A Time of Uncertainty for Logistics Providers
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Things have changed dramatically in the United States since the beginning of January. At that time, the economy was growing well, inflation was declining, the stock market was hitting all-time highs and consumer sentiment was strong. However, the introduction of punitive import tariffs — some as high as 54% on imports from China announced April 2 — created uncertainty among businesses and consumers.
Reducing the size of the government and increasing its efficiency are beneficial. However, this goal has been complicated by the unpredictable hiring and firing of federal workers by Elon Musk’s Department of Government Efficiency. As a result, these actions have contributed to greater economic uncertainty. Often, the effects of this uncertainty are more pronounced than the impact of the actual policy changes themselves.
On the positive side, reduced government regulations, a more favorable energy policy and the possibility of lower corporate tax rates are expected to support growth over the next three years. Most observers anticipate that the individual federal tax cuts implemented in 2017 will be extended. The impact on growth primarily will depend on whether these cuts are extended as expected or if further tax cuts, such as those on tip income, are introduced to provide an additional stimulus.
The bond market anticipates three interest rate cuts by the Federal Reserve this year; however, the inflationary effects of tariffs may prevent these cuts from happening. Consequently, the U.S. is likely to experience slower economic growth, as measured by gross domestic product, along with higher inflation, as indicated by the personal consumption expenditures price index. This situation could make business financing more difficult and may hinder what was initially expected to be a robust market for mergers and acquisitions.
According to current estimates from , net revenues of the U.S. third-party logistics market grew by 1.6% to reach $131.2 billion in 2024, after a decline of 12.8% in 2023. Meanwhile, gross revenues across all four segments of the 3PL market increased by 1.1% year over year, recovering from a significant drop of 26.1% in 2023. This brings the total value of the U.S. 3PL market to $302.7 billion in 2024.
Armstrong
Predicting market growth for 2025 is challenging due to ongoing uncertainties. However, we have some insights: The inventory buildup ahead of the Trump-era import tariffs has resulted in 3PL warehouses nearing full capacity, which will take time to draw down. Because of this inventory buildup, air and ocean freight forwarders have seen substantial volumes and revenue.
On April 2, Trump also announced changes to the “de minimis” rules for shipments from China. This will eliminate the exemptions for small shipments, such as those in e-commerce, from certain tariffs.
Given these factors, we expect much of the growth in the U.S. 3PL market for 2025 will occur in the first half of the year. Gross revenue is projected to increase to $316.2 billion, reflecting a growth rate of 4.5%.
Since A&A began developing 3PL market size estimates in 1995, 2021 saw the highest year-over-year growth at 48.1%, followed by 2000 with the second-highest growth at 22.9%, while 2010 ranked third at 19%.
The 3PL market in the United States consists of four segments, with numerous third-party logistics providers offering services across multiple segments.
- Dedicated contract carriage (DCC): Third-party logistics providers offering dedicated contract carriage services to customers through agreements typically having one- to seven-year terms. Their operations primarily focus on managing asset-based truckload transportation. 3PLs supply drivers, transportation equipment and management personnel as part of this service.
- Value-added warehousing and distribution (VAWD): Third-party logistics providers offering long-term contract warehousing and distribution center management and various value-added services. These contracts typically have terms ranging from one to three years, with some extending up to 10 years or more. VAWD does not include short-term “public” warehousing.
- International transportation management (ITM): Third-party logistics providers offering international air and ocean transportation management services, typically managed under contracts. These services often include freight forwarding, warehousing, container freight station operations, trade compliance, customs brokerage and inland shipment management.
- Domestic transportation management (DTM): Third-party logistics providers offering non-asset-based transportation management services, primarily focused on shipments originating from and destined for locations in North America. These services typically are performed with freight brokerage and are governed mainly by contracts. The DTM subsegments include freight brokerage, intermodal, managed transportation and last-mile delivery.
International Transportation Management
International transportation management (ITM) encompasses air and ocean freight forwarding, customs brokerage and compliance, warehousing, and inland transportation. In contrast, domestic transportation management (DTM) includes freight brokerage, managed transportation, intermodal transportation management and last-mile delivery. Both segments experienced significant gross revenue declines in 2023, with double-digit reductions reported. DTM saw an additional decline of 4.2% in 2024, while ITM experienced a 6.5% increase.
►Top 100 3PLs Face Slow Growth, Trade Uncertainty
►Logistics Firms Staying Flexible for the Future
►Map: Where the Top 100 Are
►Armstrong: A Time of Uncertainty for Logistics Providers
►3PLs Face Mixed Results Across Segments in 2024
Sector Rankings
Freight Brokerage | Dedicated
Dry Storage Warehousing
Refrigerated Warehousing
Ocean Freight | Airfreight
The growth in the ITM segment can be attributed to shipping uncertainties in the Red Sea and a decrease in ocean traffic through the Suez Canal. Additionally, concerns regarding tariffs and trade wars have fueled this growth, especially in late 2024, as importers have been eager to receive their goods before expected tariff increases.
The asset-based 3PL segments, dedicated contract carriage (DCC) and value-added warehousing and distribution (VAWD), have seen slower growth since the high-demand period after the post-pandemic shutdown, although they continue to grow.
A&A’s analysis of the financial results of 3PLs for 2024 shows that the U.S. ITM segment achieved the highest year-over-year growth among all four segments, with a gross revenue increase of 6.5%, reaching $78.8 billion. This growth comes after a significant decline in 2023 when the segment experienced a 49.3% drop in gross revenue — the largest decrease recorded since A&A began tracking the market in 1995.
Freight forwarding volumes in 2024 showed improvement compared with 2023. U.S.-based ITMs experienced an average growth of 6.7% in ocean freight measured in 20-foot equivalent units and a 15% increase in airfreight measured in metric tons. However, U.S. ITM net revenue declined by 4% in 2024 despite this positive trend. This decrease was driven by a rise in lower-margin ocean freight, which accounts for approximately 98% of total volumes compared with airfreight. As a result, there was a slight compression in gross profit margins. On a positive note, total market segment net revenue increased to $26.9 billion, reflecting a 30.2% growth compared with 2023.
The largest U.S.-based freight forwarder by gross revenue, Expeditors International of Washington, saw a 17.2% increase in gross revenue to $10.6 billion in 2024, and its net revenue was up 5.2% to $3.4 billion. In turn, its freight forwarding volumes grew by 7% in ocean freight TEUs and 12% in airfreight metric tons.
A cargo ship sails through the Suez Canal. (Ayman Ared/Associated Press)
C.H. Robinson Global Forwarding experienced the most significant year-over-year increases of the U.S. ITM 3PLs analyzed, with gross revenue soaring 26.9% to $3.8 billion and net revenue up 16.4% to $803 million. This is after being the U.S. ITM 3PL with the most significant gross revenue decrease of 56% in 2023.
A notable change on this year’s top ocean freight forwarder list is Beijing-based Sinotrans, which landed the No. 1 spot with 4,872,248 ocean TEUs handled in 2024, an increase of 13.1% over 2023. This is 562,248 TEUs more than second-place Kuehne + Nagel’s volume, which declined 0.6% year over year to 4,310,000 TEUs handled.
The Asia-based freight forwarders we analyzed averaged 8.7% year-over-year growth in ocean TEUs handled in 2024 and 19.9% in airfreight metric tons.
Once the pending acquisition of Germany’s DB Schenker, which ranks seventh, by Denmark-based DSV, which ranks fourth, is complete, it will be interesting to see how the top five pan out in 2025.
Dedicated Contract Carriage
The asset-heavy dedicated contract carriage (DCC) 3PL market segment experienced the second-largest year-over-year gross revenue growth, up 6% to $31.5 billion, and the largest year-over-year net revenue growth, with an increase of 5.3% to $31.2 billion in 2024. This is a substantial improvement versus the mere 0.7% in gross revenue growth and the 1.4% increase in net revenue the segment experienced in 2023.
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 that could handle “overflow” business from DCC operations as dedicated or spot truckload capacity tended to do well.
DCC has an advantage when truckload capacity increases due to softer demand and declining rates. Since traditional DCC contracts have one- to three-year terms with specific trucking assets dedicated to customers, this makes DCC contracts much “stickier” than standard shipper-carrier trucking contracts and less susceptible to declines in the truckload spot market.
DCC trailer types are 80% dry vans, reefers account for 11%, flatbeds comprise 5% and tankers and other trailers tally 2% each. Sixty-four percent of the top 25 DCC providers have both dry vans and reefers; 60% also have flatbeds. More than a third of the top 25 have tankers. Other types of equipment include curtain sides, roller beds, end dumps, drop decks and dry van trailers with liftgates. Customer trailers/containers often are used primarily for retail operations, such as Walmart.
J.B. Hunt Dedicated Contract Solutions had a 4.6% decrease to 12,647 total DCC power units in 2024. Segment revenue also fell 4.2% to $3.4 billion. However, it remains the largest DCC 3PL, generating an average of $268,500 per power unit.
Ryder, with dedicated contract trucking operations within two of its business segments, Dedicated Transportation Services and Supply Chain Solutions, only shed 200 DCC power units since 2023. With 11,400 power units in 2024, Ryder remains in second place but continues to come closer to being the top DCC 3PL with a difference in power units of 1,247 from J.B. Hunt DCS.
With its acquisition of Cowan Systems, Schneider gained DCC power units and placed in the No. 3 spot on the top dedicated contract carriers list this year. The combined entities had 8,400. Schneider alone increased DCC power units by 9.6% to 6,829 at year-end 2024.
Value-Added Warehousing and Distribution
The other asset-based 3PL market segment, value-added warehousing and distribution (VAWD), was the third-best-performing segment in 2024, growing 2.3% to $69.7 billion in gross revenue. This is after being the best-performing segment of the four in 2023, with a mere 1.6% increase in gross revenue to $68 billion. In 2024, VAWD experienced the second-highest net revenue increase among the four 3PL segments, growing by 3.9% to $53.9 billion.
Key value-added services in the VAWD segment include kitting, pick and pack, packaging, repair and refurbishment, sequencing and subassembly, merge-in transit and shipment consolidation.
Orders are prepared for loading at UPS' distribution center in Atlanta. (Robin Nelson/Bloomberg News)
For VAWD 3PLs, most warehouses are full, and higher interest rates have kept a lid on new warehouse development. There has been increased focus on fine-tuning warehouse pricing and improved bid performance. Shippers see this as a good time to put out RFPs (request for proposals) and work to mutualize some of the one-sided agreements entered into during the post-shutdown demand surge. Many shippers are examining their supply chain networks and providers to improve inventory management and on-time delivery performance. We anticipate a continued focus on supply chain network flexibility and warehouse optimization.
Overall, VAWD 3PLs with strong customer vertical strategies, operational excellence cultures, integrated warehousing and transportation management skills, and longer-term customer agreements have outperformed undifferentiated, short-term public warehousing 3PLs.
A continual headwind for VAWD 3PLs has been high warehouse labor demand, turnover and wage increases. This is driving significant interest from VAWD 3PLs to automate warehouses with autonomous robots from manufacturers like Fetch, Locus and 6 River Systems. Many 3PLs invested in robotics last year to improve efficiency, accuracy and picking speed. By accessing real-time data and analytics from the cloud, robots can optimize their routes, reduce idle time, reduce human transport/travel time and prioritize tasks based on demand. These autonomous mobile robots use sensors, cameras and mapping software to navigate the warehouse. Robots can be quickly deployed, sometimes as soon as two weeks. Leasing robots also can offer 3PLs greater flexibility in scaling their operations up or down as demand fluctuates.
For 2023 and 2024, the VAWD 3PL market segment has performed better than its transportation management counterparts. With a general shortage of warehousing space and the growth in e-commerce fulfillment and last-mile delivery, it is expected to grow.
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With an estimated 284 million square feet of 3PL warehousing space in 465 North American warehouses, Amazon will remain the No. 1 VAWD 3PL in North America for the foreseeable future, with a difference of 121 million square feet between it and second-place DHL Supply Chain. Globally, Amazon has an estimated 399 million square feet of 3PL warehousing space in 767 warehouses.
The top five VAWD 3PLs in North America ranked the same in 2024 as in 2023, with all reporting increases in North American warehousing square footage except DHL Supply Chain.
Almost all of ҳݰ’s North American warehousing space, 84 million square feet, is within the U.S., with one warehouse in Canada. In 2024, GXO expanded its U.S. warehousing footprint by 6 million square feet, and its U.S. revenue grew 6.1% to $2.9 billion.
Domestic Transportation Management
In contrast, the non-asset-based domestic transportation management (DTM) segment experienced gross and net revenue declines in 2024. Gross revenue decreased by 4.2%, totaling $118.4 billion, while net revenue fell by 2%, reaching $19.2 billion. Despite this decline, it marked an improvement compared to 2023, which saw double-digit revenue drops. DTM gross profit margins increased slightly by 0.3%, resulting in an average gross margin of 16.2%.
The true leaders in DTM are those 3PLs with strong carrier management skills that have technologically innovated. This allows them to efficiently tap long-standing carrier relationships to cover shipper demand rather than being overly reliant on load boards to buy capacity at spot-market rates.
The digitalization of transactional truckload DTM/freight brokerage continues rapidly as more 3PLs have built interfaces to large shippers’ transportation management systems for truckload spot-market rate quoting and automated load tendering and booking. A couple of dozen 3PLs use these TMS interfaces to provide shippers with instant spot rate quotes and the ability to complete load tendering and booking systematically. This process automates part of the traditional spot-market freight brokerage account management function, increasing shippers’ use of more spot versus contract pricing.
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Account management automation of spot-market truckloads is happening in conjunction with the automation of carrier sales (procurement) functions within freight brokers using carrier capacity management systems to digitally match shippers’ loads to carriers based upon historical and real-time carrier capacity data analyzed via machine learning/artificial intelligence algorithms. This digital freight-matching capability has become a competitive differentiator within the DTM segment as 3PLs look to increase the number of loads/shipments they manage per person per day and revenue per person per year. It also can build carrier loyalty by reutilizing high-performing core carriers at rates below the spot market rates offered via load boards.
Four of the top five freight brokers — C.H. Robinson, Total Quality Logistics, WWEX Group (Worldwide Express/GlobalTranz) and Echo Global Logistics — are some of the 3PLs driving industry automation along with the newer tech-first digital freight brokers, such as Uber Freight. At this point, most of the top freight brokers are strategically digitalizing operations to add value through improved carrier management and customer and carrier experiences.
Following suit with our 3PL segment and subsegment definitions, J.B. Hunt jumped to second place on this year’s top freight brokerage firms list with the inclusion of J.B. Hunt Intermodal in addition to its Integrated Capacity Solutions segment with 2024 gross revenue of $6 billion and $1.1 billion, respectively.
Due to the midyear acquisition of UPS’ Coyote Logistics by RXO, Coyote wasn’t listed separately on this year’s list. However, we anticipate RXO’s full-year 2025 results to place the combined entity within the top five largest freight brokers next year.
In all 3PL segments, automation to reduce head counts and increase efficiencies gained further momentum. Strategic growth initiatives to better position 3PLs in a changing environment took on new importance.
