Report finds freight forwarding market fragility
The current demand downturn could force consolidation within the freight forwarding industry, suggests a recent report by Transport Intelligence.
'The freight forwarding sector is in the eye of a recessionary storm,' said TI Chief Executive John Manners-Bell. 'Since the middle of 2008 there has been a massive reduction in demand for all forwarding services. Indeed such has been the magnitude of the fall that it suggests the sector is undergoing a systemic change of considerable magnitude.'
That systemic change seems to indicate that consolidation will necessarily come, said the report, Global Freight Forwarding 2009.
'The structure of freight forwarding is not static and it continues to develop in both volume and, it might be suggested, power,' said Manners-Bell. 'Freight forwarding is consolidating, a consolidation apparently amplified by the present recession.'
Forwarders involved in ocean freight have seen good news and bad news this year.
'The implications of (the mismatch between supply and demand) for freight forwarders have been two-fold,' he said. 'The fall in demand has had a substantial effect on revenue, yet the fall in rates has had an ameliorative impact on margins.'
As for air freight, the future is less certain.
'The present trends in the air freight market are fairly similar to those in the sea freight market,' he said. 'However, over the long term, dynamics of the two markets are fundamentally different, as air freight is dominated by the opportunity costs inherent in the belly-freight capacity of what is perceived as an industry driven by passenger revenue.'
The report is available here.
Report finds freight forwarding market fragility
