3PL Revenue Drops 6.7 Percent

Have we Bottomed out?

Revenue for third-party logistics providers dropped by 6.7 percent during  2009 compared with 2008, according to a survey by Armstrong & Associates.

Among respondents to the survey, 53 percent said their revenue was down and 37 percent said revenue was up, primarily because of new business.

Respondents said that the economic recovery would be relatively slow. For 2010, they expected total revenue to be down 4.6 percent. Richard Armstrong, chairman of Armstrong & Associates, said, “Recent upticks in transportation volume and consumer spending indicated that we have bottomed out. The question now is whether the recovery will be V or L shaped. Company results are very mixed, but 3PLs as a group should bounce back quickly. Non-asset based players are particularly resilient.” Armstrong & Associates estimates 2009 revenue for 3PLs in the U.S. at $128 billion.

Although revenue in every area of activity declined during  2009, the extent of the decline varied widely from sector to sector. 3PL revenue in International Transportation Management suffered the most during the quarter, dropping 14.6 percent because of the steep decline in international trade and container movements. Revenue in Dedicated Contract Carriage was down 11.9 percent. Revenue in Domestic Transportation Management dropped 10.9 percent, reflecting the drop in North American truck traffic. Revenue in the Value-Added Warehousing and Distribution (VAWD) sector dropped the least, by only 4.3 percent.

Revenue of automotive 3PLs dropped by 37.5 percent, compared with declines of 7.3 percent in consumer goods, 8.1 percent in retailing, 7 percent in industrials, 6.7 percent in high-tech, 2.3 percent in healthcare, and only 0.1 percent in food and groceries.