3PL: High service levels indicate continued momentum

Since early 2014, there have been 10 major acquisitions by 3PLs totaling $18 billion, all based on the need for providers to expand their array of services and extend their geographic footprints in order to drive scale.

In the wake of this frenzy of activity, there are now nearly 25 3PLs that have revenue exceeding one billion dollars. And according to Evan Armstrong, president of the third-party logistics consultancy Armstrong & Associates, the pace of the merger and acquisition activity will most certainly continue; however, the size of those deals may be toned down. “We expect to see a large number of mid- and small-sized deals versus the $100-million-plus deals seen throughout 2015,” he recently told LM’s Patrick Brunson.

This activity should not come as a surprise, since Armstrong’s most recent report indicates that that approximately 11% of U.S. logistics spend over the course of 2015 was outsourced to 3PLs. The firm also notes that the U.S. 3PL market grew by roughly 7.5% annually between 2009 and 2014, driven by an increase in the outsourcing of both core and noncore logistics management activities—and it’s showing no sign of stopping.

According to our readers, another element that shows no sign of subsiding is the world-class service that these 16 3PLs have been delivering here in the U.S. and around the world. Considering all the deal making that shippers were reading about, the weighted average score in both Transportation Management (47.21) and Value-added Solutions (48.23) jumped up more than two full points this year, indicating that readers perceive service as improving.

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