Freight News, Logistics

Freight forwarding: big challenges ahead

[ July 31, 2014   //   ]

The freight forwarding market is facing major challenges as it fights to stay viable in a changing global environment, according to the latest report from Transport Intelligence (Ti).

In its ‘Global Freight Forwarding 2014’, Ti says that the value of the market has fallen 3.3% since 2012. Moreover, “troubling capacity concerns within the air and sea freight markets” combined with manufacturers moving away from globalisation and towards regionalisation will need a rethink of freight forwarding strategies and solutions.

China is no longer the automatic “go to” location in Asia to manufacture goods, as opportunities open in other emerging markets such as Africa, the Middle East, South America and Southeast Asia. Near-sourcing is becoming a reality with emerging markets like Mexico and Turkey benefiting from their proximity to the US and the European Union respectively. There is also evidence of ‘re-shoring’ of manufacturing to developed countries due to changing transport and labour costs.

However, new trade lane opportunities are opening and these are already evident among the top European Union and US trade lanes by tonnage which include the likes of Brazil, Algeria and Turkey. At the same time, new product solutions are also on the increase such as multi-modal transport as an alternative to air and/or sea freight movement as well as industry-specific solutions particularly for commodities requiring temperature controlsuch as pharmaceuticals, foods and even some high-tech goods.

But many freight forwarders are struggling to cope with the changing dynamics. While the best-in-class have adopted strategies which include a focus on emerging markets and specific industries, from a financial perspective many are faltering because of fluctuating rates and capacity within the air and sea freight markets.

Ti senior analyst, Cathy Roberson predicts: “The global freight forwarding market is evolving and those forwarders that can adapt the quickest to economic and market changes will be the winners”.

But while the global freight forwarding market declined from 2012, the outlook is positive with forecast compound annual growth of 6.7% to 2017.