The logistics research and consultancy firm Transport Intelligence’s latest report on the global freight forwarding sector shows that ocean forwarding rose by 11.5 percent in 2012, while air cargo forwarding fell 4.2 percent.
Ti said that global forwarding growth of 3.1 percent was therefore misleading since all the growth was attributable to the ocean side.
In the report, Global Freight Forwarding 2012
, Ti said the overall market grew to $125.9 billion, with ocean freight forwarding contributing $63.2 billion and air freight contributing $62.6 billion. Ti attributed the poor performance on the air cargo side to overcapacity, rising fuel prices and other operational costs.
“This has led many shippers to opt for alternative methods for transporting their goods,” Ti said.
“Despite double-digit growth in 2012, the sea freight forwarding market is still vulnerable to long-term overcapacity and erratic rates,” said Cathy Roberson, lead author of the report. “Forwarders have benefited from the modal shifts experienced in 2012, but there could be serious problems if these issues are not addressed. Although the air freight market was weaker in 2012, airlines are removing capacity across the world. If it wishes to continue its impressive growth, the sea freight sector should not continue to ignore these problems.”
The Asia-Pacific region accounted for the largest forwarding market in 2012, with a 32 percent share.
“Although its economy is still heavily reliant on exports, domestic demand is growing and therefore intra-Asian services are becoming more sought after,” Ti said, adding that it expects Asia to hold a 37 percent share of the market by 2016. “It is anticipated that this will be of particular detriment to the European market, currently the second largest, which will decline from 31 percent to 26 percent as a result of its ongoing economic issues.”
Ti said the new market dynamics have forced the two sectors to undertake contrasting strategic focuses to increase volumes and profitability. The air cargo sector has experienced a significant decline in volumes due to the modal shifts and, as a result, forwarders are having a hard time filling up aircraft. Therefore, air forwarders have begun to focus on higher-margin commodities, such as pharmaceuticals and other temperature-controlled goods.
“For example, in 2012, Kuehne + Nagel acquired two specialized freight forwarders within the perishables industry and DHL Global Forwarding continued to expand its global network of Life Science Competence Centres,” Ti said.
Conversely, Ti noted ocean forwarders are expanding their less-than-containerload (LCL) offerings, particularly on Asia-Pacific trade lanes. The service offers reduced shipping costs, increased flexibility and improved transit times over full-containerload (FCL) services. Companies have also developed expedited multimodal offerings such as ocean and road transport to provide a door-to-door service and a combined air and sea service which reduces costs, but still provides the faster transit time of pure air transport.
The study suggests the overall forwarding market will grow by 6.8 percent between 2012 and 2016.
“Although we expect the sea freight forwarding market to develop more rapidly, we also anticipate that the air freight forwarding market will recover over the next five years as shifting trade lanes result in new opportunities in emerging markets,” Roberson added. - Eric Johnson