The Future of 3PL Looks Bright

Despite worries earlier this year that the devaluation of the Chinese renminbi would spell disaster for international trade, this year’s “Annual Surveys of Third Party Logistics CEOs,” produced by Dr. Robert Lieb of Northeastern University and sponsored by Penske Logistics, says the future of 3PL is coming up roses. Although average three-year revenue growth numbers are down some, all the companies surveyed turned a tidy profit.

Average regional industry growth rates for the next three years remain strong, with 5.92 percent growth projected for North America, 4.00 percent for Europe and 5.75 percent expected for the Asia-Pacific zone.

“Growth rates are still positive in all three regions while being lower overall, so they are trending downward, but…the reality is these companies are of a much larger scale,” said Dr. Lieb. “It is easy to support a 30 percent growth rate for a company of a smaller size but not so much for a larger one.”

3PL Acquisitions Influence Growth Rate

Probably the largest influence on these slowed growth rates is the recent surge in acquisitions among 3rd party logistics companies. Seven of the 30 CEOs surveyed saw significant merger and acquisition activity in the last year, with a few major acquisitions having already been successfully completed between 2008 and 2014. Since that time, the global 3PL sector has seen ten major deals, accounting for $18 billion, originate.

So many big deals means substantial restructuring is required before growth resumes, so what we’re seeing in the short term is simply the effect of integration and investment in these new properties. According to Joe Carlier, Vice President of Logistics at Penske, changes in consumer behavior toward eCommerce will also have a massive impact on future logistics sector growth

The Explosion of eCommerce in 3PL

Currently, 11.85 percent of 3rd party logistics revenue in North America comes from eCommerce fulfillment, but that’s expected to increase to over 20 percent in just the next three years. The story is the same in Europe, where eCommerce represents about 5.33 percent of current 3PL revenue and is expected to boom to nine percent in the same three year period.

Although eCommerce has long been a significant part of 3rd party logistics growth, it’s clear that this sector is set for an explosion in growth in the near future. The influx of packages to be moved and orders to be fulfilled should spell great things for 3PLs across the globe. The money and energy that have been dumped into recent mergers and acquisitions will also ensure that these huge 3PLs are able to meet demand as eCommerce continues to expand.

2015-12-03T14:12:57+00:00

Leave A Comment