You might have missed it since tariffs keep dominating the headlines, but there was a big acquisition in the third-party logistics industry last week: Echo Global Logistics (“Echo”) announced that it is acquiring ITS Logistics. Here are some details from the press release:
Founded in 1999, ITS Logistics has built a strong reputation as a modern 3PL delivering purpose-built solutions for complex supply chain challenges. The company is widely recognized for its industry-leading drop trailer and trailer pool program, DropFleet, as well as its expertise in dedicated capacity, intermodal and drayage solutions, freight security, omnichannel fulfillment, and sustainability-focused transportation strategies.
The combination will create one of the leading transportation and logistics platforms with pro forma 2025 revenue of approximately $5.4 billion, expanding Echo’s scale while accelerating the evolution of ITS’s differentiated solutions through Echo’s technology platform.
Growth via acquisitions has long been Echo’s playbook, with at least 23 acquisitions since its founding in 2005. In this case, based on the emphasis in the press release, it’s clear that ITS’ drop-trailer and trailer-pool program was a core part of the value proposition. Demand for this type of offering is growing, as shippers look to improve throughput, reduce detention, and secure more reliable capacity — which helps explain why other providers are pursuing similar models, such as Uber Freight with its PowerLoop offering. For related commentary, see “Profiles in Transportation Management Excellence: Molson Coors’ Success With Drop-and-Hook.”
Rather than dive into the merits of this particular acquisition, I want to revisit a couple of questions that it raises for me about the third-party logistics (3PL) market.
Is the 3PL market becoming bar-bell shaped?
I first raised this question almost 11 years ago. Here is what I wrote at the time:
I believe the 3PL industry [based on trends occurring at the time] is perhaps becoming barbell shaped, with small, niche providers growing and thriving at one end; very large, global providers growing and thriving at the other end; and everybody else getting squeezed out in the middle.
If you’re a 3PL in the middle, which end of the barbell will you race toward?
When looking for a 3PL partner, do companies prefer a Best-of-Breed or a One-Stop-Shop provider?
I addressed this question in a March 2023 blog post, highlighting the following insights from our Indago supply chain research community:
Almost three-quarters of our member respondents (72%) said they would prefer to work with a Best-of-Breed provider (one that specializes in a specific logistics function) instead of a One-Stop-Shop.
“I always lean towards providers who excel at having focus,” said one Indago supply chain executive. “Be great at one thing and I’ll give you my business. If you try to do too much, you’ll lose out on quality.”
Providing a counter view was this executive: “I am a fan of One-Stop-Shop, if there are economies of scale benefits, as there should be.”
If you’re a third-party logistics provider, the first question is really about growth and differentiation, and the second question is about your value proposition to clients. The two are linked, of course, but if you haven’t revisited these questions lately, what are you waiting for? The competitive landscape is very different today compared to a decade ago, and so are customer needs and expectations, with technology (such as AI and robotics) playing much bigger roles than before.
The Echo–ITS deal may look like just another acquisition, but it’s really a reminder that the middle of the 3PL market is getting more uncomfortable by the year. Specialize, scale, or get squeezed. That choice is becoming harder to avoid.
