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
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Jul 6, 2024 - Labor Costs Increase
                              • Freight forwarding industry employment and average wages for nonsupervisory employees increased slightly during the first four months of 2024, according to the US Bureau of Labor Statistics. Freight forwarding services increased their prices slightly in February 2024 but a March decrease brought prices back to the January level, according to the US Bureau of Labor Statistics. 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.
                              • Only about 20% of freight forwarders have a visibility system that can offer clients up-to-the-minute information on the location, condition, and estimated arrival times of their goods, according to Supply Chain Brain. Visibility systems also allow forwarders to optimize routes, reduce delays, manage resources more effectively, and engage in proactive problem-solving in the event of customs delays, weather disruptions, or port congestion. The ability to track and monitor shipments in real time is becoming a crucial component for forwarders striving to maintain a competitive edge, according to Supply Chain Brain.
                              • 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.
                              • Attacks on cargo ships in the Red Sea and drought affecting the Panama Canal have created a “perfect storm” of disruption in global shipping, according to Mike Giambrone, an account executive at logistics provider OEC Group. The Red Sea is a critical shipping lane for cargo traveling through the Suez Canal, which accounts for about 12% of global trade, according to Giambrone. Approximately 30% of global container traffic traverses the Suez Canal, transporting $1 trillion of goods per year, according to the Government of New Zealand. Drought conditions in the Panama Canal, worsened by a severe El Nino, have severely impacted container ship traffic through that key trade route. The Panama Canal accounts for about 7% of global seaborne trade, according to the Wall Street Journal. “It’s really the East Coast and Gulf Coast markets that are going to see the results of this,” Giambrone said. He noted that when there’s a problem on the East Coast, shippers can transfer their capacity to the West Coast, but this can bring additional problems. Giambrone cited the post-COVID shipping surge that resulted in “a parking lot of container ships” at West Coast ports in 2021. Some ships were diverted to the East Coast to ease the congestion. “Then the East Coast started having serious congestion.”
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