Global 3PL market reaches $750 Billion as 50 firms dominate
In 2014, the Global third-party logistics (3PL) market expanded to $750.7 billion and the U.S. 3PL market grew 7.4% to $157.2 billion.
Big deals have recently altered the 3PL market. In January of 2014, FedEx purchased GENCO for $2 billion. In August, Norbert Dentressangle expanded to the U.S. by purchasing Jacobson Companies for $750 million in cash. Then, in the spring of 2015, Norbert Dentressangle sold itself to voracious acquirer XPO Logistics for $3.5 billion. Along with the U.S. and Europe, Asia has seen significant large deal volume making 2015 potentially the largest year for $100 million plus deals.
These acquisitions are reflective of a 3PL sector that is now dominated by around 50 companies. These 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.
Two U.S. 3PL Market Segments experienced double digit growth in 2014. Both were domestic segments reflecting U.S. economic growth. Non-asset based domestic transportation management (DTM) gross revenues grew 15.4%, while net revenues grew 20.5%.
Dedicated contract carriage (DCC) gross and net revenues both increased by 10.4%. DTM is the modern and sophisticated offspring of freight brokerage. 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.