (TIA).

TIA officials said this is the 18th edition of this report, which was initially released in April 2009. It focuses on 3PL industry trends and practices, with an objective to provide a representative understanding of what is happening in the 3PL industry.

Data for the report is based on confidential feedback from 33 TIA member companies, whom answer questions on various topics, including: 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 revenue in the first quarter for all TIA member study participants—at roughly $2.27 billion—was up 3.0 percent compared to the first quarter of 2012, and total shipments—at 1,307,062 saw a 3.2 percent annual increase. First quarter invoice amount per shipment—at $1,739—dipped 0.2 percent annually, and profit margin—at 13.6 percent—was off by 0.7 percent.

According to the report, nearly 98 percent of 3PL revenue cited came from truckload, intermodal, or less-than-truckload at 72 percent, 18 percent, and 8 percent, respectively, with each of these modes seeing annual gains in shipments.

Truckload shipments were up 3.1 percent annually, and LTL shipments were up 2.6 percent, with intermodal was up 2.0 percent. Revenues for truckload, LTL, and intermodal were up 2.4 percent, 6.5 percent, and 4.0 percent, respectively.

Mark Christos, a member of the TIA Board of Directors, Chair of the TIA 3PL Market Report and vice president at Matson Logistics, said in an interview that one of the biggest takeaways of the report was that there was similar shipment growth in each of these three primary modes that the participating 3PLs offer to their shipper customers.

“In the past, that has seen some volatility, due at times to one certain mode being down” he said. “But there was similar growth among the three this time, which is encouraging.”

While that across the board shipment growth could portend economic consistency, Christos noted that specifically within LTL and intermodal 3PLs are focusing on expanding those service offerings, which resultant of their customers needs.

What’s more, he said this growth is likely due to a combination of 3PLs leveraging these modes through brokerage services and also industry-specific services they are providing for shippers.

“It is hard to speculate what is going on inside each 3PL’s organization in terms of what they are doing,” he said. “They are trying to offer more services to customers and going into the truckload, LTL, and intermodal carrier communities and finding carriers that support 3PLs to expand with those modes.”

The report said that total fuel expenses for the first quarter of 2013 increased 1.5 percent annually. Christos said that this increase has some effect on the findings but stressed that the competitive environment for 3PL’s has a much more influential impact in terms of the balance of capacity.

And the gains for invoice amount per load at 2.0 percent, 3.8 percent, and 2.0 percent for truckload, LTL, and, intermodal, respectively, speaks to tighter capacity and demand for those services, said Christos, noting that it appears that brokers have been successful in increasing pricing.

“What is happening is that pricing has not accelerated as fast as costs and that is why profit margin percentages have dropped a bit,” he noted.