The underlying structural support of 3PL market growth being three to four times higher than the overall U.S. economic growth as measured by gross domestic product continues.  3PL market growth is driven by companies outsourcing logistics functions to concentrate on core competences, the need for sophisticated supply chain information technology solutions, and the ongoing globalization of trade and logistics.

Non-asset based transportation management activities had the largest growth in 2008.  International transportation management (ITM), including freight forwarding, customs brokerage, non-vessel operating common carrier (NVOCC) and value-added related services grew by 7.5 percent.

ITM includes the major global supply chain managers.  In our database, they divide into three groups. The very profitable 3PLs are Expeditors, Kuehne + Nagel, and DHL Global Forwarding.  Traditional net income margins (net income / net revenue) in this segment exceed 10 percent.

Net revenues for domestic transportation management (DTM) grew an estimated 6.5 percent.  DTM includes freight brokerage and related value-added services.  C.H. Robinson dominates DTM with 21 percent of net revenues and 45 percent of EBIT (earnings before interest and tax). Net income margins in DTM normally exceed 10 percent.

Dedicated contract carriage (DCC) is asset-based.  Its revenue growth was eliminated by the recession. J.B. Hunt and Ryder are the major players in "exclusive" dedicated contract carriage. Net income margins in this segment normally are 4-5 percent.

Value-added warehousing and distribution (known as "contract logistics" in Europe) grew an estimated 4 percent in 2008.  Value-added warehousing and distribution (VAWD) has a mix of owned, asset and leased, non-asset buildings.  VAWD tends to have net income margins of 4 percent and is regularly less profitable than the transportation-based 3PL segments.

The Outlook

We project that U.S. 3PL revenues will reach $145.3bn in 2010 after a difficult year (4.5 percent increase) in 2009 and an improving year (8.0 percent increase) in 2010.