U.S. and Global Third-Party Logistics Market Analysis is Released

STOUGHTON, WI, May 21, 2009 – After 11 modest months in 2008, third-party logistics revenues dove in December and have remained depressed in 2009. While a few third-party logistics providers (3PLs) could drown, most are treading water and some are swimming strongly.

Armstrong & Associates recent survey and analysis shows gross revenue (turnover) for 3PLs down by 8.8% for 2009. Net revenues (gross margins) were less impacted for many non-asset transportation managers and leading value-added warehousing 3PLs.

Expeditors, C.H. Robinson, Kuehne + Nagel and other major transportation managers report net revenues decreased 3% to 10%. Earnings before interest, tax, depreciation and amortization (EBITDAs) and earnings before interest and tax (EBITs) fell proportionately. Additionally, net revenues are expected to be down another 5% this year for the transportation management group.

In a recent survey, for 3PLs as a group 60% are reporting lower gross and net revenues for this year. Among value-added warehousing 3PLs, 57% are reporting increased net revenues. Automotive and retail vertical industries were the main drags on 3PL market growth for 2009 with projected revenues down 32% and 23% respectively. The food and grocery vertical and 3PL returns management subsegment are up for the year. GENCO, Kenco and New Breed expect revenues to increase in 2009.

2008 Results – U.S.

2008 could be remembered as “lackluster” or “it could have been worse.” Gross revenues for third-party logistics in the United States grew 6.7% in 2008. Net revenues grew 4.7% compared to 7.2% in 2007 as the logistics part of the economy continued to slow before it dove in December. Combined EBIT for 3PLs was 8.9% of net revenue. Net income increased only 1.5% and was 5.3% of net revenue. Overall growth and the net profit ratio of 94.7 was the weakest since we began tracking it for FY1996.