North American 3PLs notch growing revenues as economy recovers “in spits and spurts”

North American third party logistics providers (3PLs) saw incremental revenue increases in the third and fourth quarters of 2020 as the economy continued to bounce back from a pandemic recession “in spits and spurts,” a new study shows.

As a sector, 3PLs providing value-added warehousing & distribution (VAWD) services saw their profits drop 5.8% in the first half of 2020 as measured by net revenue, according to the report from Armstrong & Associates Inc. And the impact of Covid-19 stay-at-home orders and business shutdowns would have been even greater if it had not been balanced by strong growth in retail e‐commerce business.

Overall, the pandemic tamped down VAWD sector revenue from $57.2 billion in 2019 to $46.9 billion in 2020, but that trend is expected to relent in the coming year with a forecast of $48.8 billion revenue for 2021.

The study measured results at the 50 largest 3PLs in North America, which represented a total of 3,821 facilities and 939.2 million square feet of warehousing space. On average, each of those 3PLs operates 71 warehouses measuring 311,081 square feet each, Armstrong said in the report, “The Business of Warehousing in North America in the E-Commerce Era – 2021, Market Size, Major 3PLs, Benchmarking Costs, Prices and Practices.”

By name, DHL Supply Chain is the largest with 139 million square feet of warehousing space within North America, followed by XPO with 90 million square feet, and Ryder SCS with 56.4 million. Rounding out the top 10 are: NFI, Geodis North America, Americold, Lineage Logistics, FedEx Logistics, Kenco Logistics Services, and CI Logistics North America.

However, that list would change if it included the online retailer amazon.com, which Armstrong defines as belonging to the “private” warehousing sector, which is dedicated to e-commerce B2C (business-to-consumer) business as opposed to 3PL services. But Amazon increasingly provides de facto 3PL services as well, at a scale which Armstrong estimates as comprising 136.8 million square feet in North America in 2019, a size which would rank it in second place on that list.

Focusing in on U.S. e‐commerce 3PLs, that sector’s revenue reached $43.4 billion in 2019, and Armstrong expects a 28.0% compound annual growth rate (CAGR) through 2020, saying that e‐commerce purchases continue to expand during the pandemic and companies continue to outsource versus build internal fulfillment operations.

Amazon is also the top performer in that category, outpacing its rivals by such a huge margin that all the other 19 companies on the top-20 list added together barely eclipsed the Seattle-based company alone, totaling just 53% of Amazon’s U.S. e-commerce 3PL revenue. After Amazon, that list includes: UPS Supply Chain Solutions, XPO Logistics, Ingram Micro Commerce & Lifestyle Services, Rakuten Super Logistics US, Radial, Geodis North America, Kuehne + Nagel North America, FedEx Logistics, and Newgistics.