• The global freight forwarding market contracted 3.7% in real terms in 2022, and will shrink further by 3.9% this year, Transport Intelligence reports

• The global market’s value eroded to €348.09 billion (US$381.66 billion) in 2022 due to the market contraction

• Asia Pacific shrank the most among the regional markets but remains the largest region with 32.2% of the market

The world freight forwarding market contracted 3.7% in real terms (holding prices and exchange rates constant) in 2022 after bouncing back in 2021 from the Covid-19 pandemic, with the Asia Pacific market shrinking the most among the regions, Transport Intelligence says in a new report.

The Global Freight Forwarding 2023 Report released on August 3 said even as the contraction eroded the global market’s value to €348.09 billion (US$381.66 billion) in 2022, the major forces that shaped the world economy last year will continue, causing a 3.9% contraction in real terms in 2023, squeezing the market value to €334.34 billion.

The report said Asia Pacific’s freight forwarding market shrank the most, compared with other regions, but it remains the largest region with 32.2% of the global market.

Transport Intelligence’s (Ti) data shows the world freight forwarding market will see a real compound annual growth rate (CAGR) of 1.6% from 2022 to 2027.

Data from Ti Insight – the leading provider of market research to the global logistics industry – shows the global freight forwarding market continues to normalize, with demand for air and sea freight forwarding services remaining soft.

Ti said the poor performance of the global freight forwarding market can be attributed to weakness in air freight forwarding, which shrank 7.3% in 2022. However, sea freight forwarding also had a less than desirable performance, contracting 1.5%. The research firm said global economic downturn is the main underlying reason for the market contraction.

The Global Freight Forwarding 2023 Report is written by industry researchers, analysts and uses data from Ti’s GSCi knowledge portal.

“The freight forwarding market continues to be negatively affected by the ripple effects of normalization in consumer behavior, as well as the global economic and manufacturing slowdown,” said Viki Keckarovska, research manager at Ti Insight.

“The exceptional market conditions of the past two years are gone, and the freight forwarding market is on a new trajectory. This is causing a fourth-quarter downturn in revenue and profits among most freight forwarders.”

Ti said supply continues to outstrip demand, contributing to falling freight rates and consequently reduced yields, prompting freight forwarders to re-assess their strategies by leveraging technology and offering more value-added services to shore up margins.

Digital forwarders are also adapting to the new market reality and the tougher investment environment, Ti said. A worsening macroeconomic environment has led to a fall of venture capital investment, forcing many digital forwarders “to re-evaluate their growth strategy.”

Other highlights of the report:

• Ti’s State of Logistics Air and Sea Freight Forwarding Survey 2023 reveals 90% of freight forwarders are feeling increased pressure on margins due to mainly to growing competition and stronger negotiation by clients. Leveraging technology and offering more value-added services will be the most successful strategies in pulling back eroding margins in this in the next 12 months, Ti said.
• The venture capital landscape has shifted with investors being more cautious and slowing down the deployment of capital in digital forwarders. 2022 broke all records for start-up funding, but VC funding in digital freight forwarders plunged in H1 2023. One of the implications is that the start-up strategy will become more targeted towards profitable growth.
• All major forwarders have benefited roughly equally from the market conditions in 2022, with 16 out of the top 20 achieving revenue gains mainly due to soaring freight rates, particularly in H1 2022. But the markets are on a new trajectory leading to a fourth-quarter revenue and profits among most of the freight forwarders.
• A comparison of the sustainability strategies of the top 10 global freight forwarders shows a number of them have ambitious targets for the next 10 years, but only five of the top 10 forwarders have set carbon neutrality target dates.

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