State of the 3PL Market: Technology now the key differentiator

This is an excerpt of the original article. It was written for the July-August 2016 edition of Supply Chain Management Review. The full article is available to current subscribers.

July-August 2016

What’s the difference between us and our competitors? Our people!” I can’t think of an organization that doesn’t publicly state that its people are its most important asset. Yet, anyone who has been in the workforce for any length of time knows that when the rubber hits the road—or something else hits the fan—people are usually the first casualty of cost cutting. It’s far easier to free up your talent for “other opportunities” than it is to close a plant or sell a fleet of trucks.

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The merger and acquisition frenzy of 2015 may have abated a bit over the past few months, but the trend for larger third-party logistics providers (3PLs) to consolidate could be played out for some time, contend leading industry analysts.

Since early 2014, there have been 10 major acquisitions by 3PLs totaling $18 billion due to the need to expand the array of services and extend their geographic footprints in order to drive scale. In the wake of this activity, there are over 30 domestic 3PLs that have revenue exceeding $1 billion.

“The pace of 3PL merger and acquisition will certainly continue,” says Evan Armstrong, president of the third-party logistics consultancy Armstrong & Associates. “In fact, this year we expect to see a large number of mid and small-sized deals versus the $100-million-plus deals seen throughout 2015.”

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