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 15,400 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 from 1-2 locations, employs 17-18 workers, and generates about $16 million annually.
- The freight forwarding industry consists of about 15,400 companies that employ about 272,000 workers and generate about $252 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
Recent Developments
Oct 2, 2024 - Port Workers’ Strike Suspended
- A strike by International Longshoremen’s Association members that shut down East Coast and Gulf Coast ports during the first week of October was suspended after the union and the United States Maritime Alliance agreed to a tentative deal on wages. The two sides have extended their existing contract through January 15, 2025, to provide time to negotiate a new contract. The strike stressed the US supply chain despite its short duration. Thousands of containers had been dumped at the wrong ports, and billions of dollars in goods were anchored offshore because ports were not operational and shipping costs had begun increasing, according to CNBC. “One day of shut down equals one week of disruption in the supply chain,” said Mark Colson, President and CEO of the Alabama Trucking Association. As much as 43% to 49% of total containerized goods entering the US are processed through ports on the East Coast and Gulf Coast, according to NBC News.
- The global freight forwarding market is reverting to the historical trend as demand for air and sea freight forwarding services remains soft, according to the Global Freight Forwarding 2024 Report from Ti Insight. The market is contracting due to challenges arising from a global economic downturn, shifts in consumer behavior, and supply surpassing demand, which have led to a 1.3% contraction in real terms (holding prices and exchange rates constant) in 2023.
- Freight forwarders are being hit with new surcharges and being pushed into premium services to have space guaranteed onboard ships, according to Peter Sand, head analyst for freight rate benchmarking and market analytics firm Xeneta. “Carriers will prioritize shippers paying the highest rates. That means cargo belonging to shippers paying lower rates on long-term contracts is at risk of being left at the port. It happened during the Covid-19 pandemic, and it is happening again now," Sand said. Freight forwarders have no other option than to pass these costs on directly to their customers in such cases, Sand added.
- Freight forwarding industry employment and average wages for nonsupervisory employees increased slightly during the first seven months of 2024, according to the US Bureau of Labor Statistics (BLS). Freight forwarding services increased their prices significantly during the first seven months of 2024, according to the BLS. Freight forwarding industry sales are forecast to grow at a 4.32% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
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