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FOR
IMMEDIATE RELEASE
Bigger and Better - 3PL Financial Results - 2004
STOUGHTON, WI March 23, 2005 – Third-party
logistics service providers (3PLs) had a great year in 2004. Total revenues
for the U.S. 3PL market rose to $89.4 billion, an increase of 16.3%. The
compound annual growth rate for U.S. third-party logistics is 14.2% since
1996. Leading the way was international transportation management (ITM), the
core component for global supply chain management. ITM increased 34% for
U.S. 3PLs. This significant growth reflected a large increase in global
product movements to the U.S., particularly from China. Tight vessel,
airfreight and truck capacities allowed for significant price increases.
Better net revenues and income margins followed suit.
Net revenues (gross margin) for U.S. market
international transportation supply chain managers (ITM) increased 17.2% for
2004 to $7.8 billion. After- tax profit margins improved to 7.1%, three
percentage points better than the previous year. These margins are similar
to 1998. If current trends continue for another year, the ITM segment will
return to its traditional after-tax net income margins of 9-10%. Leading the
way in ITM are Expeditors International, UTi, DHL Danzas and Kuehne & Nagel.
All of these companies have more than $1 billon in U.S. turnover. Their
after-tax income margins range from over 17% (Expeditors) to 9% (Kuehne &
Nagel).
Major growth and even better profitability
occurred in U.S. domestic transportation management (DTM). Leading the DTM
segment is C.H. Robinson, one of the most profitable companies in the U.S.
Robinson's net revenue increased to $661 million and its after-tax margin
was 20.8%. Turnover for DTM increased to $25 billion, a 16.8% increase.
After-tax net income margin improved to 11.6%. Other leaders in this segment
include Landstar and Schneider Logistics.
Table 1. Revenues and Profitability by Segment - 2004
Turnover
(Gross
Revenue) Net Revenue Net Revenue
3PL Segment ($ Billions) ($ Billions) Growth Net Income
Domestic Transportation
Management 25.0 3.3 15.8% 11.6%
International
Transportation
Management 31.5 7.8 17.2% 7.1%
Dedicated Contract
Carriage 8.7 8.5 12.3% 4.4%
Value Added Warehouse
Distribution 21.2 17.3 11.8% 2.8%
86.4(1) 36.9 13.5% 5.0%
(1) Total turnover for the 3PL industry in the U.S. is estimated at
$89.4 billion. $3 billion is included for the logistics software
segment.
Dedicated contract carriage (DCC) reached a
new high of $8.7 billion in 2004. The previous best year for DCC was 2000.
Revenues contracted for 2001 and 2002. Tight trucking capacity in the U.S.
helped this segment. Cardinal Logistics, NFI, Penske and Werner had
increases of over 20%. Schneider Dedicated and J.B. Hunt, the largest
players, had double-digit growth.
Value-added warehousing and distribution (VAWD)
increased by 7% in 2004. Since 1999 this segment more than doubled with a
compound annual growth rate of 15.3%. VAWD continued to grow solidly during
the economic malaise of 2001- 2002. The downside for VAWD is that its profit
margins, though they improved in 2004, are still meager compared to
transportation management. The net income after tax percentage improved from
2.7% last year, to 2.8%.
The complete report for 2004 can be
obtained by contacting Armstrong & Associates. Armstrong & Associates'
Extended Information Service subscribers will receive the report next week.
The report can be purchased over the phone
or online at:
http://www.3plogistics.com/shopsite/index.html.
About Armstrong & Associates:
Armstrong & Associates, Inc. is a supply
chain management consulting firm specializing in market research, mergers
and acquisitions, supply chain systems benchmarking, and logistics
outsourcing. Armstrong & Associates publishes Who’s Who in Logistics?.
Recent research papers include: "An Overview of Warehousing in North America
- Market Size, Major 3PLs, Benchmarking Prices and Practices" and "Trends
in Third-Party Logistics Provider Supply Chain Systems Purchasing,
Deployment and Use". In addition, Armstrong & Associates
maintains databases of warehousing companies, freight forwarders,
third-party logistics providers, and distributors.
For more information, contact: (800) 525-3915 or e-mail
armstrong@3PLogistics.com.
Armstrong & Associates, Inc.
100
Business Park Circle
Suite 202
Stoughton, WI 53589
Phone: (608) 873-8929 Fax: (608) 873-5509
Website:
www.3PLogistics.com
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