Profit margins are on the rise for 3pls
With so many factors affecting the logistics process, including the price of fuel, it benefits companies to leverage the knowledge that Third Party Logistics (3PL) companies have to offer. In fact, Logistics Management recently reported on the ongoing positive impact 3PLs are having for shippers.
The Transportation Intermediaries Association (TIA) published a Fourth Quarter 3PL Benchmarking Report for 2015 highlighting various indicators, including the number of shipments, the invoice amount per load and the profit margin percentage. It was found that even with a decrease in shipments and revenue in the fourth quarter of last year, profit margins for shippers actually increased.
Some of the key metrics listed in the report include the following:
Less-than-Truckload (LTL) freight
- Shipments down 7.5% annually (114,109)
- Invoice amount per load down 0.1% ($416)
- Profit margin per load up 9.3% ($81)
- Profit margin percentage up 19.4% (160 basis points)
- Shipments up 3.0% annually (252,686)
- Invoice amount per load down 9.2% ($2,194)
- Profit margin percentage up 9.8% (50 basis points)
So how do profit margins increase when so many other indicators decreased? Polaris believes that the reliance on 3PLs during this time has allowed shippers to streamline their operations and discover solutions that might not have occurred to them before—all of which significantly affect a company’s ability to strengthen its bottom line.
Mark Christos, a member of the TIA Board of Directors, agrees that these statistics underscore the benefits that come from using 3PLs on a consistent basis. “It is a very good sign and shows that 3PLs are providing good service, and carriers are also relying on 3PLs,” said Christos, while also noting that these collaborative trends are likely to continue into 2016.
Polaris Logistics Group: A Trusted 3PL Partner
As a 3PL, it is our duty to understand the factors that affect supply chain and logistics, and to offer this insight to our customers. Polaris believes that a collaboration between our team and the other parties involved in the logistics process is necessary to develop logistics solutions that result in increased profit margins for your company.
Maintaining a proactive strategy and collaboration requires a constant line of communication between the drivers and our customers, as well as a close relationship with customs brokers throughout the life of a load, ensuring easy delivery across international borders. To learn how Polaris Logistics Group can offer our industry expertise to your company, contact us at 855.879.7186 or fill out the submission form on our website.