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TIA survey says: 3PLs’ revenue up over 10% quarter-over-quarter

Transportation Intermediaries Association reports solid Q3 numbers

Photo: Jim Allen/FreightWaves

The Transportation Intermediaries Association’s third-quarter report paints a picture of a 3PL industry that had a strong three months, whether it’s a comparison to the second quarter of this year or the corresponding quarter of 2020. 

Total shipments for the participants surveyed by TIA across all modes — truckload, LTL and intermodal — were up 6.8% in the third quarter compared to that of the second. Total revenue was up 10.3%, compared to the second quarter, and the size of the invoice per shipment rose 3.3%, increasing to $2,419 from $2,341. 

Gross margin for the entire range of the 3PL industry surveyed by the TIA rose to 13.4% from 12.8% in the second quarter.  

The TIA report also breaks down its data along the lines of the size of the survey participants. It saw a significant shift between the second quarter and the third quarter for the smallest of the surveyed 3PLs, those with annual revenue less than $16 million. 

“Problems attracting capacity have hurt the most among the smallest brokers,” the TIA said in its report. “They have responded by concentrating on the most attractive loads.”

For 3PLs in that smallest category, shipments in the third quarter were down 10.3% from the second quarter. But the size of the average invoice rose 19.5%, and the total revenue was up 7.2%. Margins, however, were a small 1.2%. 

By contrast, the margin for the 3PLs in the middle range — between $16 million and $100 million — came in at 9.4% on shipment volume that was up just 2.6%. Revenue climbed 7.1% and the average invoice amount rose 4.5%.

The biggest companies, those with revenue of more than $100 million, saw their average invoice amount actually decline 0.5% from the second quarter. Total shipments rose 7.5% and revenue was up 10.7%. But with a gross margin of 4.3%, the larger companies had the lowest of the three categories surveyed by TIA. 

What is particularly striking about the margin data is how red ink turned black between the second and third quarters. In the TIA’s second-quarter report, the margin for the middle sector of 3PLs was reported as a negative 4.4%. For the companies with revenue above $100 million, it was a negative 9.7%. The smallest companies had a positive margin of 6.9% in the second quarter. 

By contrast, in the third quarter, the smallest companies had the tightest margins and the margins for the other two categories were solidly positive. 

There was a significant divergence during the quarter among modes of transportation. Truckload brokered freight had a strong quarter, with total shipments rising 9.5% and the invoice per load climbing 5% to $2,410. The gross margin in truckload was 13.7%, up 90 basis points from the second quarter.   

During the quarter, LTL shipments brokered by 3PLs declined 2.5% from the second quarter of last year, to 130,886. However, the invoice per load was up 7.5% to $465 and the gross margin per load rose 13.5% to $97. The gross margin rose to 20.9%, an increase of 110 basis points. 

Intermodal freight handled by 3PLs clearly struggled. Total shipments were down 1.3%, the invoice amount per load was up just 1.2% to $2,685, and the gross margin was flat at 8.8%.

While many economist statistics have been mostly ignoring comparisons to corresponding periods of 2020 because of the pandemic, comparisons in trucking by now are against a third quarter of 2020, when a strong freight market was in full swing. The FreightWaves Outbound Tender Rejection Index for the third quarter of last year climbed steadily through the quarter, peaking at 26.88. By comparison, the OTRI for the third quarter of this year started at less than that number and closed out the quarter at 21.78.

Outbound Tender Rejection Index for the third quarter of 2020

Given that the third quarter of 2020 was relatively strong, the performance of the 3PL industry in 2021’s third quarter was notable in comparison. Total shipments in this year’s third quarter were up 10.6% from last year; total revenue was up 36.1% and the gross margin rose 130 basis points. The invoice amount per shipment climbed 23% from last year. 

Outbound Tender Rejection Index for the third quarter of 2021

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.