The global freight forwarding market size was valued at USD 210.07 billion in 2022. It is projected to reach USD 314.88 billion by 2031, growing at a CAGR of 4.6% during the forecast period (2023-2031).
Freight forwarding services comprise consolidation, storage, handling, packaging, distribution, ancillary, and advisory services. In addition, freight forwarding service providers liaise with customs for proper documentation and identify the best, cheapest, and quickest routes. Reducing air and sea freight rates due to falling oil rates, the development of the e-commerce industry and the increasing prevalence of cloud-based operations that simplify supply chain management are some of the prime drivers fostering the growth of the freight forwarding market. During the forecast period, market growth is anticipated to be driven by a rise in the volume of international trade transported by air and ocean freight. The freight forwarding industry is extremely reliant on the quantity of cargo transported. To satisfy consumer demand, therefore, air and ocean freight forwarding companies must increase their cargo volume. In December 2019, Kuehne + Nagel International AG, a German transport and logistics company, increased its air cargo volume by 11.02 percent, from 1.5 million air freight metric tons in 2018 to 1.7 million air freight metric tons in 2019.
International trade volume growth is contributing significantly to the expansion of the freight forwarding market. International trade involves the exchange of goods and services between nations. Trading internationally will expose consumers and countries to products and services that are unavailable or more expensive in their home countries. Freight forwarders organize the intermodal transport of goods on behalf of shippers, and an increase in trade volume will stimulate freight forwarding. The volume of global merchandise trade increased by 8.0% in 2021, according to the World Trade Organization. Consequently, the expansion of international trade is anticipated to drive the growth of the freight forwarding market in the future.
One of the primary factors driving the expansion of the freight forwarding market is the rising demand for less expensive shipping, the ability to identify consumer demands, and the speed with which logistics services can be provided. In addition, an increase in international trade agreements contributes to the expansion of the freight forwarding market. Rapid expansion supported by government reforms, new transportation sector developments, rising retail sales, and the E-commerce sector is likely to be the primary drivers of India's logistics industry in 2021. In the Indian logistics market, online freight platforms and aggregators are on the rise due to the requirement for low entry barriers and less investment compared to establishing an asset-based business model.
The increase of nearshoring manufacturing actions across the globe, which will cease in the absence of acknowledgment of trade activities, is anticipated to impede market expansion. Nearshoring is when a company relocates its operations from a distant country to a nearby one. Nearshoring is a term derived from the practice of offshoring, in which companies move their product manufacturing to a region with lower landed costs than their home country. In addition, the increase in reshoring and nearshoring manufacturing may inhibit the growth of the freight forwarding market over the forecast period.
The incorporation of artificial intelligence (AI) has become a popular trend in the freight forwarding industry. Through automation and real-time data, artificial intelligence plays an important role in reducing costs, saving time, boosting productivity, and increasing accuracy. For example, Kuehne+Nagel, a Swiss logistics company, launched the AI-enabled freight forwarding platform eTrucknow.com for overland shipments within the Asia-Pacific region in July 2019. Shippers can use eTrucknow to streamline the quotation and comparison process. After the customer submits the shipment information, an AI-enabled engine automates and optimizes the comparison of quotations by validating various data points and showing the customer the most affordable quotation. Moreover, through the marketplace platform, eTrucknow provides certified carriers with access to a network of shippers in need of road freight services, enabling them to convert their empty space or empty trips into potential revenue.
The global freight forwarding market is segmented by mode of transport and application.
Based on the mode of transport, the global market is bifurcated into air freight forwarding, ocean freight forwarding, road freight forwarding, and rail freight forwarding.
The ocean freight forwarding segment is the highest contributor to the market and is expected to grow at a healthy CAGR during the forecast period, owing to the large carrying capacity at the lowest cost. An ocean freight forwarder is a specialist in transporting cargo via cargo ships. It enables ocean forwarders to understand exactly how to complete any shipment and establish the necessary relationships to get the lowest ocean rates, which they can transfer to their customers.
Air freight forwarding is anticipated to grow at a higher rate. Air freight forwarding is the organization and planning of the transport of freight from one location to another by air. An air freight forwarder excels in transporting freight via passenger aircraft or cargo-specific aircraft. This specialization enables them to comprehend the complexities of air freight, establish a rapport with the TSA, and, in many instances, offer better air rates.
Based on application, the global market is bifurcated into industrial and manufacturing, retail, healthcare, oil and gas, and food & beverages.
The industrial and manufacturing segment is the highest contributor to the market and is expected to grow at a healthy CAGR during the forecast period. The adoption of freight forwarding is increasing due to the rising manufacturing industry worldwide and the need to safeguard the quality of manufactured goods. Customers do not want broken, spoiled, or damaged goods. Hence freight forwarding is used to meet customer expectations.
The retail segment will grow at a significant rate due to the higher consumption of retail products worldwide. The retail sector is facing hyper-competition and multi-channel retailing. Hence the need for freight forwarding is on the rise to improve all phases of the supply chain and satisfy the need of the customers.
The global freight forwarding market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
North America is the most significant shareholder in the global freight forwarding market and is expected to grow at a healthy CAGR during the forecast period. The U.S. transportation and logistics industry are highly advanced, with the presence of many domestic and international companies. The region's wholesale and retail sector is the largest consumer of freight forwarding services, owing to the use of air, rail, truck, and water transportation services. The growing e-commerce sector in the region will propel the growth of the freight forwarding market exponentially throughout the forecast period.
Europe is expected to grow at a significant rate, owing to the massive interconnected, globalized economy comprising thousands of bilateral trade relationships. The European Freight Forwarders Association (EFFA) provides a forum for freight forwarders along with a global network of quality agents to equip each member to better compete in the growing global economy. Unlike multi-national freight concerns, EFFA agents are positioned to offer personalized and varied services to a varied market. Increased demand for freight forwarding services has resulted from the expansion of European commerce. Through the network of its member companies, the European network for logistics fulfills this demand by providing optimal deals and terms of delivery to all European nations. Freight forwarders provide their network of warehouses and other storage to retailers who require storage and distribution services, where goods can be kept until their distribution to their final destinations. The warehouses of the industry partners of the European Network for Logistics Services are widespread enough to store large quantities of various goods. The warehouses are located in all key destinations in almost every European country, allowing to offer of space and stock maintenance services to all European traders in order to ensure regular deliveries to final destinations.
Asia Pacific is expected to grow significantly, with the highest CAGR during the forecast period 2023-2031. During the last few years, China has emerged as the largest production cluster, which has increased its trading partners, extending it to the resourceful African region. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement between 11 countries, China's European land bridge, and 'One Belt, One Road' are some of the key initiatives around the globe fostering the growth of the freight forwarding market. As India's retail sector expands on a massive scale, domestic logistics firms are planning huge investments to expand their service offerings. It is anticipated that the logistics sector will have significant changes, providing a broad spectrum of services.
The LAMEA is anticipated to register a healthy growth rate during the forecast period. Dubai has emerged as a major hub for trade and logistics due to its infrastructure, which includes world-class roads, ports, and airports, as well as its central location and free trade policies. Geographically, Dubai's location between East and West makes it an ideal location for connecting and servicing the two ends of the globe via road, air, and sea. In addition, the city's logistics facilities and infrastructure, combined with its minimal costs, free-trade policies and agreements, and growing investments and trade links, make it a lucrative gateway for businesses. In fact, the logistics industry is estimated to contribute approximately 14% of the UAE's GDP, and this percentage is expected to rise over time.
|Report Coverage||Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends|