TT Logistics 50: Shippers Seek Ways to Meet Market Demands, Deal With Capacity Constraints by Using 3PLs

This story appears in the Nov. 15 print edition of Transport Topics.

Demand for logistics services is on the rise after falling sharply in 2009, as shippers look for ways to meet shifting market demand and deal with looming constraints in freight-hauling capacity.

While the pace of business recovery in the United States has been painfully slow, logistics industry observers said growth in China and elsewhere has soaked up much of the excess air and ocean freight capacity. This situation has forced shippers to reevaluate distribution methods and to increase the use of third-party logistics service providers to deal with greater uncertainty and market volatility.

“One driver of growth is complexity,” said Evan Armstrong, president of Armstrong & Associates, Stoughton, Wis. “Third-party logistics companies provide the infrastructure necessary to support increasingly complex supply chains involved in global trade.”

Interest in logistics also extends to the top of many corporations, according to a survey conducted by Robert Lieb, a professor of supply chain management at Northeastern University in Boston.

“Customers are asking 3PLs to analyze supply chains in terms of environmental impact and cost,” Lieb said.

Armstrong said gross revenue for logistics companies in the United States is expected to rise 13.3% to $121.4 billion this year after falling nearly 16% to $107.9 billion in 2009 from an estimated $127 billion in 2008.

The global market for logistics services is $507 billion, Armstrong said.

The decline in logistics revenue in 2009 was the first since Richard Armstrong, chairman of Armstrong & Associates, began tracking the industry in 1996.

Armstrong has worked with Transport Topics to compile a list of the Top 50 Logistics Companies since 2005. Firms are ranked based on net revenue from logistics activities in North America for the most recent 12-month period.

UPS Supply Chain Solutions held onto the No. 1 position on the latest Top 50 list, followed by Exel (No. 2), the U.S.-based logistics unit of Germany’s Deutsche Post DHL; Caterpillar Logistics Services (No. 3); DB Schenker USA (No. 4); and Schneider National Inc. (No. 5).

Ceva Logistics, a company created from a merger of Amsterdam-based TNT Logistics and Houston-based EGL Inc., moved to No. 25 from No. 3 on the list because company officials changed how they reported net revenue.

The company was listed a year ago on the basis of total revenue. This year, Ceva officials provided a more precise breakdown of gross and net revenue.

Another company affected by a change in how company officials reported revenue was Greatwide Logistics Services, which moved to No. 34 from No. 11.

Logistics companies generate revenue by procuring and managing the movement of freight for shippers.

In addition to the Top 50 Logistics Companies (55 companies are listed because of ties), Transport Topics publishes a list of Top 25 Freight Forwarders (ranked by container volume measured in 20-foot-equivalent units), Top 25 Freight Brokerage Firms (ranked by net revenue), Top 25 Warehousing Firms (ranked by total square feet) and Top 25 Dedicated Contract Carriers (ranked by number of power units).

Another aspect of the Top 50 Logistics Companies special section is a listing of Top 50 Freight Transportation Firms, in which trucking, railroad, air and ocean carriers are ranked by annual revenue.

Editor’s note: The TT 50 will be posted online in the near future.