Subscribe to our free, weekly email newsletter!


TIA report paints a bright picture for 3PL sector

By Jeff Berman, Group News Editor
September 20, 2010

The most recent results from the Transportation Intermediary Association’s (TIA) 3PL Market Report indicate that the third-party logistics sector is regaining its financial footing following the depths of the recession.

The report first came out in April 2009 and 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 43 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. Participating TIA member companies are broken up into the following categories for comparison to avoid anti-trust issues, according to the TIA. The categories are: under $500,000 in gross billing; $500,000 to $1 million in gross billing; $1 million to $3 million in gross billing; $3 million to $10 million in gross billing, and more than $10 million in gross billing.

According to the report, total dollars billed for all study participants was up 13 percent compared to the first quarter of 2010, with all five categories showing growth in total dollars billed.

And with billings up, an increase in volume took place as well, according to the TIA, with total loads shipped in the second quarter up by at least five percent in the second quarter compared to the first quarter for every category with the exception of the $1 to $3 million grouping. The report also noted that average profit margins for all participating 3PLs were at about 15 percent compared to 16 percent in the first quarter even though average revenues and volumes were up across the board, according to TIA officials.

“The fact that every single category saw growth is a big positive,” said Joe Hannah, Ph.D., chair and professor of supply chain management at Auburn and one of the report’s authors. “I am little bit cautious with this data, though, because the second quarter typically outpaces the first quarter and there is more activity in general because of the seasonality of a lot of items.”

Even with the seasonality component at play, Hannah admitted that the overall data points to a much stronger second quarter on an annual basis, with positive indications and a cause for cautious optimism warranted.

According to the report, all 3PL categories, except for the $10 million and above one, generated 80 percent or more of total billings from truckload activity. 3PL’s above $10 million attributed truckload activity accounting for about two-thirds of total billings. Some of these companies drive significant revenues from rail and intermodal services, and companies in this category tend to have more diverse service offerings said the report. The total number of truckload loadings for the quarter came in at roughly 865,000, ahead of about 800,000 in the first quarter.

Looking outside of truckload, rail represented 85 percent of non-truckload activity and rail shipments accounted for 80 percent of non-truckload revenue.

Another driver for a strong second quarter is related to inventory re-building as evidenced by strong import demand and careful inventory management planning by manufacturers and retailers.

“The scars from being stuck with too much inventory [in early 2009] are still pretty fresh,” said Hannah, “and we are seeing a lot more caution going forward with inventory restocking. There are some good indications the economy has stabilized and is starting to grow a little bit. It is likely more than seasonality and could be viewed as a cautious rebound.”

For more information on the TIA’s 3PL Market Report, go to http://www.tianet.org .

About the Author

Jeff Berman headshot
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. .(JavaScript must be enabled to view this email address).


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!

Recent Entries

In this webcast we'll explore how successful companies use strategies such as cross-client load consolidation, zone skipping, pooling, etc. to minimize freight cost. You’ll hear how transportation optimization is used to generate cost savings and where the ROI comes from.

Even with expected import cargo volume declines in the coming months, the Port Tracker report by the National Retail Federation (NRF) and maritime consultancy Hackett Associates expects volumes to be up for the first half of 2016.

USPS pointed to ongoing growth in its Shipping and Package Group, whose primary offerings are comprised of Priority Mail, Express Mail, Parcel Select and Parcel Return services, as the key driver for the quarterly revenue gains.

With a 2.3 cent decline to $2.008 per gallon, this week’s price stands as the lowest national average going back to the week of March 16, 2009, when it checked in at $2.017.

A recent Wall Street Journal report stated that third-party logistics and freight transportation services provider XPO Logistics shut down seven freight terminals that were part of the Con-way Inc. less-than-truckload (LTL) network, Con-way Freight. Con-way was acquired by XPO for $3 billion last year.

Article Topics

News · 3PL · TIA · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA