Bad things happen in threes; Global freight forwarding market slumps in 2019

Freight Forwarding

Trade wars, social unrest and economic slowdowns, what do they have in common? Their ability to wreak havoc on the global freight forwarding market in 2019.

Ti’s latest market sizing figures prove just how vulnerable the freight forwarding market is to unprecedented events. Whilst market growth was widely forecast to slow in 2019 in comparison to 2018, it was unlikely that any could have predicted growth in the market to be this disheartening.

The combination of trade-wars, social unrest and a global economic slowdown contributed to the worst year for the global freight forwarding market in a decade. However, trade conflict between the US and China has unsurprisingly had the most significant impact on the global freight forwarding market, which contracted 1.7% in real terms in 2019.

The performance in the market can be primarily attributed to the weakness in air freight forwarding, which shrank by 4.1%. The air freight market was volatile and unpredictable throughout 2019. All regions, with the exception of Sub-Saharan Africa, experienced declines in their respective air freight market. This was largely due to the US-China trade war. Due to the global nature of modern supply chains the impacts of the trade war have not been confined to the US and China exclusively, but the rest of the world too. Markets which supply raw materials, or are involved in light manufacturing, or production of specialised intermediate/ semi-finished goods have seen volumes fall as a result of the dispute.

Sea freight has also had a lacklustre performance in 2019 only growing 1.3% year-on-year. Ironically, in attempts to subdue Chinese trade, the tariffs have more severely impacted the sea freight forwarding performance in North America.

The forwarding market was not all doom and gloom. Opportunities arose in new places including Vietnam which is largely considered to be a winner of the US-China trade war, as Vietnam’s trade with the US grew substantially in 2019. Additionally, many have predicted that the trend of moving manufacturing out of China into Vietnam is likely to continue for the foreseeable future. Additionally, the South American forwarding market has vast potential over the next few years as it strengthens ties with the EU.

Prior to the outbreak of COVID-19, Ti forecast that the market will improve and grow at a real 2019-2024 CAGR of 3.6%. The next few years looked promising. Global trade was forecast to improve and there was hope that tensions surrounding the US-China trade would ease following the initiation of the first phase of the trade agreement.

However, given the current climate, it is unclear whether the market will bounce back once life returns to normal. COVID-19 overshadows previous concerns regarding the trade war as the world braces itself for an economic recession spurred on by the virus. Unfortunately for the market, it appears that bad things happen in threes; trade wars, social unrest and slowing economies all impacted the market in 2019. Already 2020 seems to be off to a rocky start thanks to COVID-19, a looming global recession, and a degree of social unrest in some regions. Only time will tell how resilient the forwarding market is to these threats. However, for the time being, it may be best to ask Alexa to skip to 2021.

Source: Transport Intelligence, April 28, 2020

Author: Beth Poole

For analysis covering the impact of COVID-19 please see “Global Freight Forwarding Market Sizing 2020: COVID-19 Impact Analysis, Ti’s new whitepaper providing a snapshot of market growth potential, available to download on Thursday, April 30. The paper includes Global and regional projections for the impact of COVID-19 on the freight forwarding market. Additionally, Ti market sizing data for global freight forwarding with market sizes and growth rates for 2019, projections for 2020 and 5-year forecasts will available to download on GSCi from Thursday, April 30.

For further information, please contact Michael Clover, Head of Commercial Development, [email protected]