Troubling capacity concerns within the air and sea freight markets combined with manufacturers focusing away from globalization and towards regionalization are resulting in changes to freight forwarding strategies and product solutions, according to the report.
The report highlights some of the key dynamics driving change in the freight forwarding sector:
• China is no longer the automatic “go to” location in Asia to manufacture goods, particularly as opportunities open in other emerging markets such as Africa, the Middle East, South America and Southeast Asia.
• Near-sourcing is becoming a reality as such emerging markets as Mexico and Turkey benefit from their proximity to the US and the European Union respectively.
• There is also evidence of “re-shoring” of manufacturing to developed countries due to the changing balance of transport and labour costs.
The result of these trends has been that new trade lane opportunities are opening and these are already evident among the top European Union and U.S. trade lanes by tonnage which include the likes of Brazil, Algeria and Turkey. Along with the trade lane opportunities, new product solutions are also on the increase. These include multimodal transport as an alternative to air and/or sea freight movement as well as industry-specific solutions particularly for those commodities requiring temperature-control management such as pharmaceuticals, foods and some high-tech goods.
Many freight forwarders are struggling to cope with the changing dynamics. The best-in-class have adopted strategies which include a focus on emerging markets and specific industries. However, from a financial perspective, many are faltering because of fluctuating rates and capacity within the air and sea freight markets.
According to Transport Intelligence senior analyst Cathy Roberson, “The global freight forwarding market is evolving and those forwarders that can adapt the quickest to economic and market changes will be the winners.”
Indeed, even though the global freight forwarding market declined from 2012, the outlook is positive with a forecast CAGR through 2017 of 6.7 percent. Emerging markets will continue to play a growing role and as regionalization and even localization grows, multimodal transportation solutions will become additional options to air and sea freight as freight forwarders look for profitable growth in the midst of a changing global economic environment.
