Armstrong & Associates

As e-commerce sales surge toward $8 trillion, third-party logistics providers (3PLs) are evolving to handle higher order volumes, tighter delivery windows, and complex returns using automation, AI, and integrated warehouse management systems (WMS). By offering scalable fulfillment, reverse logistics, and real-time visibility, 3PLs help shippers of all sizes optimize operations, cut costs, and enhance customer satisfaction in a rapidly changing digital marketplace.

Third-party logistics (3PL) providers are grappling with geopolitical instability, fluctuating tariffs, rising costs, and labor shortages, while also facing pressure to accelerate e-commerce order fulfillment. Smaller 3PLs struggle to keep pace with larger peers due to high costs of automation, AI, and robotics. Despite these challenges, the U.S. 3PL market saw growth in 2024, with net revenues increasing by 1.6%.

The report, entitled “Working through the Uncertainty—Latest Third-Party Logistics Market Results and Outlook,” said that U.S. 3PL Market net revenues, which Armstrong defines as gross revenues less purchased transportation, increased 1.8%, to $131.5 billion in 2024, coming off of a 12.8% annual decline, to $129 billion, in 2023.

A new report issued by Brookfield, Wis.-based supply chain consultancy and global third-party logistics (3PL) research provider Armstrong & Associates, in collaboration with the National Home Delivery Association, examines the current state of a key aspect of the last-mile delivery market, big and bulky last-mile delivery.

Ongoing U.S. trade policy shifts—including new de minimis rules for Chinese shipments—are reshaping global logistics. With rising tariffs and reduced exemptions impacting cross-border e-commerce, Armstrong & Associates projects 2025 third-party logistics (3PL) revenue to hit $316.2 billion, up 4.5%, fueled by early-year growth despite increased uncertainty.

As market conditions remain flat and capacity continues to loosen, digital freight matching (DFM) leaders are preparing for a technology-driven rebound, focusing on AI and automation to optimize future growth.

The e-commerce boom has driven third-party logistics providers to heavily invest in automated fulfillment. Shippers have embraced the change, making e-commerce a leading growth driver across all segments of 3PL services.

The report, entitled “Divergence—Latest Third-Party Logistics Market Results and Outlook,” said that U.S. 3PL Market net revenues, which Armstrong defines as gross revenues less purchased transportation, fell 12.8%, from 2022 to 2023, to $129 billion, with overall gross revenues down 26.1% annually, and total U.S. 3PL Market revenue coming in at $299.5 billion, for 2023.

Most global and domestic 3PLs faced huge challenges last year as shippers adjusted to ongoing issues related to inventory optimization and geopolitical risk. To keep pace, the top 3PLs are now amping up their collaboration with carrier partners and implementing as much cutting-edge automation as they can to improve customer service—but will it be enough?

Technological solutions and platforms are being rapidly developed and are catapulting the freight forwarding industry into a new era. Today, the forwarding industry is undergoing a digital revolution, and analysts surmise that companies that fail to keep pace with these advancements risk falling behind—and fast.

Themes focused on over the course of this podcast included: the state of the market; ways in which the pandemic affected 3PL operations; M&A; how 3PLs are adjusting to and leveraging nearshoring; and the economy, among other topics. 

In this podcast, Jeff Berman, Group News Editor for Logistics Management and the Peerless Media Supply Chain Group interviews Evan Armstrong, President of Brookfield, Wisc.-based supply chain consultancy Armstrong & Associates.

Following a previous announcement that Greenwich, Conn.-based global contract logistics services provider GXO Logistics made a $965 million cash offer to acquire Chippenham, UK-based Wincanton, a supply chain solutions services provider across myriad vertical markets, it appears that Wincanton is receptive to the offer.

Total estimated 2023 global 3PL market revenue was off 18.5% annually, coming in at $1.2 trillion. But even with that decline, the firm observed that this tally still represented a 25.3% increase, when compared to pre-pandemic 2019.

We canvassed a seasoned group of industry observers to record what happened this past year and what it means to our logistics and supply chain operations as we head into 2024. Here’s what they had to say.