Freight Forwarding Industry Size & Share Analysis - Growth Trends & Forecasts (2023–2028)

 The Global Freight Forwarding Market is currently estimated at USD 168.99 billion in 2023, with projections to reach USD 207.19 billion by 2028, growing at a rate of about 4.16% during this period.

Market growth is being primarily driven by substantial trade volumes occurring across various regions. Additionally, the resurgence of internal air freight has significantly contributed to this market expansion.

The occurrence of unexpected black swan events in 2022 has highlighted the criticality of adaptable and resilient supply chains for the freight forwarding industry. These unforeseen events have the potential to severely disrupt supply chains, testing them repeatedly in recent times—from the ongoing repercussions of the COVID-19 pandemic to incidents like the Suez Canal blockage and the conflict in Ukraine. Challenges such as staffing shortages, capacity issues, inflation, and demand peaks have also impacted the freight market. Consequently, supply chains are facing a more diverse and unpredictable array of challenges than ever before, necessitating forwarders to be exceptionally resilient and prepared for any contingency.

In this landscape, agility, flexibility, and visibility—often facilitated by digitalization—become paramount for enduring such disruptions. Freight forwarders can enhance efficiency through appropriate technology adoption and adept data collection and analysis, positioning themselves better to capitalize on opportunities even in non-disruptive periods.

However, 2023 is anticipated to witness an economic slowdown, as projected by entities like the International Monetary Fund (IMF) and the World Trade Organization. The global economic growth is forecasted to decelerate from 6.0% in 2021 to 3.2% in 2022 and further to 2.7% in 2023. Similarly, the World Trade Organization has revised its 2023 global trade growth forecast to 1.0%, down from the previous estimate of 3.4%. These economic decelerations are expected to significantly impact freight forwarders' customers.

Moreover, while international air travel is anticipated to return to pre-pandemic levels in 2023, rates are still relatively high and are expected to decrease unless demand rises. The current low demand, marked by reduced inventories and sales due to weak consumer demand, is expected to persist into early 2023. Additionally, trade restrictions involving major countries like China, the United States, Russia, Ukraine, and Europe are further strangling and disrupting global supply chains, prompting suppliers to seek alternative sourcing locations beyond the traditional Asian regions.

Logistics managers are indicating that the ocean freight market is readjusting faster than anticipated. The shift from a supply chain that struggled with unprecedented pandemic-driven demand to a scenario of weak demand and an oversupplied freight market underscores the risks associated with a prolonged global economic downturn. Central banks worldwide are increasing interest rates in an attempt to combat inflation, aiming to reduce demand and consequently lower supply chain prices, which had reached record highs and significantly contributed to inflation. However, this monetary policy is delicate as a supply-demand rebalancing carries its own risks.

In terms of market trends, the growth in cross-border and sea trade remains a significant driver. Nonetheless, multiple global economic shocks are expected to dampen the momentum of global trade in the latter half of 2022 and persist into 2023. Forecasts by the WTO indicate a projected 3.5% growth in global merchandise trade volumes for 2022, slightly up from 3.0% in April 2022. However, a significant decrease to a 1.0% increase is anticipated for 2023, down from the previous estimate of 3.4%. Import demand is expected to soften due to various factors impacting major economies, such as high energy prices from the Russia-Ukraine conflict affecting household spending and manufacturing costs in Europe. Monetary policy tightening in the United States will also influence interest-sensitive spending in sectors like housing, automobiles, and fixed investment.

Specifically, in Canada, merchandise imports rose by 3.9% in February 2022 after a 7.5% decline in January 2022, with increased exports of energy products driving a 2.8% increase in exports during the same period. However, a consequent decline in Canada's global merchandise trade surplus from USD 3.1 billion in January to USD 2.7 billion in February was noted. Factors such as increased imports of chemicals, plastics, and rubber products, along with various global events impacting industries like fertilizers due to lower Chinese output, new Russian export quotas, and the conflict in Ukraine, have raised concerns about product availability and cost, affecting Canadian fertilizer imports.

The container shipping industry experienced profitability in 2022, with expectations of a more stable shipping scenario post-pandemic. International container exports saw a rise of approximately 2-3% in 2022, attributed not only to the backlog from the previous year but also to the gradual recovery of the maritime shipping sector. Furthermore, it's anticipated that port congestion worldwide will normalize in the upcoming months. However, this normalization hinges heavily on pandemic-related factors, and any resurgence of COVID-19 could potentially exacerbate the situation.
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