Top 50 3PLs: Seeing into the future of global logistics
Finding the right third party logistics provider (3PL) in today’s global marketplace involves looking beyond the provider’s “vision” statement, say industry experts. Yet, they also acknowledge that there’s still an element of prognostication involved once a short list of the Top 50 has been whittled down.
in the NewsState of Logistics 2016: Pursue mutual benefit B2B Sellers Prefer a Unified Approach for Ecommerce Report forecasts growth in automated truck loading systems B2B Industrial Packaging acquires Alpine Distribution’s packaging division Corrugated industry links rise in recycled content of boxes to advances papermaking technology More News
One of the key takeaways from this year’s list of Top 50 Global third-party logistics providers (3PLs)—compiled by market consultancy Armstrong & Associates—is that business forecasting is becoming increasingly important to shippers when choosing the provider that best fits their needs. This notion becomes even more urgent when one considers that the 3PL market compound annual growth rate (CAGR) from 1996 to 2012 fell 0.3 percent to 10 percent.
Domestic transportation management (DTM) led financial results for 3PL segments again in 2012. Gross revenues were up 9.2%, and at the same time, the cost of purchasing transportation, increased competition, and slackened demand are pressuring DTM gross margins and net revenues. As a result, net revenues increased by only 5.4 percent. Overall gross margins were 14.6 percent—in 2011 they were 15.2 percent. However, overall 3PL earnings before interest, tax, and net income margins remained strong, ringing in at 33.2 percent and 20.3 percent of net revenue respectively.
The key to sustaining that net income trend appears to be in the top provider’s ability to anticipate market trends, say analysts.
“Third party logistics providers are good at modeling transportation and distribution networks and identifying overall shifts in demand,” notes Evan Armstrong, the consultancy’s president. “But they also have the forecasting tools associated with integrated warehousing and transportation management.”
According to Armstrong, the leading players in the value-added area of forecasting are Menlo Worldwide, Ryder SCS, APL Logistics, Genco, UTi, and DB Schenker. “Based on our findings,” he says, “these companies can be leveraged by shippers to identify key inventory deployment locations and lower-cost transportation lanes.”
About the AuthorPatrick 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!
Megatrends in ocean freight Ocean Cargo Roundtable: What’s in store for 2017? View More From this Issue