DC Velocity - September 2012

short takes

A holding company owned by Permira has successfully completed its acquisition of Intelligrated at a valuation in excess of $500 million. Intelligrated will continue to be led by its founders, Chris Cole and Jim McCarthy, who have maintained a significant stake in the company as part of the transaction. … Third-party logistics provider LeanCor Supply Chain Group is expanding its logistics services as well as its training and education program to the Chinese market. … Yard management system developer Exotrac has redesigned its website. The site is now easier to access with mobile devices, including Android devices, iPads, and iPhones. … Remcon Plastics Inc., a plastics manufacturer for material handling products, is the newest company to join the Reusable Packaging Association.

U.S. 3PL growth to moderate in 2012, consulting firm says

The U.S. third-party logistics (3PL) market will end 2012 with moderate growth over 2011 numbers, according to estimates from Armstrong & Associates Inc. Continued economic turmoil in Europe and an economic cooling in Asia have curtailed expansion for the traditionally high-flying industry, the Stoughton, Wis.-based consulting company said.

The U.S. 3PL market will report gross revenues—revenues before the cost of purchased transportation—of $142.2 billion, a 6.3-percent increase over 2011 figures, according to the Armstrong data. The gains are actually an improvement over 2011, when revenues rose 5. 3 percent from 2010’s totals.

The low point for the industry was recession-wracked 2009, when gross revenues came in at $107.1 billion and the industry reported the first year-over-year decline since Armstrong began tracking gross revenue data in 1996.

Since 1997, domestic 3PL revenue growth has averaged 10 percent a year, more than quadruple the average annualized growth rate of the U.S. gross domestic product (GDP). Even with 2012’s slower pace, the growth rate will likely be triple that of the U.S. GDP, which is projected to finish the year with an annual growth rate in the neighborhood of 2 percent.

Third-party logistics companies are
non-asset-based businesses, meaning
they do not own any transportation
assets. Instead they buy capacity on con-
veyances to move their customers’
goods. Many of them also manage and
operate warehouses and distribution
centers on their customers’ behalf.

FAST-GROWING SEGMENTS In the past 16 years, international transport management has been the fastest-growing segment of 3PL services as companies use third parties to expand their international presence. From 1995 to 2011, revenue generated from international transportation management grew 15 percent on a compound annual growth rate (CAGR) basis, Armstrong said.

The next fastest-growing segments were value-added warehousing and distribution, at an annualized rate of 14. 3 percent, and domestic transportation management at 11 percent.

The largest 3PL in 2011 was DHL Supply Chain & Global Forwarding, an amalgam of freight forwarders and 3PLs that over the years have been clustered under the DHL umbrella, Armstrong said. DHL generated more than $32 billion in revenue, outpacing its nearest rival, the Swiss behemoth Kuehne & Nagel, by approximately $10 billion. ;