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Amazon debuts atop global 3PL rankings
American Shipper
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Buoyed by the continued expansion of the global economy and a new entrant in Amazon, the world’s 50 largest logistics companies registered combined revenue of $341 billion in 2018, a 14 percent increase from 2017.

Amazon led the way with $42.7 billion in third-party logistics revenue, less than 20 percent of the Seattle-based firm’s entire 2018 revenue of $232 billion, according to Pittsburgh-based research and consulting firm SJ Consulting Group.

Although Amazon’s activities as a 3PL would also have ranked it highest on this list during 2017, its third-party logistics activities had not been included in these rankings until this year, notes Mark D’Amico, senior analyst at SJ Consulting.

As in previous years, this year’s Top 50 list calculates revenue from a broad range of logistics services, incorporating freight forwarding, air and ocean, truckload and less-than-truckload (LTL) brokerage, intermodal, warehousing, and dedicated trucking. The impact of foreign exchange rate fluctuations was not “huge” for this year’s calculations, D’Amico explained, when only three of the currencies — euro, British pound, and Danish krone — changed by more than 3 percent.

Amazon, the Seattle-based e-commerce giant, reports multiple sources of revenue, not just that from its online retail sales, which involves Amazon’s buying and then selling the various categories of products it purchases. The portion of Amazon’s revenue now included on the Top 50 list is “third-party seller services” — which comprise fulfillment fees and storage fees in Amazon’s warehouses. Unlike Amazon’s e-commerce sales, “These are products that Amazon does not purchase before shipping; these are fees that Amazon is collecting from its sellers,” D’Amico said.

Evan Armstrong, president of Armstrong & Associates, a 3PL research firm, does not include Amazon in his listings of 3PLs because he believes that company’s statistical reports do not provide enough clarity into the revenue that Amazon derives from its various third-party logistics services. Despite such ambiguity, Armstrong added, “We think that about 75 percent of the third-party seller revenue [reported by Amazon] is probably third-party logistics.” No matter how the numbers are calculated, Amazon has clearly become the largest global 3PL, surpassing DHL, with $33.24 billion in 2018 revenue. And yet, Amazon “never talks about itself as a 3PL,” Armstrong said.

If Amazon had been excluded from the list, the year-over-year growth rate in 3PL revenue would have been 11.6 percent among the Top 50 companies. No other online retailer is providing third-party logistics services on a scale like Amazon, D’Amico said. “The closest thing, in one sense, is eBay, the online sales site, which hosts the product and collects fees on its sale, but does not manage the fulfillment.”

Amazon’s attraction
D’Amico added that UPS and FedEx have tried to roll out some services that provide the same sort of fulfillment as Amazon offers, but Amazon has an advantage because those other companies “cannot help the seller generate the sale. Third-party sellers are attracted to Amazon because of the exposure they get.” They use Amazon to reach new buyers in new markets.

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