The global freight forwarding market is going through a period of normalization, with demand for air and sea freight services remaining low, as per the Global Freight Forwarding 2024 Report from Ti Insight. The report highlights that the market is facing challenges due to a global economic slowdown, changes in consumer behavior, and an oversupply surpassing demand, resulting in a 1.3% contraction in real terms in 2023.
The decline in the market performance is mainly attributed to the weak performance of air freight forwarding, which decreased by 2.1% in 2023. Sea freight forwarding also saw a contraction of 0.6%. The global economic downturn is identified as the primary reason for these disappointing results in the forwarding market.
In nominal terms, the global freight forwarding market contracted by a significant 45.6% in 2023 due to reduced freight rates for air and sea compared to the previous year. However, the market is expected to show slight growth in 2024, with a projected increase of 1.7% in real terms.
The Asia Pacific region experienced the third-largest market contraction among all regions but remains the largest region, accounting for 35% of the global freight forwarding market. Data from Ti suggests that the global freight forwarding market will have a real compound annual growth rate (CAGR) of 3.3% over the five years leading up to 2028.
The State of Logistics Air and Sea Freight Forwarding Survey 2024 by Ti reveals that 91.1% of freight forwarders are facing increased pressure on margins, mainly due to rising competition and stronger client negotiation. To counter margin erosion, targeting higher-margin clients and offering more value-added services are expected to be successful strategies in the coming year.
The report also mentions that the exceptional market conditions of the past two years have ended, with markets now following a new trajectory. This shift has resulted in a significant decline in revenue and profits among freight forwarders in 2023, returning to a more normal state. Despite the challenges, Kuehne + Nagel maintained its position as the leader in the global freight forwarding market, with revenues of €15.988 billion in 2023.
Thomas Cullen, chief analyst at Ti, commented on the market trends, stating that the freight forwarding market has mirrored the volatility of the broader air and sea freight market in recent years. While the years 2020-2022 were prosperous for large freight forwarders, 2023 brought results back to a more normal state with profits and revenues declining. However, the market remains complex, with exceptional events like the obstruction of the Suez Canal impacting different types of providers in unique ways.