Weathering the crunch: Logistics firms stay strong

From ” As the economic crisis deepens and fear of a deep, prolonged recession increases, third-party logistics companies are capitalizing on the increasing need of companies to implement cost-saving logistics solutions. Third-party logistics accounts for about 10 percent of the total logistics activity in the United States, but the revenue in the industry has grown at an annual rate of three to four-and-a-half times the rate of the gross domestic product recently, said Richard Armstrong, chairman of Armstrong & Associates, a leading global 3PL company.

“With a negative GDP in the fourth quarter we’ll probably see growth slow to single digits and less than 5 percent on an annual basis,” Armstrong said. “We’re going to get hurt as the economy gets hurt.”

But hurt means different things to different industries. The trucking and shipping industries have been hit hard, posting staggering losses in the third quarter.

“Most of the 3PL activity involved nonasset activities and most trucking companies that are going bankrupt are completely asset-based,” Armstrong says. “Twelve to 15 percent of the miles they run are empty miles and they don’t have anyone to pass that on to.” Weathering the crunch: Logistics firms stay strong

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