Freight forwarding market to grow 11% in 2021, 5% CAGR till 2025

June 23, 2021: Transport Intelligence’s (Ti), latest report, Global Freight Forwarding 2021, shows the post-Covid-19 global forwarding market is settling into its recovery phase after dramatic contractions in 2020.

However, market dynamics remain skewed with limited capacity available and sky-high freight rates presenting a challenging market for shippers and opportunities for forwarders to secure high margins.

“The freight forwarding market is expected to bounce back strongly with growth of 11.6 percent in 2021 and a CAGR of 5 percent from 2020-2025 as volumes recover,” reads the release.

Air and sea freight rates remain at record levels and are highly volatile following the disruption of the pandemic resulting in a capacity crunch and swings in volumes

Digital forwarders are becoming increasingly competitive with established players as they invest in assets and customer service teams alongside their tech to enable more end-to-end and value-added services.

The Global Freight Forwarding market contracted by 8.7 percent in 2020, recording its worst year since the financial crisis as a result of the pandemic. The sea freight forwarding market contracted by 3.8 percent in 2020, but air freight forwarding suffered worse with a decline of 12.3 percent.

The sea freight forwarding market is set to grow at 7.6 percent in 2021 and at a CAGR of 4.5 percent from 2020-2025. Growth in 2021 will be largely be driven by the bounce back in volumes from 2020, particularly in Q2 2021 vs Q2 2020. Sea freight forwarding growth out to 2025 will be driven by the ongoing recovery in volumes, modal switches from air to sea and new trade agreements generating more trade.

Airfreight forwarding is set to grow at 14.9 percent in 2021 and at a CAGR of 5.4 percent from 2020-2025. Growth in 2021 is largely driven by a recovery of volumes from 2020 and very high freight rates. Longer term growth out to 2025 will be driven by a recovery in global trade and strong growth in air freight intensive sectors like high tech, pharmaceuticals and cross-border e-commerce.

The new report also shows that amid all the disruption to the air freight market the top 20 freight forwarders have significantly increased their share of overall volumes, from 65.05 percent in 2019 to 74.89 percent in 2020. The top 20 actually increased the air freight volumes they handled in 2020, despite market volumes declining by 12.50 percent. Coupled with the high air freight rates that persisted through 2020, this led to a very good year for large forwarders. The sea freight market also saw volumes decline from 2019, with 9.95 percent fewer containers handled in 2020.

Nevertheless, capacity constraints and high freight rates enabled the top 20 forwarders to broadly maintain their revenues, even though they carried 7.49 percent fewer containers than in 2019.

The new report provides a view of the future of both the air and sea freight forwarding markets and an outlook for volume, price and capacity development for the rest of 2020. It also examines the performance of freight forwarders in detail and how many of the larger players managed to achieve record margins, with the average freight forwarding margin for 2020 increasing to 7.5 percent.

The report also examines the developing digital freight forwarding landscape. There is a new market map for the digital landscape and profiles of the major players to show how their capabilities are developing. The latest analysis highlights how they are increasingly competing with established forwarders with a full suite of end-to-end value-added services and acquiring key assets to enable this, all underpinned by their technological base.

Global Freight Forwarding 2021 also drills down into technology further, taking a closer look at the software that underpins freight forwarding services, assessing the strategies pursued by different forwarders to develop their capabilities and providing profiles of the solutions available on the market.

The latest news from the market of consolidation among the top players corroborates Ti’s view that we are likely to see further M&A activity among freight forwarders through 2021. But the report also explains that it is likely we will also see considerable M&A activity involving the digital players and software entrants which are competing to capture the growth of digitalization in the market.