According to Armstrong and Associates, 2018 will go down as a truly outstanding year for Third Party Logistics (3PL) in the US. Recent information reported by Armstrong and Associates, provides some very interesting insight into the 3PL industry’s expected growth and trends for 2019. Here are some of the report’s highlights:
- Two main growth drivers were an extraordinary buildup of inventories that shippers implemented in an effort to stave off the impact of the implementation of any expected new import tariffs, as well as a strong domestic economic expansion.
- A tight domestic carrier capacity drove up rates and allowed for increases in fuel surcharge revenues. There is also the impact of the tremendous growth in the e-commerce sector, (NO SURPRISE HERE!)
- Armstrong estimates that the US 3PL market net revenue, which it describes as gross revenues, less purchased transportation, grew at a rate of 12.1% to $86.4 billion. Overall gross revenues increased by 15.8% to a total of $213.5 billion for calendar year 2018. These results were so strong that the last time the industry saw this level of gross revenue growth was in 2010 when the 3PL market bounced back 19% from the “great recession.”
- The Domestic Transportation Management segment, including freight brokerage, managed transportation services as well as freight matching services led all other 3PL segments with increased gross revenues of 20.7% to $86.5 billion.
- The Domestic Transportation Management sector is also experiencing new competition from the likes of various digital freight brokers, such as Uber Freight, Convoy and Transfix. These new 3PL services have created a whole new world by digitizing the freight broker market by no longer relying on manual carrier sales/and back office processes.
- The International Transportation Management segment posted a 15.4% growth in 2018 totaling $61.9 billion.
- The Dedicated Contract Carriage Segment grew an estimated 15.8% to $17.8 billion, led by J.B. Hunt Dedicated Contract Carrier Services, (DCS).
- And finally, Value-added Warehousing and Distribution actually had the lowest rate of growth in 2018 of a mere 8% to $43.3 billion, (still not shabby growth numbers).
These statistics certainly represent a very vibrant 3PL business market sector and one that most industry experts believe will continue to grow in 2019 and beyond. There are however, the naysayers out there who believe our current economy is ripe for a new recession and may just be around the corner. And, if a recession does come to pass all of these business sectors could be giving back some of their record growth in the later part of 2019, but probably more likely in 2020.
The reality is however, without a crystal ball it’s anyone’s guess.
The complete report and other market research can be purchased at 3PLogistics.com/Product-Category/Guides-Market-Research-Reports.