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

                              Dec 3, 2022 - Congress Intervenes In Rail Industry Dispute
                              • The US Congress passed legislation that binds the country’s Class 1 railroads and 12 rail unions to a September agreement brokered by the Biden administration. Eight of the unions had previously voted in favor of the agreement and four voted against it. Congress has authority granted in the Railway Labor Act to impose the resolution from Biden's Presidential Emergency Board. The bill now goes to President Biden, who is expected to sign it into law. Any strike after the bill is signed into law would be considered illegal and the strikers could be fired. Experts estimate that a rail strike could have frozen almost 30% of US cargo shipments by weight, stoke already surging inflation, and cost the American economy as much as $2 billion per day.
                              • Experts say that if one union were to go on strike, others would likely refuse to cross the picket line, and rail companies could respond with a nationwide lockout. Experts also note that rail traffic may stop even if one or more unions cross the picket line. The Brotherhood of Maintenance of Way Employees (BMWE) rejected the agreement, for example, so there would be no one to build and maintain the tracks, bridges, buildings, and other structures for the crossing union(s) if BMWE strikes. All of the unions have said that they are opposed to Congressional intervention and want to be allowed to strike, but they would not be opposed to the US Department of Labor facilitating negotiations again.
                              • Several large trucking operators are seeing freight demand drop off rather than pick up heading into what is typically their busiest period of the year, according to The Wall Street Journal. The downshift in business is sending rates in trucking’s volatile spot market downward and the weakness is starting to filter into the contract business that makes up the largest share of trucking volumes. “The fourth quarter is generally the peak of the holiday shipping season,” said David Yeager, chief executive of trucking and rail freight services provider Hub Group. “However, judging by the feedback from our clients, this peak will be muted versus historic norms. Beyond 2022, we do acknowledge the potential for a continued softening economy.” Experts cite slackening demand as inflation cuts into consumers’ buying power and triggers uncertainty in the direction of the economy.
                              • 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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