Report: ‘Big’ deals, companies dominate 3PL sector in 2015

Third party logistics market is now dominated by around 50 companies in post-industrial countries, according to a new report from supply chain management market research and consulting firm Armstrong & Associates, Inc.    “Big” deals and companies have dominated the third party logistics market in 2014 and the first half of 2015, according to a new report from supply chain management market research and consulting firm Armstrong & Associates, Inc.
   The report, “Big Deal – 2014 3PL Results and 2015 Estimates,” cites the January 2014 acquisition of value-added warehousing and distribution provider GENCO by FedEx for $2 billion as one of several high-profile mergers and acquisitions in the 3PL sector over the past year and a half.
   Other examples include Norbert Dentressangle’s $750 million purchase of U.S.-based Jacobson Companies in August 2014, and ND’s subsequent sale to the “voracious” roll-up XPO Logistics for $3.5 billion.
   “Along with the U.S. and Europe, Asia has seen significant large deal volume making 2015 potentially the largest year for $100 million plus deals,” Armstrong & Associates said in a statement.
   “These acquisitions are reflective of a third-party logistics (3PL) sector that is now dominated by around 50 companies based in post-industrial countries. These third-party logistics providers have scale based on geographical coverage, IT and processes that create threshold levels which bar smaller rivals from overtaking them by organic growth alone.”
   According to the report, the global 3PL market expanded to $750.7 billion in 2014, and the U.S. 3PL market grew 7.4 percent to $157.2 billion. Non-asset based domestic transportation management (DTM) and dedicated contract carriage (DCC) were U.S. segments that saw double digit growth, increasing net revenues 20.5 percent and 10.4 percent, respectively.
   “DTM is the modern and sophisticated offspring of freight brokerage,” said A&A. “DCC provides dedicated truck capacity in a market often dominated by tractor shortages which are driven by a lack of drivers. DCC is a primary protection mechanism for shippers when demand outpaces supply.”
   The complete report and other Armstrong & Associates market research can be found here.
   Armstrong & Associates, Inc. specializes in strategic planning, logistics outsourcing, competitive benchmarking, mergers and acquisitions, 3PL service/cost benchmarking, and supply chain systems evaluation and selection.