Global freight forwarding market to contract 3.9% in 2023

The Global Freight Forwarding 2023 Report from Ti Insight – the leading provider of market research to the global logistics industry – shows that the global freight forwarding market continues to normalise, with demand for air and sea freight forwarding services remaining soft.

The poor performance of the global freight forwarding market can be attributed to the weakness in air freight forwarding, which shrank by 7.3% in 2022. However, sea freight forwarding also had a less than desirable performance, contracting by 1.5%. The global economic downturn is the main underlying reason for the contraction in the forwarding market.

The Global Freight Forwarding 2023 Report is written by industry researchers, analysts and utilises data from Ti’s GSCi knowledge portal, a data powerhouse with over 1 million pieces of data and analysis.

Ti Insight Research Manager Viki Keckarovska says: “The freight forwarding market continues to be negatively affected by the ripple effects of normalisation in consumer behaviour, as well as the global economic and manufacturing slowdown. The exceptional market conditions of the past two years are gone, and the freight forwarding market is on a new trajectory. This is causing fourth quarter downturn in revenue and profits among most freight forwarders.

“Supply continues to outstrip demand, contributing to falling freight rates and consequently reduced yields among forwarders. Driven by these challenging market conditions, forwarders are re-assessing their strategies by leveraging technology and offering more value-added services in order to pull back eroding margins. Finally, the digital forwarders are also adapting to the new market reality and the tougher investment environment. A worsening macroeconomic environment has led to a fall of venture capital investment and forced many of the digital forwarders to re-evaluate their growth strategy.”

Report highlights

After bouncing back in 2021 following the COVID-19 pandemic, the global freight forwarding market contracted by 3.7% in real terms (holding prices and exchange rates constant) in 2022, bringing the market value to € 348,094 m.

The major forces that shaped the world economy in 2022 are set to continue.

As a result, the global forwarding market is expected to contract even further in 2023 (-3.9% in real terms) and reach a market value of € 334,344 m.

The Asia Pacific freight forwarding market experienced the largest market contraction compared to the other regions, however, it remains the largest region, accounting for 32.2% of the global freight forwarding market.

Ti data shows that the total the global freight forwarding market will see a real CAGR of 1.6% from 2022 to 2027.

Ti’s State of Logistics Air and Sea Freight Forwarding Survey 2023 reveals that 90% of freight forwarders are currently experiencing increased pressure on margins. Rising competition and stronger negotiation by clients are the main reasons for the increased pressure on margins. Leveraging technology and offering more value-added services will be the most successful strategies in pulling back eroding margins in the freight forwarding market in the next 12 months.

There is a shift in the venture capital landscape with investors being more cautious and slowing down the deployment of capital in digital forwarders. 2022 broke all records for start-up funding, however venture capital funding in digital freight forwarders plunged in the first half of 2023. One of the implications is that the start-up strategy will become more targeted towards profitable growth.All major forwarders have benefited roughly equally from the market conditions in 2022, with 16 out of the top 20 forwarders achieving revenue gains, mainly due to the soaring freight rates particularly in the first half of the year. However, the markets are on a new trajectory, leading to fourth quarter downturn in revenue and profits among most of the freight forwarders.

The comparison of the sustainability strategies of the top 10 global freight forwarders shows that a number of companies demonstrate ambitious targets for the next 10 years, however only five out of the top 10 freight forwarders have set carbon neutrality target dates.

The full report also analyses the competitive landscape in the freight forwarding market and offers in-depth market projections and trade forecasts: an essential tool for business leaders making critical decisions.