TIA 3PL benchmarking report shows ongoing impact of 3PLs and brokerages on managing transportation

Fourth quarter 2014 brokered freight transportation shipments headed up while total revenue headed down, according to the “Fourth Quarter 2015 TIA 3PL Benchmarking Report,” which was released last week by the Transportation Intermediaries Association (TIA).

This is the 28th edition of this report, which is based on monthly data from TIA member companies who submit real operating data and respond to questions on business conditions impacting the 3PL sector. Types of questions that the member companies’ answers include: 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 fourth quarter invoice revenue for all TIA member study participants—at nearly $2.3 billion—was down 4.7 percent annually, and total shipments—at 1,312,834—headed up 8.5 percent. The average invoice per shipment of $1,723 fell 12.1 percent, with profit margin percentage up 200 basis points to 15.3 percent.

Key fourth quarter metrics by mode included:
- Truckload: shipments up 13.0 percent annually at 914,725, with invoice amount per load down 23.3 percent at $1,328, profit margin per load down 10 percent at $212, and profit margin percentage up 240 basis points at 16.0 percent;
-Less-than-truckload: shipments down 7.5 percent annually at 114,109, invoice amount per load down 0.1 percent at $416, profit margin per load up 9.3 percent at $81, and profit margin percentage up 160 basis points at 19.4 percent; and
-Intermodal: shipments—at 252,686—were up 3.0 percent annually, with invoice amount per load down 9.2 percent at $2,194, and profit margin percentage up 50 basis points at 9.8 percent

With fourth quarter 2015 volumes showing a strong annual gain, Mark Christos, a member of the TIA Board of Directors, Chair of the TIA 3PL Market Report and vice president at Matson Logistics, said those results were very encouraging that they reflect how shippers continue to be reliant on 3PLs and brokerages for services.

“That has been pretty consistent and that has been, perhaps, the most encouraging part in that this is not a flash in the pan type of thing, with shippers using 3PLs and brokerages,” he explained. “We have seen consistency, and the numbers reflect that. It is a very good sign and shows that 3PLs are providing good service, and carriers are also relying on 3PLs, with shippers, carriers, and 3PLs working well together. It feels very balanced in terms of this collaboration.”

On a sequential basis, the report found that shipments dropped 3.5 percent from the third quarter to the fourth quarter, revenue was down 10.7 percent, and invoice amount per shipment dropped 7.4 percent. Despite this trio of declines, profit margin percentage rose by 50 basis points to 15.3 percent.

Christos said the declines in shipments reflects a bit of a shift in how Peak Season activity in recent years has flattened out, with shippers moving freight earlier in the year than they did in the past and are also more sophisticated in their inventories and not overcompensating on that front as may have been the case in the past. 

“What this may indicate is that peak is not what it used to be, as well as that shippers are managing inventory differently, too,” he said.

When asked how things are progressing to date in the first quarter of 2016, Christos said that it is reasonable to expect things to come in at levels similar to the fourth quarter of 2015 in that shippers continue to rely on 3PLs for services and solutions, adding that the market is “calm” right now, with low fuel prices, capacity mostly stable, and the expectation of continued stability in the market.