The global freight forwarding market declined in value by 3.3% year-on-year in 2013 but the outlook through to 2017 is bright, according to the latest report from Transport Intelligence.
The consultancy’s ‘Global Freight Forwarding 2014’ study found that the sector’s earnings in 2013 were still behind the highs of 2011 and operating profits had declined over the same period.
The global freight forwarding market declined in value by 3.3% year-on-year in 2013 but the outlook through to 2017 is bright, according to the latest report from Transport Intelligence.
The consultancy’s ‘Global Freight Forwarding 2014’ study found that the sector’s earnings in 2013 were still behind the highs of 2011 and operating profits had declined over the same period.
But while forwarders face major challenges to remain viable players in a rapidly changing trading environment, there is ample cause for optimism. Ti concluded the forwarding market would recover as the excess of ships and freighters was reduced by higher demand, helping boost margins and rate stability.
“The outlook through to 2017 remains positive with forecasted growth of 6.7% CAGR over 2013-2017 led by growth in ocean forwarding,” said the 177-page report.
Cathy Roberson, senior analyst at Ti and the report’s lead author, said forwarders were also increasingly seeking out new areas of growth to bolster bottom lines.
She told Lloyd’s Loading List.com that “regionalisation” had seen trade growth shift from East-West flows to become more complex. Multiple trade bridges now link developed and emerging markets and additional complexity is added by the growing trend to embrace near-sourcing and, in some regions, more protectionist policies.
“Freight forwarders have noted these changes in the global market and are identifying where they can achieve most growth,” she said. “So there is more focus on emerging markets, but also on industry sectors such as perishables and healthcare.”
She said trade lanes were shifting as freight forwarders look to emerging markets in Africa, Asia, the Middle East and South America for growth opportunities, while at the same time modal shifts are underway. Forwarders are also upgrading IT systems to provide visibility on a global not regional basis, often by using cloud-based systems.
“They are offering customers more options on more lanes by expanding LCL by sea, or using air-sea systems, and also by offering road options such as road/rail which are particularly important as regionalisation grows,” Roberson said.
“Forwarders have had a few tough years. But those able to up their game will flourish in the years ahead.”
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