News / 'Doomsday scenario' for forwarders just a post-Covid rate drop blip

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The “disappointing results” in Transport Intelligence’s (Ti) Global Freight Forwarding Market Report are a consequence of economic downturn, it says – but the airfreight forwarding sector has taken a bigger hit than its ocean counterpart.  

In nominal terms, the global freight forwarding market contracted by a staggering 45.6% in 2023.  

The drop is attributed to the collapse in freight rates from their “unusually high” 2021 and 2022 mid-Covid levels. 

“Obviously, it would seem like a drop of 45% is a doomsday scenario for freight, but given that most companies recognised that the price growth was temporary, it has been managed carefully by the forwarders,” Michael Clover, head of commercial development at Ti, told The Loadstar. 

“It’s good to contrast it with the real terms growth – basically a measure of underlying volume – that shows the underlying health of the market is not as bad as the nominal figures suggest,” he added.  

So in real terms, according to Ti data, the global freight forwarding market contracted by 1.3% last year, bringing the market value to €192.7bn ($209bn).

“Challenges arising from a global economic downturn, shifts in consumer behaviour and an oversupply surpassing demand have led the global freight forwarding market to contract,” the intelligence platform explained. 

“Geopolitical risks, such as conflicts in Ukraine and Israel, the rise of inflation and the increase in the price of fuel, coupled with weakened consumer demand, had an impact on the real growth forecast.” 

The lion’s share of the poor market performance was due to weakness in the air freight forwarding sector, which shrank 2.1% in 2023, while ocean freight forwarding had “a less-than-desirable performance”, but saw a smaller contraction, of 0.6%.  

Growth in the freight forwarding market is largely determined by the strength of international trade, says the report, and according to UN Trade and Development (UNCTAD), the value of international trade “declined moderately”, to around $31trn last year.  

This was driven by lower global demand, “particularly for goods”, said UNCTAD.  

Looking ahead, Ti forecasts that a more fragmented global economy, prompted by geopolitical events, will increase financial instability. 

It said: “As a result, the global freight forwarding market is expected to grow at a 3.3% compound annual growth rate (CAGR) over the next five years to 2028, and reach a market value of €226.7bn ($245.9bn).” 

Across the period, air freight forwarding is forecasted to expand at a 3.6% CAGR, and ocean forwarding at 3%. 

Despite this gloomy outlook, freight forwarders in Ti’s freight volume survey remained optimistic: 28.6% of respondents said they saw air volumes increase 5%-10% in the previous year, while looking ahead, they expect continued volume increases; 31% expecting air freight volumes to increase by more than 10%.

The most successful strategies for forwarders to sustain profit margins over the next five years, according to Ti, will be targeting higher-margin clients, offering new or more value-added services and investing in new technology.  

You can purchase Ti’s Global Freight Forwarding Market Report here