Ti’s latest report, Global Freight Forwarding 2022, shows that in 2021 the global forwarding market rebounded and exceeded its pre-pandemic levels. However, limited capacity and record-high freight rates present a challenging market for shippers, as well as opportunities for extraordinary ‘uplift’ in the profitability of freight forwarders.
- The global freight forwarding market grew by 11.2% in real terms during 2021, the fastest expansion in a decade. The market is forecast to grow 5.7% in 2022 and at a 3.7% CAGR over the five years to 2026.
- 2022 freight forwarding growth will be driven by air freight, which is forecast to grow by 6.1% in real terms.
- 2026 forecasts are more pessimistic due to inflation, the war in Ukraine, and consumer spending slowing down.
- The air forwarding market is forecasted to exhibit slightly faster growth, expanding at a 4.0% CAGR from 2021-2026, while the sea forwarding market is expected to grow slightly less quickly at 3.6% CAGR over the period.
- Kuehne + Nagel and DSV lead the global freight forwarding market. The two market leaders have successfully integrated acquisitions in recent years which has helped both to top the list.
- The entrance of shipping lines into the acquisition market has created a new driver of industry consolidation, not least due to the carriers’ almost unlimited funds and access to ‘cheap’ money.
- Digital forwarders must combine smart technology with operational experience to be game changers in the industry. Achieving both objectives while remaining profitable will be a challenge, especially if access to capital becomes more limited in the future.
After experiencing one of its most challenging years to date amid the Covid-19 pandemic, the global freight forwarding market bounced back strongly and grew by 11.2% in real terms in 2021. This is the fastest growth rate since 2011, bringing the market value to €269,656m.
The market’s expansion was driven by global trade which reached new record highs during the year as recovery from the Covid-19 pandemic boosted demand. As well as 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. 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 drivers of the growth momentum are likely to gradually abate, global trade growth is expected to moderate in 2022. 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 forecasted to grow by 6.1% in real terms. The sea freight forwarding market will have to endure more months of challenging conditions caused by the capacity crunch as new capacity is not set to kick in till 2023. It is set to grow at 5.2% in 2022.
2026 forecasts are more pessimistic than previously as inflation challenges intensify, the war in Ukraine threatens global energy supplies and consumer spending slows further. As a result, the global freight forwarding market is expected to grow at a 3.7% CAGR over the five years to 2026. The air forwarding market is forecast to exhibit slightly faster growth, expanding at a 4.0% CAGR, while the sea forwarding market is expected to grow slightly less quickly at 3.6% CAGR over the period. Increases in cross-border e-commerce do however provide a bit more optimism, along with the return of capacity via passenger flights after the ending of Covid restrictions.
The report also provides a snapshot of the funding scene in the digital forwarding sector and discusses the impact that the recent surge in investments will have on established start-ups and new market entrants. The report analyses the competitive landscape in the digital freight forwarding market and compares digital forwarders against one another based on their revenues, global reach, transport mode and freight transported. The findings of Ti’s latest Digital Freight Forwarding Survey 2022 serve to 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 Viki Keckarovska, Ti’s Senior Research 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 LSPs to adjust to the ever-changing environment. Finally, the digitalization trend in the forwarding industry, which was already gathering pace before the pandemic, has been accelerated further by the crisis, with the adoption of digital forwarders, online freight booking platforms and marketplaces increasing threefold since 2019.”
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