Despite the past year’s high inflation and interest rates, 2022 was “a very good growth year” for the domestic third-party logistics (3PL) market, according to a report from Armstrong & Associates Inc.
That growth was driven by 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, the Wisconsin-based firm said in its latest report, “Transition – Soft Landing at a New Level: Latest Third-Party Logistics Market Results and Predictions for 2023.”
Based upon 3PL reported 2022 financial results, Armstrong & Associates estimates that U.S. 3PL Market net revenues (gross revenues less purchased transportation) grew 24% to $148.1 billion and overall gross revenues increased 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 we began developing 3PL Market estimates in 1995. 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 (DTM) segment led all other 3PL segments with net revenue growth of 33.8% to $26.4 billion while overall gross revenue increased a healthy 14.4% to $159 billion.
And the asset-heavy Dedicated Contract Carriage (DCC) 3PL Market segment delivered the second largest year-over-year net revenue growth of 27.4% to $29.2 billion in 2022. Gross revenue increased 27.7% to $29.5 billion. DCC’s growth benefited from shippers wanting to lock in capacity after a turbulent 2021, an increased ability to attract drivers through wage increases and better recruiting, and having ample capital to invest in equipment. In addition, those 3PLs with freight brokerages which could handle “overflow” business from DCC operations as dedicated or spot truckload capacity, tended to do well.