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Tuesday, June 03, 2008

Third-party logistics firms Riding High on Economic Down Turn

Many Third party logistics firms that do not own their own trucking firms are doing very well in the US downturn that has yet to move in to recession.  Their efficient operating models are helping them to hold their own and pick up more business from other companies trying to cut costs.

Shares of some of the established third-party logistics companies like C.H. Robinson Worldwide Inc (CHRW.O: Quote, Profile, Research) and Expeditors International (EXPD.O: Quote, Profile, Research) have been trading around their lifetime highs.

Analysts believe specific third-party logistics providers will remain attractive not only because they are immune to rising fuel prices, but also because they are steadily grabbing market share from companies that have their own carriers.

Third-party logistics firms escape slowing economy | Special Coverage | Reuters


One of the keys to success here seems to be the lack of vertical integration with trucking firms owned internally.  Firms that do own their own trucking groups are hurting as oil prices continue to rise, and they are losing money from oil as they simultaneously try to stop the flow of business to third party logistics groups that are taking the baby along with the bath water right out of the glass sink that bathe them to nurture a business that would otherwise seize up.