A little over 15 years ago, Armstrong and Associates found 46 percent of Fortune 500 companies use 3PL (third-party logistics) companies to help with their freight arrangement. In May 2017, that number nearly doubled to 90 percent.

The study found that companies that use 3PLs do so to control their costs and improve the efficiency of their supply chain, while some larger companies rely mostly on 3PLs to handle their complete day-to-day freight management.

Why are more successful companies turning to 3PLs? It’s a growing market, turning away from the transactional relationships of the past and building “meaningful partnerships,” according to the 21st Annual Third-Party Logistics Study.

Of course, the overall economy has a major impact on the logistics market, so we’ll take a look at the contributing economic factors, the growth in logistics, and the role 3PLs play that have the biggest companies in the United States relying on them for all of their logistics needs.

Growing Logistics Market

Saving time, saving money, and avoiding headaches are top reasons to turn to a third-party logistics company. The cost reductions achieved by using a 3PL are expected to be a major market driver for 2017 to 2021, based on a report from Radiant Insights. The logistics market overall is projected to grow at an annual rate of 6.5 percent per year during this time frame.

The American Trucking Association’s Trucking Activity Report sees growth continuing in freight and trucking through 2026. The report shows 28.6 percent increase in freight tonnage and a 74.5 percent increase in revenues to $1.52 trillion by 2026.

New orders for trucks dipped slightly in May, but research groups say overall, the outlook for the market is positive. Class 8 orders were down 30 percent from April, but were still 18 percent higher than May 2016.

Stifel analyst Michael Baudendistel wrote in a letter to investors that the firm believes the dip in Class 8 orders should be interpreted as a step back from unsustainable levels and believe there will be a strong growth period from 2019-2020.

Autonomous trucks are also expected to take the nation’s roads by storm within five years, according to the Transportation Research Board. This of course after the autonomous truck Otto went on a 120-mile beer run sans driver at the wheel in Colorado in October 2016.

Increases in technology and efficiency in the transportation world could have a major impact on delivery times and capacity.

Current Economy

While the Logistics industry has plenty of growth in its forecast, the U.S. economy is sending mixed signals.

Overall, the United States’ industrial production rose one percent in April 2017, the largest expansion in more than three years.

The U.S. unemployment rate hit its lowest level in 16 years, down to 4.3 percent. There were 138,000 jobs added in May, slightly down from April. While the number of jobs added was still lower than predicted, there were significant gains in sectors like mining, which added nearly 50,000 jobs.

At the Federal Reserve’s last interest rate meeting, there was a 67 percent chance of a rate hike occurring in June. If this is the case, it would be the third rate high in the last seven months, after a period of several years with few hike rate increases by the Fed.

Consumer spending stayed steady in May, at a $104 daily spending average, similar to the $107 average in April, according to Gallup. This is the fourth month in a row that self-reporting through Gallup averaged $100 or more.

Consumer confidence is down for the second month, but is up 19 percent from last year and according to Forbes, people are spending their money online, at value retailers, and on beauty products.

Role of 3PL

Third-party logistics companies are growing in popularity for a multitude of reasons: they can save time by increasing efficiency, providing visibility to freight spend, handle all logistics operations as a one-stop shop, and can service virtually any industry, and many operate in all 50 states and across the globe.

In the 21st annual 3PL Study, 93 percent of shippers surveyed said that improved, data-driven decision-making is essential to the future success of supply chain activities and processes. Of the 3PLS in the study, 98 percent reported that as well.

In the day to day world of freight arrangement, shippers can spend hours manually entering data and coordinating shipping with different carriers. Working with a 3PL cuts down on the amount of time spent on these daily operations, but can also provide services well beyond the input of data!

From staying ahead of potential impacts on the industry to in-depth account reviews, to cutting and managing costs, to fully outsourcing logistics operations with account management offered through a Transportation Management System, a 3PL can offer tremendous visibility to clients.

In the 21st Annual Third-Party Logistics study, 86 percent of shippers said that using 3PLs has improved their customer service, and 73 percent said 3PLs offer new and innovative ways to improve logistics effectiveness.

New demands from consumers and shippers will continue to evolve the logistics industry, making offerings more robust to better serve the industry.

Why Wait, Join the 90 Percent

We’ll take care of the nitty gritty of freight arrangement to get your shipments from point A to point B so you can focus on your core business. If you need anything from an emergency storage solution to a full warehouse operation, we can set you up with our warehouse providers. Have an emergency shipment that needs to leave ASAP? Don’t stress about finding a truck – we’ll do that part for you. Want to fully outsource your logistics operations with our Integrated Outsourcing TMS? You got it.

Join the 90 percent of top companies that rely on 3PLs to guide them through the complex world of logistics! Send us any one of your shipments and we’ll give you a no-hassle quote, from a real person, every time.