Thursday, April 12, 2007

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

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

(Gross Net Net Net Income
Revenue) Revenue Revenue (Profit)
3PL Segment $ Billions $ Billions Growth Margin
Management 33.8 6.6 12.0% 11.1%
Management 42.4 15.9 17.7% 5.7%
Dedicated Contract
Carriage 11.0 10.9 8.0% 4.4%
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: 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

SOURCE Armstrong & Associates

No comments: