U.S. and Global Third-Party Logistics (3PL) Market Analysis Is Released

STOUGHTON, Wis., April 12 /PRNewswire/ — Third-party logistics gross revenues for the U.S. broke $110 billion for the first time in 2006. 3PL gross revenues hit $113.6 billion, a 9.5% increase. Net revenues were $53.1 billion. EBIT and net income margins in relation to net revenue were 8.6% and 5.4% respectively. Margins for the year were down slightly due to the fourth quarter economic slowdown.


As part of its just released report, Armstrong & Associates estimates the global third-party logistics market at $391 billion. European 3PL revenues are estimated at $139 billion.


For the U.S. market, International Transportation Management (ITM), which includes major components of freight forwarding and global supply chain management, had net revenue increases of 17.7%. Kuehne + Nagel, Expeditors, DHL Global and APL all had net income margins of 10% or greater compared to net revenue. ITM growth is primarily a reflection of continued economic expansion in China and the Asia Pacific markets.


Domestic Transportation Management (DTM), including freight brokerage, posted a 12% gain in net revenues (gross margin). Gross revenues (turnover) were $33.8 billion. BAX, BNSF, C.H. Robinson, Meridian IQ and NFI grew by more than 20%. Hub, Penske, Ryder and Werner grew by 10% or more. After-tax Net margin for DTM was 11.1%


DTM net revenue growth slipped from 18% in 2005 and net income margin dropped by 1%. We attribute these changes to the U.S. economic slowdown; they are temporary downturns and have no significant long term importance for key players in DTM. Despite the slowdown, C.H. Robinson still ended the year with net revenues of $1.1 billion and a net income margin of 24.7%. BNSF Logistics, Hub, NFI and Werner all had double digit net income margins.

       Table 1.  Revenues and Profitability by 3PL Segment — 2006

Turnover
(Gross Net Net Net Income
Revenue) Revenue Revenue (Profit)
3PL Segment $ Billions $ Billions Growth Margin
Domestic
Transportation
Management 33.8 6.6 12.0% 11.1%
International
Transportation
Management 42.4 15.9 17.7% 5.7%
Dedicated Contract
Carriage 11.0 10.9 8.0% 4.4%
Value-Added
Warehouse/Distribution 23.4 19.7 9.7% 3.9%
Total (1) 110.6 53.1 11.9% 5.4%

(1) Total turnover (gross revenue) for the 3PL industry in the U.S. is
estimated at $113.6 billion; $3 billion is included for the contract
logistics software segment.


The complete report can be obtained online at: http://www.3plogistics.com/shopsite/index.html. Armstrong & Associates’ Extended Information Service subscribers will receive the report this week.


About Armstrong & Associates: Armstrong & Associates, Inc. is a supply chain management consulting firm specializing in market research, mergers and acquisitions and outsourcing. Armstrong & Associates publishes Who’s Who In Logistics? Armstrong’s Guide to Global Supply Chain Management. Recent research papers include An Overview of Warehousing in North America — 2007 Market Size, Major 3PLs, Benchmarking Prices and Practices and Brand Recognition, RFP Activity and Expected Profit Margins for 3PLs — 2007. In addition, Armstrong & Associates maintains databases of warehousemen, freight forwarders and third-party logistics and distributing companies.