Releasing the IMF’s April 2019 World Economic Outlook Report, Managing Director Christine Lagarde stated that “the global economy is at a delicate moment” and that “global growth has been slowing, largely because of rising trade tensions and financial tightening in the second half of 2018.” These effects have been felt across the logistics market over the course of 2018, as can be seen from Ti’s newly released market sizing data.

Within freight forwarding, a market heavily reliant on healthy global trading conditions, market growth fell from 8.0%* in 2017 to 3.9% in 2018. The slowdown is not altogether surprising given the exceptional performance in 2017. As global demand picked up considerably in 2017, demand for air transport services surged as shippers rushed to re-stock inventories and move goods to market. As this cycle drew to a close in early 2018, the market’s expansion reduced substantially, as is common following so-called “inventory re-stocking cycles”. Trade tensions between the US and China have had far-reaching implications for regional and global supply chains, which has affected forwarding growth across different countries.

The slowdown in global contract logistics growth was much smaller. The market grew by 4.9% in real terms, down from 5.0% in 2017. The US market performed relatively well, whilst China’s market is continuing show remarkable vigour. Manufacturing has previously been (and continues to be) a strong base for its contract logistics growth, but a growing consumer market led by internal investment, growing wages and a boom in e-commerce has created a vibrant opportunity in Chinese retail contract logistics.

e-commerce is continuing to drive rapid growth in China’s express and parcels market too, which is expanding much faster than the global growth rate. Although there are significant brightspots in areas such as healthcare and cross-border e-commerce, weaker macroeconomic conditions have played their part in slowing market growth. FedEx’s recent financial results were heavily impacted by these trends, as stated by Alan B. Graf, Jr., Executive Vice President and Chief Financial Officer: “Slowing international macroeconomic conditions and weaker global trade growth trends continue, as seen in the year-over-year decline in our FedEx Express international revenue.” The global market growth rate of 8.5% in 2018 was 1.2 percentage points lower than the rate in 2017.

Europe’s macroeconomic performance has been relatively limp compared against the rest of the world. Germany sits close to recessionary territory as a result of softer external demand and disruption in its automotive sector. Italy is feeling the effects of mounting public debt. Brexit uncertainty continues to harm investment into the UK economy. As road freight remains by far the dominant mode of transport for moving goods domestically and internationally in Europe, its market growth in volume terms has been adversely affected through falling economic growth in 2018. However, price growth has been driven through a rising cost-base. Notably oil prices picked up in 2018, accelerating at a faster rate than had been seen for a number of years, and this has translated into higher diesel prices. Carriers have charged more for their services to compensate, and as a result, nominal growth (which measures growth in terms of volumes and prices) was higher in 2018 than it was in 2017.

Ti’s new figures show robust growth across major global logistics markets. Growth rates are not flattering when compared against the previous year, where global GDP growth was the fastest it had been since 2011. Nonetheless, there have been significant opportunities for LSPs to grow top-line figures through the course of the year.

Source: Transport Intelligence, April 23, 2019

Author: Andy Ralls


*All growth rates mentioned are in real terms (holding prices and exchange rates constant at 2018 levels) unless stated otherwise.


Ti has released market sizing data for the aforementioned markets, with market sizes and growth rates for 2018, projections for 2019 and 5-year ahead forecasts. To find out more, click here, or contact Ti’s Head of Commercial Development, Michael Clover via email: [email protected] or through calling +44 (0) 1666 519907.