Top 50 3PLs: Will mergers and acquisitions alter the third party logistics landscape?

A flurry of major service provider deals captured mainstream headlines in recent months, but the consequence of this activity has yet to be measured by domestic and international shippers. Meanwhile, the EU flounders, Asia remains strong, and emerging nations may represent the next great opportunity for the major 3PL players.

By Patrick Burnson · June 1, 2012

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Modest growth forecast
Principals at Armstrong & Associates maintain that growth in the sector will be sustained, but sluggish. “After surveying our 3PL tracking group and seeing the final 2011 results, our initial estimate of 12.9 percent growth in the international transportation management [ITM] segment has been revised down,” says consultancy president Evan Armstrong. “With the European economy in decline and Asia cooling, ocean freight revenues expanded slightly, but could barely counteract the decline in airfreight revenues.”

Armstrong notes that this is more of a continuation of 2010, with domestic transportation management doing well and the value-added warehousing and distribution segment remaining steady. “Beyond that, dedicated contract carriage, which is the most mature of the 3PL market segments, should be able to grow 4 percent as providers keep a lid on capacity and manage fleet asset additions.”

At the same time, Armstrong expects ITM net revenues to grow 3 percent in 2012. Domestic transportation management should continue to lead the way, with approximately 10 percent net revenue growth this year.

“It’s a good time to be an integrated 3PL with business in multiple 3PL segments,” says Armstrong. “Most large 3PLs have internal lead logistics providers [LLP] groups that tend to focus on process re-engineering, continuous improvement, and information technology deployment for improved ‘control tower’ supply chain management.”

Part of Armstrong’s forecast also suggests that most global 3PLs will conduct modal shifts away from airfreight and express modes to lower cost transportation alternatives to save money through the tepid economic recovery. “Tighter inbound transportation control and overall network optimization means that providers that can meet the required service standards will continue to be the 3PL leaders,” he adds.

This may explain why there was no change among the seven leading global 3PLs in this year’s ranking. Like 2011, DHL Supply Chain & Global Forwarding leveraged its extensive integrated global footprint. Armstrong says that Kuehne + Nagle is still the largest “pure” ocean freight forwarder with over 2.9 million twenty-foot containers (TEUs) managed in 2011.

“C.H. Robinson Worldwide continues to expand globally and has added operations in Mumbai and Shanghai,” says Armstrong. “While still growing, one must remember that only 8 percent of Robinson’s revenues are derived outside of the United States.”

Advancing companies include Norbert Dentressangle, which is continuing to expand beyond Europe, and Toll Holdings, which has expanded its Southeast Asia operations and overall global network. Armstrong says that Agility has had the most dramatic decline, dropping from number 16 to number 21 mainly due to past legal complications with U.S. government clients.

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About the Author

Patrick Burnson
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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