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There are relatively few clouds in the sky, to hear Armstrong tell it. The company, which has identified more than 4,000 3PL customers, has divided the third-party provider market in the U.S. into four segments, each of which is expected to show growth.
First, is the group whose members serve the international transportation needs of its customers. That segment is expected show as much as 20-percent growth over last year. Then, purely domestic concerns should report about 14-percent growth. Value-added warehousing and distribution providers are becoming more mature, says Armstrong. Still, they will see more than 18-percent growth this year. Finally, dedicated contract carriage, the most mature segment in the U.S., will see growth of little over 6 percent.
Consolidation will continue, in Armstrong's view, especially among the family-owned companies operated by baby boomers who will look to retire and don't have anyone to leave the business to. These will become acquisition targets, he says.
In addition to the expected clout of Chinese 3PLs, especially in the country, there should be significant growth among Indian-owned providers. And such companies are highly likely to be "buying American." Overall, then, Armstrong predicts a "good amount" of consolidation in the industry.
In a sense, that dovetails with what shippers want anyway, he says. Most are looking to pare the number of providers they work with in the first place, so it's alright if there are fewer players to choose from. Breadth of services, however, will remain of key importance to customers, and providers who can't meet those needs will struggle for business.
To view this video interview in its entirety, click here.
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