3PLs enjoying fiscal rebound

Third-party logistics providers (3PLs) returned to fiscal health in 2010 and are continuing to experience revenue and profit increases in the first half of 2011, according to an annual study conducted by research firm Armstrong & Associates

Third-party logistics providers (3PLs) returned to fiscal health in 2010 and are continuing to experience revenue and profit increases in the first half of 2011, according to an annual study conducted by research firm Armstrong & Associates.

Revenues and profitability increased across all of the 3PL segments tracked by the firm in 2010, with gross revenues increasing from 12.9% to 30.1%, and overall 3PL industry revenues up 18.9% in 2010 to $127.3 billion. Net revenues, which are gross revenue minus purchased transportation, were up 13.2%, while the industry’s overall net income increased 23.4% from 2009 levels, Armstrong added.

The firm also noted that international transportation management services were the top performer in the 3PL segment, with a year-over-year gross revenue increase of 30.1%, with dedicated contract carriage following at 13.1%.

The compound annual growth rate (CAGR) for the 3PL market in the U.S. remains on the upswing. Armstrong noted that net revenue from 1995 through 2010 averaged annual increases of 12.7% – with 2009 the only negative growth year since the company began tracking the 3PL industry 15 years ago.

From 2009 to 2010, the firm said increases in 3PL net revenue were 4.7 times the rate of U.S. gross domestic product (GDP) growth, and the company pointed to rising world trade volumes – which increased 12.4% for 2010, according to the International Monetary Fund’s (IMF) World Economic Outlook – as the main factor behind that jump.

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