Bear Market Bites 3PLs

Stoughton, WI, April 2, 2009 – First quarter 2009 third-party logistics provider (3PL) revenues are down 6.7% compared to the first quarter of last year according to a survey just completed by industry experts Armstrong & Associates, Inc. Of the survey respondents, 53% said that revenues were down; 37% said revenues were up primarily due to new business.

International Transportation Management¹ is down 14.6% reflecting the steep decline in international trade and container movements. Domestic Transportation Management², reflecting the drop in North American truck traffic, is down 10.9%. Value-added Warehousing and Distribution (VAWD)³ has been impacted less. Revenues in VAWD are down 4.3%. Dedicated Contract Carriage is down 11.9% following the trucking trend reported by the ATA.

The results of the current recession are unevenly distributed across industry verticals. Automotive 3PLs have been hit the hardest (-37.5%). On the other hand, 3PL food related revenues are down only 0.1%.

Respondents to the survey felt that the economic recovery would be relatively slow. They expect revenues for 2009 to be down 4.6%. Armstrong & Associates, Inc. estimates 2008 revenues for 3PLs in the U.S. at $128 billion.

“We will have a more complete financial analysis and report available May 1,” said Richard Armstrong, chairman of Armstrong & Associates, Inc. “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.”

_____________________________

¹ Freight forwarding, NVOCC and related 4PL activities
² Freight brokerage and systems-based transportation management
³ Contract logistics