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50 companies dominate 3PL sector in 2015, report says
A NEW report from supply chain management market research and consulting firm Armstrong & Associates (A&A) shows that "big" deals and companies have dominated the third-party logistics market in 2014 and the first half of 2015.
The report cites the January 2014 acquisition of value-added warehousing and distribution provider GENCO by FedEx for US$2 billion as one of several high-profile mergers and acquisitions in the 3PL sector over the past year and a half, American Shipper reported.
"Along with the US and Europe, Asia has seen significant large deal volume making 2015 potentially the largest year for $100 million plus deals," Armstrong & Associates said in a statement.
"These acquisitions are reflective of a third-party logistics (3PL) sector that is now dominated by around 50 companies based in post-industrial countries. These third-party logistics providers have scale based on geographical coverage, IT and processes that create threshold levels which bar smaller rivals from overtaking them by organic growth alone."
The report pointed out that the global 3PL market expanded to $750.7 billion in 2014, and the US 3PL market grew 7.4 per cent to $157.2 billion. Non-asset based domestic transportation management (DTM) and dedicated contract carriage (DCC) were US segments that saw double-digit growth, increasing net revenues 20.5 per cent and 10.4 per cent, respectively.
"DTM is the modern and sophisticated offspring of freight brokerage," said A&A. "DCC provides dedicated truck capacity in a market often dominated by tractor shortages which are driven by a lack of drivers. DCC is a primary protection mechanism for shippers when demand outpaces supply."
The report cites the January 2014 acquisition of value-added warehousing and distribution provider GENCO by FedEx for US$2 billion as one of several high-profile mergers and acquisitions in the 3PL sector over the past year and a half, American Shipper reported.
"Along with the US and Europe, Asia has seen significant large deal volume making 2015 potentially the largest year for $100 million plus deals," Armstrong & Associates said in a statement.
"These acquisitions are reflective of a third-party logistics (3PL) sector that is now dominated by around 50 companies based in post-industrial countries. These third-party logistics providers have scale based on geographical coverage, IT and processes that create threshold levels which bar smaller rivals from overtaking them by organic growth alone."
The report pointed out that the global 3PL market expanded to $750.7 billion in 2014, and the US 3PL market grew 7.4 per cent to $157.2 billion. Non-asset based domestic transportation management (DTM) and dedicated contract carriage (DCC) were US segments that saw double-digit growth, increasing net revenues 20.5 per cent and 10.4 per cent, respectively.
"DTM is the modern and sophisticated offspring of freight brokerage," said A&A. "DCC provides dedicated truck capacity in a market often dominated by tractor shortages which are driven by a lack of drivers. DCC is a primary protection mechanism for shippers when demand outpaces supply."
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