Mobility Foresights

GLOBAL FREIGHT FORWARDING MARKET

 

INTRODUCTION

Freight forwarding refers to a service in which an agency plans and coordinates the shipping process of goods outside the country’s borders. This service is performed for the shippers. Other additional services that might be included in freight forwarding are commercial invoicing, distribution, warehousing, insurance and custom brokerage. They are also known as non-vessel operating common carriers.

 

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 In 2019, for the first time after a decade the market witnessed negative growth owing to less international trade. The trend continued in the year 2020 due to Covid pandemic and the trade restrictions in most parts of the world. Reshoring and nearshoring manufacturing may also further affect this market negatively.

 

GLOBAL FREIGHT FORWARDING DRIVERS

 

The main drivers of the global Freight Forwarding Market are listed below :

  1. Growth of international trade and increase of trade agreements between more countries is contributing to growth.
  2. The rise of the perishable goods market and the growing healthcare sector, especially during the Covid pandemic is expected to help in increasing the growth.
  3. The increase in the number of small and medium enterprises can contribute to growth of this sector. Online booking platforms for these companies can seem convenient to these enterprises.
  4. The demand for low cost shipping with rise in e-commerce services is also expected to boost demand.
  5. The high demand for integrated services is also expected to help the market grow.
  6. Technological advancement, especially with the adoption of the Internet of things has made tracking shipments convenient and increased the trust on such services. Other key advancements such as use of artificial intelligence and machine learning can help in speeding up the operations.

 

GLOBAL FREIGHT FORWARDING MARKET SEGMENTATION

 

By Mode Of Transportation

  1. Air
  2. Sea
  3. Rail
  4. Road

 

The air freight forwarding segment saw a fall in revenue in the year 2019 while the sea freight forwarding segment experienced lesser growth than the previous years. In 2020, further this trend was observed due to trade restrictions.

 

However the sea freight segment is expected to grow as global maritime trade is forecasted to grow. Trading of containerised cargoes is expected to rise which will in turn help the sea freight segment to grow.

 

The air freight segment is also expected to rise in the next 5 years. There are certain challenges that the air freight segment is facing. Some of them are – low capacity and very high prices due to which other modes of transportation become more favourable for the users.

 

By Service

  1. Freight transport
  2. Warehousing
  3. Documentation
  4. Value added services (custom clearance, Packaging, etc.)

 

Among the above mentioned services, the highest cost that is incurred by the companies is on Value added services. Value added services are generally labour intensive.

 

By Region

  1. North America
  2. Europe
  3. Asia Pacific
  4. South America
  5. Middle East and Africa

 

Overall, North America is the most dominating market due to high consumer preference towards online buying.

 

Among all the continents, Asia recorded the highest number of loading and unloading activity at sea ports. Even during the Coronavirus pandemic where there were international trade restrictions Asia- Pacific region’s trade continued to show growth. It is also the highest growing region for this market. The two main reasons for the growth of this region are increase in logistics due to government support and the presence of large economies like India and China. There is also a rise of industrialization and higher adoption of e-commerce which is giving a boost to the market in this region.

 

South America and the Middle East and Africa is also providing opportunities for growth.

 

China is the largest market for freight forwarding globally due to its large manufacturing and exporting capabilities.

 

By Application

  1. Small and Medium sized enterprises
  2. Large organization
  3. Industrial and Manufacturing
  4. Retail
  5. Healthcare
  6. Media & Entertainment
  7. Military
  8. Oil & Gas
  9. Food & Beverages
  10. Others (Agro Commodities, Government and Public Utilities, & Fertilizer, Jewelry, etc.)

 

By Logistics Model

  1. First party logistics
  2. Second Party Logistics
  3. Third Party Logistics

 

By Customer Type

  1. B2B
  2. B2C

      

 

COMPETITIVE LANDSCAPE

There are many competitors in this market but the market power is concentrated with the top players.

There are very less barriers to entry as no investment in fixed assets is required. Hence, the competition is intense. Many technologically advanced companies are posing a threat to freight forwarding market players. In an attempt to reduce their costs, shipping companies are acquiring freight forwarding companies which are also having a negative impact on the traditional players. The companies work at very low margin of profit in this market and very slight increase in costs and decrease in demand can impact these companies negatively.

Competitors should focus on making online booking hassle free since that is the more preferred mode for booking services.

 

Some of the players in the market are 

 

Kuehne + Nagel is the largest player in the sea freight segment.

In order for companies to retain their market share, they need to come up with more specialised solutions for different customer groups and have a global presence. Some strategies that the players have adopted are product launches, joint ventures and acquisitions.

 

Examples Of Some Important Acquisitions

 

  1. Panapila World Transport Ltd. (Holding) has been acquired by DSV. The new acquired company DSV Panapila due to the combined capabilities may emerge as the largest global player in this market.
  2. The Space Cargo Group has been acquired by C.H. Robinson Worldwide. This acquisition will increase the share of C.H Robinson in Spain and Columbia.

 

Impact of Covid

 

Before the coronavirus pandemic, the freight forwarding market had already been suffering due to the US and China Trade war situation.

The added threat to the situation was the digital transformation being brought about in the industry by many new startups.

 

In 2020, due to disruptions in the supply chains in many sectors have been impacted. Since China was the first country to get impacted due to Covid and it is one of the largest manufacturers in the world global supply chains were affected from the beginning of 2020. The impact of this was felt by the automobile, electronics, health care and consumer segment the most. There was also shortage of labour in warehouses and truck drivers weren’t available as well. However, the impact on all sectors is uneven because of the presence of e-commerce in such sectors.

 

Within the different types of routes, ocean and air transport did see a double figure drop impacting the exporting and importing countries. Land transport was less affected as compared to ocean and air routes. The rail became a more preferred mode due to the high charges by the air route.

 

Due to severe economic impact, the demand has also reduced in various sectors which would further impact the freight forwarding market.

 

In the future the companies are expected to make higher use of technology, increase air freight capacity and adopt diversification of supply chains so that the logistics sector is not impacted and there will be more readiness of future crisis.

Sl no Topic
1 Market Segmentation
2 Scope of the report
3 Abbreviations
4 Research Methodology
5 Executive Summary
6 Introduction
7 Insights from Industry stakeholders
8 Cost breakdown of Product by sub-components and average profit margin
9 Disruptive innovation in the Industry
10 Technology trends in the Industry
11 Consumer trends in the industry
12 Recent Production Milestones
13 Component Manufacturing in US, EU and China
14 COVID-19 impact on overall market
15 COVID-19 impact on Production of components
16 COVID-19 impact on Point of sale
17 Market Segmentation, Dynamics and Forecast by Geography, 2021-2026
18 Market Segmentation, Dynamics and Forecast by Product Type, 2021-2026
19 Market Segmentation, Dynamics and Forecast by Application, 2021-2026
20 Market Segmentation, Dynamics and Forecast by End use, 2021-2026
21 Product installation rate by OEM, 2021
22 Incline/Decline in Average B-2-B selling price in past 5 years
23 Competition from substitute products
24 Gross margin and average profitability of suppliers
25 New product development in past 12 months
26 M&A in past 12 months
27 Growth strategy of leading players
28 Market share of vendors, 2021
29 Company Profiles
30 Unmet needs and opportunity for new suppliers
31 Conclusion
32 Appendix

 

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