Freight Forwarding Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 15,000 freight forwarders in the US arrange transportation for freight between shippers and carriers, and typically offer a combination of services spanning transportation modes. Companies can derive profits from the differential between the rate charged to customers and the rate charged by the transportation carrier. By consolidating cargo and purchasing space on a volume basis, firms secure favorable pricing. Freight forwarders may also charge flat fees for services, such as freight consolidation, break bulking, and customs clearance.

Dependence on Third Parties

As middlemen between customers and transportation providers, freight forwarding services must rely on third parties for physical transport and are typically still responsible for the timely and safe delivery of cargo.

Seasonality of Demand

Depending on the type of cargo, sales can be seasonal and cash flow uneven.

Industry size & Structure

The average freight forwarding contractor operates out of a single location, employs 15-16 workers, and generates about $8-9 million annually.

    • The freight forwarding industry consists of about 15,100 companies that employ about 233,600 workers and generate about $130 billion annually.
    • The industry is fragmented; the top 50 firms account for about 33% of industry sales.
    • The industry includes freight forwarders, marine shipping agents, and customs brokers.
                              Industry Forecast
                              Freight Forwarding Services Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Mar 5, 2023 - Digitalization Is An Industry Disruptor
                              • Digitalization is shaking up the world of logistics, according to shipping giant Maersk. Massive supply chain disruptions and huge growth in ecommerce during the coronavirus pandemic accelerated digitalization in freight forwarding and supported the growth of digital freight forwarders. Digital forwarders use technologies like transport management systems (TMS) to organize and coordinate the movement of goods – everything from taking bookings, managing documentation, tracking shipments, and for quotations and invoicing. TMS also enables automation of vital operations and extraction of insights along the way. A TMS can handle many department operations, including accounting, office management and freight shipping. The digital freight forwarding market, which accounts for about 8% of the total freight forwarding market, is recording steady compound annual growth rate (CARG) of 23%, according to Allied Market Research. The global freight forwarding market as whole is recording a compound annual growth rate (CAGR) of 4.2%.
                              • The digitalization of traditional freight forwarders is happening alongside the growth of digital forwarders. Ti Insights calculated that digital freight forwarding startups attracted around $1.2 billion in funding in the first quarter of 2022 alone. This amount of investment was greater than for the full year of 2021. About 47.7% of goods volume went through digital forwarders’ platforms in 2022, according to the most recent TI Insights report. This is expected to increase to over 60% by 2027 as the digital forwarders grow and the technology evolves.
                              • An expected slowdown in economic activity in 2023 may reduce demand for freight forwarding services according to Maersk. The shipping firm notes that the International Monetary Fund is predicting global economic growth to go from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023. The World Trade Organization revised its growth forecast for global trade in 2023 to 1%, down from an earlier estimate of 3.4%. This loss in momentum in many markets will significantly impact freight forwarders’ customer base. Maersk indicated in its Q3 2022 that in 2023, “the global container market is expected to be broadly flat to negative.”
                              • About 60% of companies believe that they do not have full control over their container movements, according to a poll conducted by container logistics tech company Container xChange. Some 50% of container users identified monitoring containers’ journey from pick-up to drop-off as the operation they would like to automate first. Half of the companies claimed that manual processes to execute their container operations take up from 50% to 100% of their weekly workload.
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