Transport intelligence has launched its first ever Mid-year Market Sizing Review. Covering the Freight Forwarding, Express, Contract Logistics and European Road Freight markets at global, regional and country-level, the analysis reveals high growth for the sector over the first half of 2018, through to the end of 2018, and sustained growth forecasts to 2022.
Forwarding slowdown to new normal of high growth
Growth in the freight forwarding market is expected to see the most significant decline in 2018, with growth slowing by 3.9 percentage points from a peak of 8.0% in 2017, down to 4.1% in 2018. The contrast is even starker in air freight, as market growth slows from 10.2% to 4.3%. While in sea freight the market is steadier, with a reduction of 1.7 percentage points to 3.9% growth.
The slowdown shows clearly that the spike in volumes caused by the inventory restocking cycle of 2017 has now subsided. However, in line with economic growth, the prospects for both air and sea freight are still strong, with 5-year CAGRs of 4.2% and 5.1% predicted respectively. At around twice the growth rate seen from 2012-2017, there are potentially huge opportunities for freight forwarders.
However, as Trump trades tariffs with China the first signs of the transpacific trade war are beginning to show in the figures, tempering trade growth on the transpacific lane.
Cross-border e-commerce boosts international express
Cross-border e-commerce is boosting the international express market which recorded an bumper year-on-year growth rate of 8.6% in the first half of 2018. International express growth was particularly prevalent in regions with high cross-border e-commerce volumes, such as Asia Pacific and Europe.
With the rapid expansion of cross-border e-commerce volumes showing through in the figures, Ti’s 5-year forecast also show sustained growth for international express at a rate of 6.2%, representing an attractive growth opportunity for international players.
Contract logistics and road freight growing at historic highs
The contract logistics market is expected to see growth of 5.4% in 2018, a level not seen since the bounce back from the financial crisis 10 years ago. Sustained economic demand through the forecast period is expected to result in a real 5.2% CAGR for the contract logistics market over 2017-2022, with growth perpetuated further by a growing market for e-fulfilment services which demand more intensive logistics operations than traditional retail warehousing.
Ti’s projections show real European road freight growth of 3.5% for 2018, but price rises led by fuel costs and a capacity crunch are expected to push nominal growth to a high of 5.8%. The forecast shows a CAGR of 2.7% for 2017-2022, with growth tempered by a reigning in of monetary stimulus and rising interest rates expected over the period.
“After a bumper 2017 marked by strong growth in global trade, all logistics sectors reviewed are continuing to grow at healthy levels this year. This is characterised by continued expansion in China, a growing US economy, and a stable European market. Against protectionist headwinds, global logistics is expected to remain resilient through the rest of 2018,” said Andy Ralls, Quantitative Analyst at Ti, of the results.
Commenting on the outlook, Ti’s Head of Research, Nick Bailey, said “We’re in an age when evermore uncertainty, unpredictability and change is inevitable, and as a logistics industry we’re challenged with keeping goods flowing day-to-day on the one hand, and trying to understand and manage that change, plan for the future and manage innovation and disruption on the other. The growth across the key Freight Forwarding, Express, Contract Logistics and Road Freight markets these numbers show go some way to demonstrating that the industry is meeting today’s challenges and growing as a result. The battle really has only begun, though. There are strong fundamentals driving the growth in all markets, but capturing that growth will need a mix of speed and agility alongside the integration of technology and new working practices. There’s no guarantee that the business models which led to strong growth in 2017-18 will still be viable in 2022,” said Ti’s Head of Research, Nick Bailey, of the analysis.
To request our Mid-year Market Sizing Review brochure which provides more information on the data available please click here.
Source: Transport Intelligence, October 11th, 2018
Author: Nick Bailey
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