Jump in dedicated revenues highlights strong 2017 for 3PLs, Armstrong says Wow Coins Of Air Farming

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Jump in dedicated revenues highlights strong 2017 for 3PLs, Armstrong says

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Demand for dedicated contract carriage jumped in 2017 as shippers sought capacity assurance amid a tightening market for available space and drivers Wow Coins Of Air Farming , according to a report from consultancy Armstrong & Associates Inc.

Dedicated gross revenues—revenues before the costs of purchased transportation—rose to $15.6 billion, up 10.2 percent from 2016 levels and much higher than the 7.5 percent compound annual growth rate reported for the segment since 1995, the consultancy said. Under a dedicated arrangement, a shipper outsources its fleet operations to a specialist that "dedicates" rigs, trailers, and drivers for that customer's sole use. The standard contract runs three to five years, and usually requires the customer to compensate the provider for an agreed-upon number of miles driven on a round-trip basis.

Companies with enough freight to justify round trips—often from DCs to stores and back—may find dedicated a better value proposition than paying for one-way truckload service.

Demand for transportation management services also rose strongly as freight brokers and third-party logistics (3PL) providers played increasingly active roles in securing available supply. Gross revenues rose 16 percent from 2016 levels to $71.7 billion, according to Armstrong data. Net revenues rose 6.4 percent to $10.9 billion. The differential reflects gross profit margin compression as rapidly tightening truckload capacity in the second half of the year required brokers to pay higher rates faster than they could negotiate price increases with their shippers, Armstrong said. Domestic transportation management is the largest in gross revenue of the four segments that Armstrong surveys.

As of mid-year, supply and demand forces had moved somewhat closer to equilibrium than what existed in the fourth quarter of 2017 and the first quarter of 2018, according to the firm. For example, Eden Prairie, Minn.-based broker and 3PL giant C.H. Robinson Worldwide Inc., which accounts for about 14 percent of U.S. transportation management gross and net revenues, posted first-quarter increases of 14.9 and 10.1 percent in gross and net revenues, a narrower gap than what the segment experienced in 2017.

benefitting from tight air freight capacity due to the global growth in e-commerce and an overall strengthening of the world's economies. As with domestic transport management Wow Coins Of Air Farming , benefitting from tight air freight capacity due to the global growth in e-commerce and an overall strengthening of the world's economies. As with domestic transport management, intermediaries were squeezed by capacity pressures, posting only a 4.3 percent gain in net revenue. As with the domestic side, a balancing of supply and demand factors in the first quarter helped shrink last year's differential. Seattle-based Expeditors, a major air and ocean forwarder, posted a 9.7 percent gain in U.S. gross revenue and a 9.9 percent gain in net revenue, Armstrong said.

Value-added warehousing and distribution (VAWD), known more commonly as contract logistics, lagged the market last year despite 3PL concerns about tight warehouse availability. Gross and net revenue increased 2.5 percent over the 2016 period, Armstrong said.

All told, 2017 was a good year for 3PL services, and net revenues grew 5 percent to $77.1 billion. This year is also shaping up to be strong Wow Coins Of Air Farming , and net revenues grew 5 percent to $77.1 billion. This year is also shaping up to be strong, according to the firm.

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