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Intense Competition in 3PL Market Raises Brand Recognition Bar

In the era of e-commerce emergence, the importance of speed to market and the need to control costs though operational efficiencies, branding is becoming as important to third-party logistics (3PL) providers as the companies they serve.

A new 3PL Brand Recognition Survey by Armstrong & Associates reveals competition has heated up among the more established third-party logistics firms and those newer companies making a name and reputation for themselves. The transportation market research and consulting company said the 3PL industry “relies on reputation, quality, solution and scaleability,” and “growing the top line means being top-of-mind to potential customers.”

On the measure of brand strength, DHL Supply Chain & Global Forwarding topped the list again, with 56 respondents ranking it as the first 3PL that came to mind. But the 2018 survey, which received 278 responses, revealed that when it comes to brand strength, the gap between the top three is closing, with XPO Logistics and C.H. Robinson quickly catching up.

Armstrong note that XPO’s 2015 merger with Menlo helped boost its brand strength. In 2013, Menlo placed seventh on the list, while XPO didn’t break the top 20. XPO Logistics, now ranked second, had 92 percent of DHL’s brand strength.

Meanwhile, C.H. Robinson’s brand strength has climbed steadily over the past decade to come in third on the list. C.H. Robinson had a brand strength of just 50 percent in 2007, 77 percent in 2013 and 88 percent in this year’s survey.

The survey asked about the operational strengths of respondents’ top choices. DHL stood out in “value-added warehousing and “distribution and international transportation management,” while respondents consider Ryder Supply Change Solutions, ranked seventh, strong in “dedicated contract carriage,” and XPO as a leader in “domestic transportation management.”

Other recognizable names in the top 10 were No. 4 UPS Supply Chain Solutions, No. 5 Kuene + Nagel, No. 6 FedEx, No. 8 Echo Global Logistics, No. 9 Geodis and No. 10 Penske Logistics.

Armstrong noted the 3PL market has seen strong growth the past two years: “Macroeconomic trends, combined with intensifying supply chain complexity, means demand for 3PLs is increasing.”

The 3PL market expanded 10.5 percent in 2017, to $184.3 billion, and is on track to exceed $200 billion in revenue in 2019, according to Armstrong. Conditions are ideal for winning new business, even as 3PL competition increases, the report noted.