October 4, 2010

2010 will be bounce-back year for 3PLs, according to Armstrong study

Third-party logistics industry will see revenue gains of 13.4 percent, research firm predicts.

By Mark B. Solomon

After a weak 2009, the U.S. third-party logistics industry will bounce back in 2010 with gross revenue—revenue before the costs of purchased transportation—of $121 billion, up 13.4 percent from year-earlier levels, according to estimates from research and consulting firm Armstrong & Associates.

The Armstrong data includes $3 billion in revenue from contract logistics services. In all, revenue for the global 3PL market will hit $507 billion this year, according to Armstrong estimates.

At the same time, however, 3PLs face challenges in meeting the expectations of an increasingly demanding customer base. Adrian Gonzalez, director, logistics viewpoints of the ARC Advisory Group, said many 3PLs are "falling short" of customer expectations, with more than a few providers saddled with so-called legacy information technology systems that may hamper their ability to compete in an increasingly crowded provider marketplace.

"The business models of 3PLs, information technology, and consultants are converging," said Gonzalez, noting that the increased competition will not be favorable for those 3PLs that lack the infrastructure and technology to do battle.