Freight forwarding market logs fastest expansion in decade

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The global forwarding market will continue the trend from 2021, with growth to be driven by air freight forwarding market, which Kuehne & Nagel led last year. Photo from K&N.
  • Global freight forwarding market grew 11.2% in real terms in 2021, its fastest in a decade, and heads for 5.7% growth in 2022 and a 3.7% CAGR over the five years to 2026
  • 2022 growth will be driven by air freight, which is forecast to expand 6.1%
  • 2026 forecasts are more pessimistic than previously due to inflation, the Ukraine war, and slowing consumer spending
  • Air freight forwarding players are expected to post a 4.0% CAGR in 2021-2026, with sea freight forwarders close behind at 3.6% CAGR
  • Kuehne + Nagel and DSV lead the global freight forwarding market after successfully integrating acquisitions in recent years

The global freight forwarding market rebounded and exceeded its pre-pandemic levels in 2021, but limited capacity and record-high freight rates present challenges for shippers, as well as opportunities for extraordinary “uplift” in the profitability of industry players.

In its latest report, Global Freight Forwarding 2022, Transport Intelligence says the global freight forwarding market bounced back strongly in 2021, growing 11.2% in real terms, the industry’s fastest growth rate since 2011.

Vibrant growth after one of the industry’s most challenging years to date amid the COVID-19 pandemic drove up market value to €269,656 million (US$284,651 million), as global trade reached record highs last year on strong demand driven by recovery from the contagion.

Along with the phasing out of pandemic-related restrictions on economic activity, government support schemes and economic stimulus packages introduced in many countries remained, keeping demand for goods at elevated levels, the report said.

Factors such as the expansion of the e-commerce industry and the rise of free trade agreements have also been contributors to the growth of the global digital freight forwarding market in 2021.

As the growth drivers are likely to abate gradually, global trade growth should moderate in 2022, said the report written by Viki Keckarovska, Thomas Cullen and Alex Bullard.

As a result of this continued but weakened global economic recovery, the global forwarding market is expected to grow at a slower pace of 5.7%. Continuing the trend from 2021, growth will be driven by the air freight forwarding market, which is forecast to grow 6.1% in real terms.

The sea freight forwarding market will have to endure more months of challenges caused by a capacity crunch as new capacity won’t kick in until 2023. The sector is set to grow 5.2% in 2022.

The report has more gloomy forecasts for 2026 than previously, as inflation challenges intensify, the Ukraine war threatens global energy supplies, and consumer spending slows further. The global freight forwarding market is expected to register a 3.7% compound annual growth rate over the five years to 2026.

The air freight forwarding market is forecast to grow slightly faster, expanding at a 4.0% CAGR, while the sea freight forwarding market is expected to register a 3.6% CAGR over the period.

Growth in cross-border e-commerce provides a bit more optimism, along with the return of capacity via passenger flights after COVID restrictions end.

The report provides a snapshot of the funding scene in the digital freight forwarding sector and discusses the likely impact of the recent investment surge in established start-ups and new entrants. It analyzes the competitive landscape in the market and compares digital forwarders against each other based on revenues, global reach, transport mode and freight transported.

The findings of Ti’s Digital Freight Forwarding Survey 2022 assess the market penetration and outlook of digital forwarders and identify the capability gaps digital forwarders need to close.

Furthermore, the findings from Ti’s Global Freight Procurement 2022 survey provide insight into the latest logistics purchasing behaviour trends and the procurement strategies shippers are employing to better navigate the unpredictable market volatility.

“The global freight forwarding sector has been plagued by a number of supply and demand-side shocks in the past year, driving instability in the market,” said Keckarovska, Ti’s senior analyst.

“Despite all economic indicators pointing towards continued strong demand for cargo, capacity constraints result in lost growth opportunities. Demand for capacity continues to outstrip supply, contributing to increased freight rates and, consequently, increased yields and revenues among forwarders.”

Driven by these challenging market conditions, shippers are re-assessing their freight procurement strategies and contractual relationships with logistics service providers to adjust to the ever-changing environment, Keckarovska said.

“Finally, the digitalization trend in the forwarding industry… has been accelerated further by the crisis with the adoption of digital forwarders, online freight booking platforms and marketplaces increasing threefold since 2019.”