Business, Freight News, Logistics

Forwarders maintain profits in face of recession, says new report

[ July 13, 2012   //   Chris ]

The freight forwarding industry has come through the recession with its profitability relatively intact, but it has been a volatile and difficult year, say consultants Transport Intelligence (Ti). Global Freight Forwarding 2012 – published on 12 July – and one of the few surveys dedicated to the industry found that overall freight forwarding volume bounced back in 2010 from the low point reached following the bank collapses and global credit crisis in 2009, although it had stagnated since. Overall, the top freight forwarders’ profit margins were also maintained, although there was widespread variation in profitability between different forwarders.

Freight forwarders are affected by the wider shipping and airfreight markets, but the market is “counter-cyclical”, says Ti, in that profits can be higher during downturns. Rates can be driven down by excess capacity in the market but forwarders may not pass the whole of these reductions on to their customers, thus increasing their profit margins.

On the other hand, as the economic picks up and capacity starts to tighten, forwarders may find it hard to pass on rate increases to their clients – although they may still benefit due to increased volumes. However, the market for freight capacity is often complex and can be affected by outside events.

The 12 largest freight forwarders’ profits have also been “remarkably resilient” remaining at around 4-5% over the past six years, says Ti. This however is an average – there is a considerable range in the profitability of the leading forwarders, ranging from Expeditors margin of over 10% down to around 2-4% at the other end of the scale.

Global Freight Forwarding 2012 by Transport Intelligence examines the state of the air and sea forwarding market, key trends and developments in 2011 and the first half of 2012 and the structure and drivers of the market and their implications for the future.

It also provides an exclusive and wholly independent source of market shares for the leading players and ranking of the largest air and sea freight forwarders in terms of revenues, air tonnage and teus shipped.

The report includes market sizing and five year forecasts by sector (air and sea) for the six main world. It also contains air and sea freight forwarding market sizing and forecasts for 40 individual countries including all major and developing economies.

Priced £1095/$1850, can be purchased online at: http://www.transportintelligence.com/market-reports/report-global-freight-forwarding-2012/293/

Tags: freight forwarding, Transport Intelligence