Seeking Zen in a Post-Pandemic 3PL Market

MILWAUKEE, WISCONSIN, UNITED STATES, August 31, 2021 /EINPresswire.com/ — According to Armstrong & Associates, Inc. (A&A’s) newest report, “Seeking Zen: A Post-Pandemic 3PL Market – Latest Third-Party Logistics Market Results and Predictions for 2021 Including Estimates for 190 Countries” the volatile 2020 U.S. COVID-driven Third-Party Logistics (3PL) Market created growth opportunities for Third-Party Logistics Providers (3PLs) with strong carrier management, e-commerce, and air freight forwarding capabilities, while other 3PLs did not fare as well. After having a lackluster 2019 when we saw a year-over-year decline in transportation activity as import tariffs took hold, we awoke to a pandemic nightmare in March of 2020 with vast economic shutdowns. There was no time like the present for logistics expertise, and 3PL prevailed as an essential industry.

Leading all 3PL segments for revenue growth in 2020 was International Transportation Management (ITM) which consists of air and ocean freight forwarding, customs brokerage, and complementary value-added services. Air freight revenues swelled in 2020 with the pandemic and extraordinary demand for PPE. With commercial passenger aircraft making up approximately 40% of total air cargo capacity, the pandemic upended air freight forwarding, and rates surged albeit on lower overall volumes.

Overall, ITM realized a 19.2% gross revenue gain in 2020 expanding to $70 billion. While having a lower growth rate than overall gross revenue, due to a tight carrier capacity market, net revenue increased a healthy 11.4% to $24.6 billion.

The asset-heavy Dedicated Contract Carriage (DCC) 3PL segment had the second highest net revenue growth of the four 3PL segments with just 0.3% to $20 billion. Gross revenue declined 2%. The negative effect of COVID made 2020 a volatile and lower-volume year versus 2019 when DCC net revenues grew 12.1%.

The non-asset based Domestic Transportation Management (DTM) segment includes Freight Brokerage which is 83% of segment revenues and Managed Transportation which accounts for 17%. In 2020, 3PLs scrambled to find carrier capacity to meet shipper demand. Gross revenue increased 9.9% to $91.2 billion, but net revenue decreased 1.8% to $13.2 billion as volatility in motor carrier capacity quickly increased spot market rates compressing segment gross margins by 1.7%.

Rapid growth in e-commerce fulfillment could not offset the loss of business-to-business related activity as overall revenues for the Value-Added Warehousing and Distribution (VAWD) 3PL segment sagged in 2020 versus its 9% growth 2019. VAWD net revenues declined 1.1% to $35.7 billion.

Total 3PL segment net revenues (gross revenues less purchased transportation) grew 2.1% to $93.5 billion reflecting gross margin compression due to a volatile carrier sourcing market and transportation management 3PLs spending more to secure hard-to-find carrier capacity. The overall gross margin for all segments declined from 44% to 41%.

Global Third-Party Logistics (3PL) Market revenues reached $962 billion in 2020 resulting in a meager 0.1% increase over 2019 versus the U.S. 3PL Market which saw 8.8% year-over-year growth. As with the U.S., the ITM segment led the way due to COVID-19 response.

For more information on A&A’s newest report, “Seeking Zen: A Post-Pandemic 3PL Market – Latest Third-Party Logistics Market Results and Predictions for 2021 Including Estimates for 190 Countries” and other market research, please visit: http://www.3plogistics.com/product-category/guides-market-research-reports/.

ABOUT ARMSTRONG & ASSOCIATES, INC.
Armstrong & Associates, Inc. (A&A) was established in 1980 to meet the needs of a newly deregulated domestic transportation market. Since then, through its leading Third-Party Logistics (3PL) market research and history of helping companies outsource logistics functions, A&A has become an internationally recognized key resource for 3PL market information and consulting.

A&A’s mission is to have leading proprietary supply chain knowledge and market research not available anywhere else. As proof of our continued work in supporting our mission, A&A’s 3PL market research is frequently cited in media articles, publications, and securities filings by publicly traded 3PLs. In addition, A&A’s email newsletter currently has over 88,000 subscribers globally.

A&A’s market research complements its consulting activities by providing continually updated data for analysis. Based upon its unsurpassed knowledge of the 3PL market and the operations of leading 3PLs, A&A has provided strategic planning consulting services to over 30 3PLs, supported 24 closed investment transactions, and provided advice to numerous companies looking to benchmark existing 3PL operations or outsource logistics functions.

Source:
Armstrong & Associates, Inc.
10401 West Lincoln Avenue, Suite 207
Milwaukee, WI 53227 USA
Phone: +1-414-545-3838 Fax: +1-414-545-3906
Website: www.3PLogistics.com

Evan Armstrong
Armstrong & Associates, Inc.
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