U.S. third-party logistics providers’ net revenue rose 5.9 percent in 2011, led by domestic transportation management and value-added warehousing and distribution, according to an analysis by Armstrong & Associates.
Domestic transportation is the smallest but fastest-growing 3PL segment. Its estimated net revenue, or gross margins, rose 12.2 percent last year to an estimated $6.3 billion.
Value-added warehousing and distribution increased 8.4 percent, to $26.6 billion in net revenue. 3PLs’ dedicated contract carriage services posted 4.7 percent growth to $10.9 billion.
Net revenue for 3PLs specializing in international transportation management rose by 2.1 percent, to $17.7 billion. The small increase contrasted with a 16 percent compounded annual growth rate over the previous 15 years.
The international transportation segment for 3PLs continues to be affected by Europe’s recession and slowing growth in Asia, said Richard Armstrong, chairman of Stoughton, Wis.-based Armstrong & Associates. He said he expects that trend to continue for the foreseeable future.
Armstrong expects the overall 3PL market to continue to expand at the rate of 2.5 to 4.5 times growth in GDP. He looks for non-asset-based domestic transportation management to lead the way, with dedicated contract carriage and value-added warehousing/distribution showing steady growth.
The market has taken notice, with private-equity investors pursuing acquisitions among the large non-asset-based 3PLs specializing in domestic transportation and freight brokerage, Armstrong said.