Forwarders face margin squeeze as growth cools and disruption persists
The global freight forwarding market is still growing, but the industry’s easy gains appear to ...
© Roman Milert
Ocean carriers undermining forwarders that don’t have “enough clout” will drive consolidation this year.
Delegates at the recent TPM25 by S&P Global heard that, as the top 10 liner operators continue to grow and now have a monopoly of some 75% of the ocean shipping market, the “imbalance in the forwarding business has been exposed”.
This has meant smaller forwarders are being “undermined” by the large carriers, with shippers becoming increasingly sceptical of NVO promises of available capacity.
Stephanie Loomis, head of ocean freight Americas at Rhenus Logistics, explained: “When the market is tough and the carriers need volume, the forwarders are their best friends, and as soon as it gets tense and there’s not as much space to go round, then it becomes even more important that you’re big enough.”
She said: “In order to have the clout with carriers to get what they need to service their customers, forwarders must represent a significant amount of volume.
“I think we’re going to see much like what we’ve seen with the carriers – forwarders getting bigger and bigger, like with DSV buying Schenker.”
And Ms Loomis predicted: “The small forwarders, I don’t see them surviving.”
She told delegates: “We’ve had a small brokerage in Indianapolis, where I live, for years that has survived. In 10 years, maybe less, I just don’t see that being the case. And I think you’re going to see a tremendous amount of consolidation in the forwarding space.”
Indeed, in the 2025 UK logistics M&A Index, by Logistics UK and RPGCC, 94% of respondents believed consolidation was either likely or very likely in the next 12 months, with the overwhelming majority of deals “expected to be at the smaller end of transaction sizes”.
“Low margins and broadly stable interest rates are squeezing company finances, but acquisition targets with good prospects or consolidation potential remain attractive,” said the report.
One respondent noted that “smaller companies will want to exit the market”, as valuations of companies in the sector are likely to decrease this year.
Ms Loomis advised mid-sized forwarders: “You’re really going to have to find some niche in either a part of the world that you’re going to focus on, or a vertical, like technology.
“Because the best deals out there – the ability to work with a large/mid-sized importer and give them what they want – is going to be dominated by the top 10-to-20 forwarders in the world,” she concluded.
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Comment on this article
Marc Greenberg
March 17, 2025 at 2:13 pmNot sure I agree. As mentioned, service levels and technology edge can keep the small to mid-size forwarders relevant. Carrier consolidation maintaining fewer but larger contracts will help. Coordination between agents sharing volumes in the same network also helps raise the bar. It’s not all lost to size……for many larger shippers service and technology still matter!
Charlotte Goldstone
March 17, 2025 at 2:35 pmThat is a great point Marc, SME forwarders definitely have the bespoke service advantage. It’ll be interesting to see if that and tech are enough to keep them competitive in the following years…
DAVID PORTER
March 17, 2025 at 3:48 pmGreat insights by Stephanie!
Charlotte Goldstone
March 17, 2025 at 5:50 pmShe’s great isn’t she!
Aaron Dean
March 17, 2025 at 5:37 pmI disagree with Ms Loomis, there is plenty of room for SME Forwarders who believe in building relationships with both suppliers and clients, providing great customer service, talking to clients on the phone and making face to face meetings, old school freight forwarding with new technology for managing clients expectations is still alive and well.
As much as they try the Lines will never get rid of the SME forwarders. In my humble opinion.
Charlotte Goldstone
March 17, 2025 at 5:55 pmLots of what the panel were saying at TPM was that shippers are becoming increasingly cautious of small NVOs capacity promises due to the carrier being quicker to break promises with them when space was in demand over their bigger clients. But yes, hopefully you are right – it would be a shame to see the loss of so many SME forwarders.
Elton Tan
March 18, 2025 at 5:22 amMs. Loomis shared her insights and of course, there is no wrong or right as it’s an opinion. But I am not sure that I agree to her opinion though. SME’s are the backbone of any country economy. Big manufacturers have their own big forwarders and so does SME’s exporters and importers. While techonology is important, but customer service and the ability to solve the logistical problems is still the most potent weapon for ‘small’ freight forwarders. End of the day, it’s not all just about the Freight. Freight is only part of an entire chain. I’ve clients who went to the big boys but ended coming back to us after a few shipments with them. They booked their own freight directly with the liners but end of the day, they still come back to us. Why? Because they realize, the liners and the big freight forwarder boys aren’t able to provide the services we provide as a ‘small’ forwarder.
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