New research from Ti shows the post-Covid-19 global forwarding market is already emerging

Container Shipping
  • The Global Freight Forwarding market contracted by 1.9% in 2019, recording its worst year in more than a decade. Sea freight growth held up but the airfreight market shrank more than 4% as global trade slowed and key sectors weakened
  • Covid-19 is set to cause a contraction of the freight forwarding market of up to 7.5% in 2020
  • Rapidly advancing tech capabilities and shippers’ intensifying demand for smart logistics solutions is already highlighting the potential for a new generation of logistics start-ups – Cyber4PLS
  • Covid-19 has sent volumes and available capacity in the air and sea freight markets spiralling while revealing structural challenges to recovery in both markets
  • Air and sea freight rates have been volatile and look set to remain extremely unpredictable throughout 2020
  • However, primary research shows a remarkable degree of stability amongst shippers’ modal choices and freight procurement strategies
  • DSV Panalpina now 3rd largest global forwarder overall and the largest air forwarder

25th June, 2020, Bath, UK – New research from Transport Intelligence (Ti) shows the post-Covid-19 global forwarding market is already emerging. Despite the widespread disruption caused by the global pandemic and the extreme measures taken to deal with it, globally the freight forwarding market is already reshaping and adapting to the new realities to come.

Ti’s latest Global Freight Forwarding 2020 report highlights the challenges forwarders face in 2020, not least as the market entered the pandemic already on the defensive. The global freight forwarding market contracted by 1.9% in 2019, recording its worst year in more than a decade. The US-China trade war and its spill over saw volumes fall and growth curtailed, especially in the global airfreight market. A slowdown in the global automotive sector also held back growth. Overall it was the air freight market that weighed on growth – it ended 2019 4.1% smaller having failed to overcome strong headwinds globally. Growth in sea freight was more positive in 2019, although a global expansion of 1.3% was the market’s weakest since the Great Recession battered sea freight in 2009.

While many had expected a more positive growth trajectory in 2020, the Covid-19 pandemic has created significant downside risks. Ti’s Covid-19 impact analysis, which uses early trade, GDP and volume indicators, shows a second consecutive year of contraction on global freight forwarding is all but inevitable, with as much as 7.5% of market value set to disappear in 2020.

“This year may come to be the most challenging the forwarding market has ever faced – more so than the 2008/09 Great Recession even. Transitioning from the trade war and general slowdown in global trade in 2019 to the Covid-19 pandemic and the dysfunction it’s causing this year will be extremely difficult to navigate,” said Nick Bailey, Head of Research at Ti. “Globally, the forwarding market is at an inflection point. Those that can best adapt daily operations, organisational strategy and effectiveness, and make the best use of new technology, will be most prepared for the changes coming.”

Despite this challenging environment, positive signs are already beginning to emerge. Amid volatility on both the supply and demand sides, primary research undertaken for Global Freight Forwarding 2020 shows a remarkable degree of stability amongst shippers’ modal choices and freight procurement strategies. In both instances, around half of all those surveyed have maintained both their modal and procurement mix, maintaining and leaning on established relationships throughout the pandemic while also making use of new spot market tools to empower choice and decision-making when needed.

It is certain that 2020 will be a challenging year for freight forwarders globally, and the largest players will be looking to secure market share. Analysis by Ti shows a significant shake-up in 2019 with the newly combined DSV Panalpina making strides to become the largest air freight forwarder by revenue globally. It is now also the third largest forwarder globally.

Michael Clover, Ti’s Head of Commercially Development, commented: “2020 will now inevitably follow 2019 as another very difficult year for freight forwarders, but at the mid-point of the year we are beginning to see the immediate shock of Covid-19 subside and can start to map the future of the market in a post-Covid world. Although Ti’s primary research shows that modal and procurement choices remained relatively stable during the crisis, interviews with major forwarders suggest that a reappraisal of strategy is already underway as many look to set themselves up for a world of changing trade patterns, higher inventory, rising protectionism and greater flexibility”.

Source: Transport Intelligence, June 25, 2020

Author: Transport Intelligence

Global Freight Forwarding 2020 provides a detailed, up to date look at the impact of COVID-19 on the market and other major trends and drivers affecting the market in 2020 and beyond. For more information, contact Michael Clover, Ti’s Head of Commercial Development at [email protected]