In its latest research, Performance and Profitability in European Logistics, transport sector analysts, Analytiqa, has identified that revenue performance of 3PLs across Europe has remained robust in recent years. As an example, between 2003 and 2004, average revenue growth amongst French 3PLs reached 10.9 per cent. Between 2004 and 2005, average growth in revenues remained strong, but average growth decreased to 8.3 per cent.
The report finds that one trend increasingly apparent across the Continent is that 3PL customers have become more demanding, buying services on added value, service and continuous improvement, rather than pure price. This has allowed the more innovative 3PLs to flourish, whilst the flip side has seen some companies fall from grace.
In terms of profitability, the share of 3PLs making losses is declining in the Dutch 3PL market whilst across the border in Belgium the share of companies making smaller profits is declining. The French contract logistics market has proved particularly difficult in recent years. Price competition, a struggling economy and the 35-hour working week have all contributed. Across the Channel, UK 3PLs are more likely to make small profits, than either losses, or very large profits, whilst in Italy, however, the share of companies making profits above €5.0 million is increasing.
According to the report, the structure of the European freight forwarding industry is broadly stable. Around three-quarters of freight forwarders across Europe report revenues of less than €50.0 million, whilst the proportion of ‘mid-tier’ operators is marginally increasing, at the expense of the largest service providers. Those forwarders reporting over €100.0 million in annual revenue account for around 13.0 per cent of the market.
A significant observation is that forwarders are recognising that they must be perceived as supply chain managers and not merely transporters of cargo from A to B. This realisation, supported by expanding volumes and globalisation of world economies, has seen freight forwarders successfully grow revenues in recent years, recording strong average annual growth.