Global freight forwarders ‘must evolve’ to survive in new environment, says report

Declining in value by 3.3% from 2012, the freight forwarding market is facing major challenges as it fights to stay viable in a changing global environment. This is one of the main conclusions of the latest report from Ti, ‘Global Freight Forwarding 2014’.

According to the report, troubling capacity concerns within the air and sea freight markets combined with manufacturers focusing away from globalization and towards regionalization are resulting in changes to freight forwarding strategies and product solutions.

The report highlights some of the key dynamics driving change in the freight forwarding sector:

  • China is no longer the automatic “go to” location in Asia to manufacture goods, particularly as opportunities open in other emerging markets such as Africa, the Middle East, South America and Southeast Asia.
  • Near-sourcing is becoming a reality as such emerging markets as Mexico and Turkey benefit from their proximity to the US and the European Union respectively.
  • There is also evidence of ‘re-shoring’ of manufacturing to developed countries due to the changing balance of transport and labour costs.

The result of these trends has been that new trade lane opportunities are opening and these are already evident among the top European Union and US trade lanes by tonnage which include the likes of Brazil, Algeria and Turkey. Along with the trade lane opportunities, new product solutions are also on the increase. These include multi-modal transport as an alternative to air and/or sea freight movement as well as industry-specific solutions particularly for those commodities requiring temperature-control management such as pharmaceuticals, foods and some high-tech goods.

Many freight forwarders are struggling to cope with the changing dynamics. The best-in-class have adopted strategies which include a focus on emerging markets and specific industries. However, from a financial perspective, many are faltering because of fluctuating rates and capacity within the air and sea freight markets.

According to Ti’s senior analyst, Cathy Roberson, “The global freight forwarding market is evolving and those forwarders that can adapt the quickest to economic and market changes will be the winners”.

Indeed, even though the global freight forwarding market declined from 2012, the outlook is positive with a forecast CAGR through 2017 of 6.7%. Emerging markets will continue to play a growing role and as regionalization and even localization grows, multi-modal transportation solutions will become additional options to air and sea freight as freight forwarders look for profitable growth in the midst of a changing global economic environment.

In Ti’s latest Global Freight Forwarding report, an analysis of the changes affecting the market as well as a high level analysis of the top European Union and US trade lanes by tonnage, market sizing by region, ranking of leading airfreight and sea freight forwarders along with provider profiles is provided.

For additional information please contact Ti’s Sales Executive Holly Francis or download the brochure.