The leading logistics industry consulting firm of Armstrong & Associates forecasts a soft landing at a new level for third-party logistics providers.
Armstrong notes that.2022 was a very good growth year for domestic 3PLs. “Driving growth in 2022 was the continued burgeoning inventories built up from the Covid 19 supply chain disruptions and 3PLs being able to efficiently decrease purchased transportation costs to carriers while staving off significant price concessions to shippers.”
Based on providers’ reported 2022 financial results, Armstrong estimates that U.S. 3PL market net revenues (gross revenues less purchased transportation) grew 24% to $148.1 billion. adding that overall gross revenues rose 18.3%, bringing the total U.S. 3PL market to $405.5 billion in 2022.
While year-over-year growth was significantly less than the 48.1% gross revenue growth registered in 2021, 2022 at 18.3% was the fourth best growth year on record since Armstrong began developing its 3PL market estimates in 1995.
According to the data the firm has developed over nearly three decades, 2000 registered the second-best year-over-year growth at 22.9%, and 2010 was the third best at 19%.
The non-asset-based Domestic Transportation Management segment (DTM) led all other 3PL segments in 2022, enjoyed net revenue growth of 33.8% to $26.4 billion while overall gross revenue increased a healthy 14.4% to $159 billion.
The asset-heavy Dedicated Contract Carriage segment had the second largest year-over-year net revenue growth of 27.4% to $29.2 billion in 2022. Gross revenue rose 27.7% to $29.5 billion. DCCs benefited from shippers wanting to lock in capacity, better driver recruiting through wage increases and, and having ample capital to invest in equipment.
In addition, 3PLs with freight brokerages – which could handle “overflow” business from DCC operations as dedicated or spot truckload capacity – also tended to do well, Armstrong pointed out.