Business, Feature, Freight News, Sea

Global Forwarding Market to Expand 1.7%

[ August 8, 2024   //   Gary G Burrows ]

Challenges arising from a global economic downturn, shifts in consumer behavior, and an oversupply shipping capacity have led the global freight forwarding market to contract by 1.3 percent in 2023, according to a report from Ti Insight.

            The Global Freight Forwarding 2024 Report, Ti Insight, the market research firm for the global logistics industry, shows that the global freight forwarding market continues to normalize, with demand for air and sea freight forwarding services remaining soft.

            The market’s performance can be attributed to weakness in air freight forwarding, which shrank by 2.1 percent in 2023. Sea freight forwarding has also had a less than desirable performance, contracting by 0.6 percent. The global economic downturn is the main underlying reason for the disappointing results in the forwarding market, Ti Insight said.

            The report is written by industry researchers, analysts and utilizing data from Ti’s GSCi knowledge portal, a data powerhouse with over 1 million pieces of data and analysis.

            “The market for freight forwarding has reflected the volatility of the wider market for air and sea freight over the past four years,” said Thomas Cullen, chief analyst at Ti. “For large freight forwarders especially, the years 2020-22 were a boom, with revenues increasing by half and profits doubling. However, 2023 saw results falling ‘back-to-earth’ with profits and revenues falling as the markets returned to what might be called some sort of normality.

            “However, the market remains complex with exceptional events, such as the effective obstruction of the Suez Canal exerting effects on the market that have specific effects on different types of providers,” Cullen continued. “In particular the balance between non-asset-based service providers such as freight forwarders and asset owners such as airlines and shipping lines has experienced significant instability.”

Report Highlights

            • The global freight forwarding market contracted by 1.3 percent in real terms (holding prices and exchange rates constant) in 2023, bringing the market value to US$209.1 billion.

            • In nominal terms (holding exchange rates constant only), the global freight forwarding market contracted by 45.6 percent in 2023. This significant drop can be attributed to reduced freight rates for air and sea compared to last year.

            • The global forwarding market is expected to expand slightly in 2024 (1.7 percent in real terms).

            • The Asia-Pacific freight forwarding market experienced the third-largest market contraction compared to the other regions. However, it remains the largest region, accounting for 35 percent of the global freight forwarding market.

            • Ti data shows that the total the global freight forwarding market will see a real CAGR of 3.3 percent over the five years to 2028.

            • Ti’s State of Logistics Air and Sea Freight Forwarding Survey 2024 reveals that 91.1 percent of freight forwarders experiencing increased pressure on margins. Rising competition and stronger negotiation by clients continue to be the main reasons for the increased pressure on margins. Targeting higher-margin clients and offering more value-added services are likely to be the most successful strategies in pulling back eroding margins in the next 12 months.

            • The exceptional market conditions of the past two years are long gone, and the markets are on a new trajectory, leading to significant downturn in revenue and profits among freight forwarders in 2023. 2023 saw results falling ‘back-to-earth’ with profits and revenues falling as the markets returned to what might be called some sort of normality. All of the top 20 forwarders saw revenue declines in 2023.

            • Kuehne + Nagel continued to maintain its place as the leader in the global freight forwarding market, with revenues of US$17.4 billion in 2023.

            The report also analyzes the global air and sea freight forwarding market and offers in-depth market projections and trade forecasts. The full report is available for £1,495 at https://tinyurl.com/2snpwjzf.

Tags: Global Freight Forwarding 2024 Report, Ti Insight