The global freight forwarding market is expected to see steady growth with a CAGR of more than 4.0 per cent between 2021 and 2026 on the back of surging Asia Pacific markets, according to a new study by Research and Markets.
The ‘Freight Forwarding Market – Growth, Trends, COVID-19 Impact, and Forecasts (2021 – 2026)’ report notes that the key driver of this market is the Asia-Pacific and Association of Southeast Asian Nations (ASEAN) region.
The growth in international trade volumes is a major driver for the freight forwarding market and the rise in trade agreements between countries is also contributing to the growth of the market, the report notes. Asia-Pacific is the fastest growing and the largest market for freight forwarding, with the Chinese freight forwarding market holding the maximum share.
Being non-asset-based, the sector is facing high competition from other players in supply chain and technology-based companies which are disrupting the freight forwarding market, according to the report.
The market is also one of the sectors hit the hardest by the onset of COVID-19 pandemic in 2020. With the lockdown in many countries and a major focus on the production of essential products, the volumes of air and ocean freight have fallen significantly in 2020.
However, the market is now recovering backed by the manufacturing and e-commerce industries; especially the air freight forwarding market with significant thrust during the period as reported by the International Air Transport Association (IATA) in January 2021.
The report notes that as the global logistics industry continues to go through an uncertain period due to COVID-19, the Asia-Pacific market is one of the few regions that is still growing despite the pandemic.
And as a result, Asia-Pacific is the fastest-growing region globally for the freight and logistics market. This is due to the increasing logistics in ASEAN countries and the presence of major economies, like China and India. Additionally, high government support for the logistics sector in the region is also a factor boosting the industry growth.
Leading countries in the region are also observing faster technological integration in the logistics process. In India where 80 per cent of freight moves by heavily congested road networks, the trucking industry is adopting industry-leading tracking technology to trace and predict delivery times. And Thailand, for instance, is incorporating IBM and Maersk’s blockchain project to streamline its shipment monitoring processes.
China is the largest manufacturer in the world reopened its factories long before other countries, and as a result, it is still leading the freight forwarding market, globally.
The global freight forwarding market is made up of a large number of players. However, the top 20 players dominate the market accounting for more than 50 per cent of the total market, according to the report.
As the freight forwarding market is growing steadily presenting abundant opportunities, the players need to embrace technologies, become more digitised, and increase the scale and efficiency of their operations, the report says.
Having a strong network spanning the globe is important for companies operating in this space. “As the industry is highly competitive and witnessing huge transformations, companies need to develop specialised solutions to improve customer experience,” it says.
Companies are constantly under pressure to minimise cost and optimise operational efficiency. In the wake of investment shifts and diversification of global supply chains, international investors are increasingly interested in mergers and acquisitions in the ASEAN logistics market.
Global logistics companies have been expanding in the ASEAN region, because of the increase in commerce and trade activities. As such, investment opportunities for the sector have been increasing accordingly, the report highlights.