TIA Q1 3PL benchmarking report sees some annual decreases

Despite an annual gain in total brokered freight transportation shipments, total revenue and invoice amount per shipment saw declines, according to the “First Quarter 2016 TIA 3PL Benchmarking Report,” which was recently issued by the Transportation Intermediaries Association (TIA).

This is the 29th edition of this report, which is based on monthly data from TIA member companies who submit real operating data and respond to questions on business conditions impacting the 3PL sector. Types of questions that the member companies’ answers include: number of shipments by mode, total billing, and gross margins. Other data collected are customer-based forecasts to offer up expectations of near-term business volume.

Total first quarter invoice revenue for all TIA member study participants—at around $1.98 billion—was down 7.0 percent annually, and total shipments—at 1,199,522—increased 2.5 percent. The average invoice per shipment of $1,656 fell 9.2 percent, with profit margin percentage up 240 basis points to 16.1 percent.

Key first quarter metrics by mode included:
- Truckload: shipments up 4.4 percent annually at 813,794, with invoice amount per load down 15.1 percent at $1,364, profit margin per load up 3.3 percent at $230, and profit margin percentage up 300 basis points at 16.9 percent;
-Less-than-truckload: shipments down 6.7 percent annually at 114,942, invoice amount per load down 4.3 percent at $380, profit margin per load down 0.9 percent at $71, and profit margin percentage up 70 basis points at 18.8 percent; and
-Intermodal: shipments—at 246,330—were up 3.6 percent annually, with invoice amount per load down 11.7 percent at $2,133, and profit margin percentage up 40 basis points at 10.4 percent

And on a sequential basis compared to the fourth quarter of 2015, the report found that total brokered freight shipments fell 1.9 percent, gross profit margin percentage rose by 50 basis points to 16.1 percent, paced by gains in truckload and intermodal, and total revenue declined 10.3 percent. 

In an interview, Mark Christos, a member of the TIA Board of Directors, Chair of the TIA 3PL Market Report and vice president at Matson Logistics, said that when looking at the report’s data on an annual basis that for the first quarter, generally speaking, freight demand was soft and capacity was plentiful, while fuel costs lowered tremendously.

“We were encouraged to see shipment growth for truckload, which appears to indicate customers are relying on 3PLs to help them manage freight and obtain capacity,” he said. “In that regard, we were encouraged in that despite the concerns that are out there, truckload showed growth. Intermodal’s growth was good, too, and is something to build on. Those two modes were strong, and there is no doubt fuel played an impact across all the modes, too. It is a bigger bite of the apple for trucking in terms of fuel costs, with a roughly 15 percent decline in the invoice amount per load and intermodal down nearly 12 percent.”

Christos cautioned that it is hard to say these declines are directly related to fuel, as its reporting is not broken out by fuel and linehaul costs, while noting that fuel accounts for a significant part of that conversation.

Given the ongoing difficult economic environment, Christos said that despite the general softness in the economy, there are some signs of encouragement out there, with similar Q1 growth levels for truckload and intermodal, especially considering that many industry stakeholders were not bullish in Q1 growth prospects in light of macroeconomic conditions.

On a year-to-date basis, Christos said current market conditions for the second quarter could end up being slightly below first quarter levels, with shipments down slightly possibly, but within range of first quarter levels.