The freight forwarding market is experiencing its fastest expansion in a decade, according to the latest issue of Ti’s report published on 23 June.
Global Freight Forwarding 2022 says that in 2021 the global forwarding market rebounded and exceeded its pre-pandemic levels. However, limited capacity and record-high freight rates present a challenging market for shippers, but also an extraordinary ‘uplift’ in the profitability of freight forwarders.
The global freight forwarding market grew by 11.2% in real terms during 2021, the fastest expansion in a decade. This is the fastest growth since 2011, bringing the market value to €270 billion.
The market is forecast to grow 5.7% in 2022 and at a 3.7% CAGR over the five years to 2026.
Forwarding growth in 2022 will be driven by air freight, which is forecast to grow by 6.1% in real terms.
However, 2026 forecasts are more pessimistic due to inflation, the war in Ukraine, and consumer spending slowing down.
The air forwarding market is forecasted to exhibit slightly faster growth, expanding at an average of 4.0% a year from 2021-2026, while the sea forwarding market is expected to grow slightly less quickly at 3.6% over the period.
Ti says that Kuehne + Nagel and DSV are the biggest companies in the field, having successfully integrated acquisitions in recent years.
The entrance of shipping lines into the acquisition market has created a new driver of industry consolidation, not least due to the carriers’ almost unlimited funds and access to ‘cheap’ money.
Digital forwarders must combine smart technology with operational experience to be game changers in the industry, Ti adds. Achieving both objectives while remaining profitable will be a challenge, especially if access to capital becomes more limited.
Ti senior research analyst, Viki Keckarovska, said: “Demand for capacity continues to outstrip supply, contributing to increased freight rates and consequently increased yields and revenues among forwarders. Driven by these challenging market conditions, shippers are re-assessing their freight procurement strategies and contractual relationships with logistics service providers to adjust to the ever-changing environment. The digitalization trend in the forwarding industry, which was already gathering pace before the pandemic, has been accelerated further by the crisis, with the adoption of digital forwarders, online freight booking platforms and marketplaces increasing threefold since 2019.”