3PLs born from shippers
Evan Armstrong, president of consulting firm Armstrong & Associates, said it is fairly unusual for 3PLs to grow out of shipper operations, but not unprecedented.
He noted Dunavant was different in that it was growing out of a trading company and trading companies do a lot of logistics work as part of their primary business.
Examples of manufacturers that have created 3PL subsidiaries include:
- Caterpillar Logistics, which Armstrong said has top line revenue of about $3.5 billion and runs 119 distribution facilities with 28 million square feet of space. He said about half of what Caterpillar Logistics does is for the parent company.
- Uniroyal’s USCO subsidiary, which was later acquired by Kuehne+ Nagel in 2001 for roughly $300 million.
- Fidelitone, based in Wauconda, Ill., transitioned in the 1970s from making phonograph needles to parts distribution and then to a 3PL business as the music industry changed. Today, Armstrong said Fidelitone has top line revenue of more than $320 million, 500 employees, and 28 warehouses with as much as 1 million square feet of space.
- Technicolor Transportation Management Services, a unit of the Paris-based entertainment technology company, has revenue of about $450 million, Armstrong said. The company handles more than 15 million shipments annually, for example distributing DVDs and games to retailers.
- Celestica, the contract electronics manufacturer, has also developed a sizeable 3PL operation.
- ATC Logistics and Electronics began life as a company that remanufactured automobile and light truck transmissions and grew its 3PL subsidiary to the point where it was purchased in 2010 by GENCO for $512.6 million.
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