Armstrong & Associates, Inc., a supply chain management market research and consulting firm, recently published “Slow Dance – 2012 3PL market analysis and 2013 predictions”, which revealed that U.S. third-‐party logistics (3PL) market revenues increased modestly to $141.8 billion in 2012 in a slow dance mirrored by the U.S. gross domestic product (GDP). Results outside the U.S. reflected a recessionary Europe and warm but not hot results in Asia.
The 3PL market compound annual growth rate (CAGR) from 1996 to 2012 fell 0.3 per cent to 10 per cent. With U.S. governmental “sequestration” spending cuts kicking in, it is unlikely that the U.S. economy and 3PL market results will break the trend in 2013. A temporary budget surplus has taken pressure off of politicians to find solutions for huge, long-‐term U.S. deficit challenges. As John Maynard Keynes turns in his grave, the U.S. economy will grow slowly until the next major crisis.
Domestic transportation management (DTM) led financial results for 3PL segments again in 2012. Gross revenues were up 9.2 per cent. At the same time, the cost of purchasing transportation, increased com-‐petition, and slackened demand are pressuring DTM gross margins and net revenues. As a result, net revenues increased by only 5.4 per cent. Overall gross margins were 14.6 per cent. In 2011 they were 15.2 per cent. 3PL earnings before interest and tax (EBITs) and net income margins remained strong. They were 33.2 per cent and 20.3 per cent of net revenue respectively.
The largest negative in 3PL segment results was international transportation management (ITM). The results in ITM reflect the global economic malaise. Gross revenues grew 0.4 per cent and net revenues were up 1 per cent. Profit margins held as ITM 3PLs controlled costs. EBITs were 12 per cent of net revenues. Net incomes were 7 per cent of net revenues. For Expeditors International and Kuehne + Nagel (including its non-‐vessel operating common carrier Blue Anchor), EBITs exceed 30 per cent of net revenue. Net incomes are also significantly higher. First quarter 2013 results for Expeditors were nearly identical to first quarter 2012 – a good indication of what 2013 results could look like. The complete report and other A&A market research reports can be found at: www.3plogistics.com/shopsite/index.html.