Domestic 3PL market breaks the $100 billion barrier

Third-party logistics (3PL) U.S. revenues broke $100 billion for the first time in 2005, according to supply chain management consulting firm Armstrong & Associates. 3PL gross revenues hit $103.7 billion, a 16.1% increase. EBIT margins improved to 9.3%. The margin for after-tax income was 5.4%.

Domestic transportation management, including freight brokerage, leads 3PL segments with an 18.3% gain in net revenues (gross margin). Gross revenues (turnover) were $30.3 billion. C.H. Robinson, Landstar, Meridian IQ and Schneider Logistics all grew 30% or more. After-tax profitability for domestic transportation management exceeded 12%. C.H. Robinson’s net revenue was $880 million, while net income was $203 million.

Total turnover for the 3PL industry in the U.S. is estimated at $103.7 billion, which includes $3 billion for the logistics software segment.

Continued growth in global economic activity and increased supply chain management produced substantial increases in international transportation management, including freight forwarding. Gross revenue increased to $38.2 billion. Net revenue increased 13.6% to $14 billion. Industry leaders in this segment were Expeditors International, Kuehne + Nagel and UTi. All three companies had net profitabilities in interntional transportation management.

Tight trucking industry capacity made for another good year in asset-based domestic transportation management (or dedicated contract carriage). Growth of 10.2% was double-digit for the second straight year after several years of limited expansion. J.B. Hunt, Werner and Cardinal were again the leaders in this segment.

Value-added warehousing/distribution expanded to $22.3 billion with 9.5% growth. UTi Contract Logistics grew 37.5% and improved its net revenue margin to 7.9%. Cat Logistics grew 20.7% to $1.4 billion in net revenue with a net margin of 9.5%. After-tax profit margins in this segment improved to 4% as industry leaders were more inclined to cull unprofitable business.

www.3PLogistics.com

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