3PL market posts record profits in ‘04

Third party logistics market posts record profits in 2004

Growing demand for international and domestic transportation management (ITM and DTM, respectively) plus growing demand for dedicated contract carriage (DDC) services in the U.S. have boosted total revenues for the third-party logistics service (3PL) market to a record $89.4 billion in 2004.

According to an analysis by Stoughton, WI-based consulting firm Armstrong & Associates, total revenues for the U.S. 3PL market increase 16.3% last year over 2003 levels, with compound annual growth rate for U.S. third-party logistics totaling 14.2% since 1996.

Richard Armstrong, president of Armstrong & Associates, said ITM business increased 34% for U.S. 3PLs last year, reflecting significant growth in global product movements to the U.S., particularly from China, with tight ocean vessel, airfreight and truck capacities allowed for significant price increases. Major growth and improved profitability occurred in the DTM sector, increasing 16.8% and 11.6%, respectively.

Finally, DCC business reached record revenues of $8.7 billion in 2004, as tight trucking capacity in the U.S. drove business growth in this segment, said Armstrong.

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