Freight Forwarding and the Future of the Global Market

The future of the global freight forwarding market is notoriously difficult to predict. Although growth in trade volumes is not that hard to envisage – and there is plenty of data out there to support this – it is the wild fluctuations in freight rates that make the market so difficult to forecast.

Declining in value by 3.3% from 2012, the freight forwarding market is facing major challenges as it fights to stay viable

Global Freight Forwarding 2014

For instance, take a look at this graph (below) from IATA’s latest cargo eChartbook. The fact that most of 2013 was spent below the 0% line shows that both sea and air forwarders must have had a tough time charging as much as they did in 2012. In the countries and regions where slight volume growth was recorded, it was usually insufficient to offset declining freight rates, so revenues and profits suffered. In a nutshell, that is why the global freight forwarding market is thought to have contracted by 3.3% in 2013. The other thing to take from the graph is the astounding volatility of sea freight rates, with the blue line resembling a rollercoaster ride over the last six years.

FF blogpost graph 2Source: IATA cargo eChartbook Q2

So given the doom and gloom in 2013, and the unpredictability of rates, are we being optimistic when we predict that the market will grow by, on average, 6.7% per year from 2013 to 2017? Quite possibly, yes. But as I mentioned earlier, trade volumes are predicted to pick up and that is the primary driver behind the forecast. Trying to estimate what rates will do over the next four years is a fool’s errand. It tends to be best to assume the net effect is zero and then that’s the least wrong you’ll be!

Take a look at Ti’s recent Global Freight Forwarding 2014 report to find out more about Ti’s forecasts and analysis for this turbulent market. Alternatively, see our accompanying infographic.

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