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Mergers, Acquisitions Dominate 3PL Market

Big mergers and acquisitions deals changed the third-party logistics market in 2016, with XPO Logistics leading the way with $100 million worth of deals.

by Staff
June 15, 2016
Mergers, Acquisitions Dominate 3PL Market

 

2 min to read


Big mergers and acquisitions deals changed the third-party logistics market in 2015, with XPO Logistics leading the way with $100 million worth of deals, according to a new report by Armstrong and Associates.

The XPO Logistics purchases of Con-way and Norbert Dentressangle helped make 2015 the largest 3PL mergers and acquisitions year since A&A began tracking the market in 1999. The resulting mergers and acquisitions operations integrations have increased concentration on efficiency and profitability with an emphasis on quality and lean process improvement initiatives.

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Amazon also had a significant impact on the 3PL market last year with the company’s growth in its fulfillment center operations. If all of Amazon’s warehouses, totaling 100.6 million square feet of space, were counted as 3PL value-added warehousing and distribution (VAWD) space, it would be the third largest global VAWD 3PL behind DHL and XPO Logistics, according to A&A.

Amazon is also growing its internal freight forwarding and domestic transportation management skills, and A&A says there may be a day when the company goes to market as an integrated 3PL. In a recent 10-K filing, the company has already described itself as a transportation service provider.

The report also indicated that 3PL net revenues grew 4.5% in 2015 to $71.9 billion. Overall gross revenues had a muted 2.2% increase because of reduced fuel prices in 2015 compared with 2014 and the resulting reduction in fuel surcharge revenue. The overall U.S. market expanded to $161.2 billion.

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For 2015, the domestic transportation management 3PL segment leads the way with net revenue growth of 12.4%. DTM is the modern and sophisticated offspring of freight brokerage, according to A&A.

International transportation management rebounded with 4.8% net revenue growth. Dedicated contract carriage net revenue saw muted growth of 4% due to ample carrier capacity in the market. While many 3PL warehouses were full in 2014 and 2015, pricing pressure has dominated the competitive landscape. Value-added warehousing and distribution had a meager 2.2% increase in net revenue for the year.

Armstrong & Associates was established in 1980 to meet the needs of a newly deregulated domestic transportation market. A&A provides 3PLmarket research, helps companies outsource logistics functions and functions as a resource for 3PL market information and consulting. For more information from A&A, click here.

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