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Freight Forwarding, an industry in rapid transformation 

Phuc Le
June 27, 2023

The freight forwarding industry is currently undergoing a rapid and transformative shift, driven by technological advancements, evolving trade patterns, and changing customer expectations. This transformation is reshaping the way goods are transported, managed, and delivered across the globe. With an increasing focus on efficiency, connectivity, and agility, freight forwarding is playing a crucial role in facilitating seamless global trade and supply chain operations.

Advancements in technology, such as artificial intelligence, Internet of Things (IoT), and data analytics, are revolutionizing the freight forwarding landscape. These technologies enable automation, real-time tracking, predictive analytics, and improved visibility throughout the logistics journey. As a result, businesses can make data-driven decisions, optimize routes, manage inventory effectively, and enhance overall supply chain efficiency.

Freight Forwarding, an industry in rapid transformation 

What is Freight Forwarding?

Freight forwarding is a service that manages the transportation of goods from one location to another. Freight forwarders act as intermediaries, coordinating and optimizing the logistics process on behalf of businesses. They handle tasks such as documentation, customs clearance, cargo consolidation, warehousing, and transportation coordination. By leveraging their expertise and extensive networks, freight forwarders ensure seamless and efficient movement of goods across borders

The Benefits of Freight Forwarding

What is Freight Forwarding?

Partnering with a freight forwarder brings numerous benefits, including expertise in international trade, cost optimization, enhanced visibility, risk mitigation, access to a global network, and value-added services. By leveraging the capabilities of freight forwarders, businesses can streamline their logistics operations, reduce costs, mitigate risks, and focus on their core competencies, ultimately gaining a competitive advantage in the global marketplace.

  • Expertise and Efficiency:

According to a survey conducted by Armstrong & Associates, 78% of businesses reported that working with a freight forwarder improved their understanding of international trade regulations and compliance requirements, leading to smoother operations and reduced customs-related delays.

The World Customs Organization (WCO) estimates that businesses can save up to 10% of their total logistics costs by outsourcing freight forwarding activities to experts who possess the necessary knowledge and experience.

  • Cost Optimization:

A study by the Global Shippers' Forum revealed that freight forwarders leverage their strong relationships with carriers and shipping lines to negotiate better rates, resulting in average cost savings of 15-20% for businesses.

The Container Owners Association (COA) reports that freight forwarders' consolidation strategies can increase container utilization rates by 10-20%, minimizing transportation costs and reducing the environmental impact of shipping.

  • Supply Chain Visibility:

A research report by Mordor Intelligence projects that the global market for freight forwarding visibility solutions will grow at a CAGR of 10.5% from 2021 to 2026, indicating the increasing demand for real-time tracking and tracing capabilities.

A survey conducted by EFT (Eye for Transport) found that 75% of businesses consider supply chain visibility provided by freight forwarders as crucial for making informed decisions and proactively managing potential disruptions.

  • Risk Mitigation:

The International Federation of Freight Forwarders Associations (FIATA) states that cargo insurance offered by freight forwarders covers approximately 80% of global trade, providing businesses with financial protection against loss or damage during transit.

The World Trade Organization (WTO) highlights that freight forwarders play a vital role in helping businesses navigate the complexities of trade regulations, reducing the risk of non-compliance penalties and ensuring smooth customs clearance.

  • Global Network:

According to a report by Transport Intelligence, freight forwarders' extensive network of agents and partners enables businesses to access over 90% of global markets, facilitating the expansion of international trade.

The International Air Transport Association (IATA) estimates that freight forwarders account for approximately 80% of the global air cargo volume, demonstrating their global reach and ability to handle shipments across borders.

  • Value-Added Services:

According to a report by Transport Intelligence, freight forwarders' extensive network of agents and partners enables businesses to access over 90% of global markets, facilitating the expansion of international trade.

The International Air Transport Association (IATA) estimates that freight forwarders account for approximately 80% of the global air cargo volume, demonstrating their global reach and ability to handle shipments across borders.

10 Factors Driving Freight Forwarding Transformation

10 Factors Driving Freight Forwarding Transformation

These industries are driving the rapid transformation of the freight forwarding industry, as evidenced by various market reports and industry trends. The adoption of these technologies and practices enables freight forwarders to enhance operational efficiency, improve customer service, and adapt to evolving market dynamics

  • E-commerce: The exponential growth of e-commerce is reshaping the retail landscape and driving significant changes in freight forwarding. According to Statista, global e-commerce sales amounted to over $4.28 trillion in 2020, and this figure is projected to reach $6.38 trillion by 2024. The rising popularity of online shopping has led to an increased demand for efficient logistics solutions, including last-mile delivery and reverse logistics, as highlighted by a report from McKinsey, which states that e-commerce-related logistics could account for 30% of total logistics expenditure by 2025.
  • Internet of Things (IoT): IoT technologies are playing a crucial role in enhancing supply chain visibility and optimizing freight forwarding operations. According to a report by Allied Market Research, the global IoT in logistics market was valued at $47.93 billion in 2020 and is projected to reach $129.07 billion by 2027, growing at a CAGR of 13.1%. This growth is fueled by the increased adoption of IoT devices and sensors to track shipments, monitor cargo conditions, and optimize route planning.
  • Artificial Intelligence (AI) and Machine Learning (ML): AI and ML technologies are revolutionizing the freight forwarding industry by automating processes and optimizing decision-making. According to a report by MarketsandMarkets, the AI in supply chain market size is expected to reach $10.1 billion by 2025, with a compound annual growth rate (CAGR) of 45.3% during the forecast period. AI and ML algorithms are being used to analyze vast amounts of data, improve demand forecasting accuracy, optimize inventory management, and enhance route planning efficiency.
  • Robotics and Automation: The adoption of robotics and automation in freight forwarding is increasing operational efficiency and reducing costs. According to the International Federation of Robotics (IFR), the sales of industrial robots reached a record high of 384,000 units globally in 2020. This represents a year-on-year increase of 3.5%. Automated systems and robots are streamlining warehouse operations, improving sorting and packaging processes, and enhancing productivity in freight handling.
  • Blockchain: Blockchain technology is gaining traction in the freight forwarding industry due to its potential to enhance transparency, security, and traceability. According to a report by MarketsandMarkets, the global blockchain supply chain market size is expected to grow from $253.9 million in 2020 to $3,272.7 million by 2026, with a CAGR of 50.2%. Freight forwarders are exploring the use of blockchain to track and authenticate shipments, streamline documentation processes, and improve collaboration and trust among supply chain stakeholders.
  • Sustainability and Green Logistics: Sustainability has become a key focus in the freight forwarding industry, driven by environmental concerns and regulatory pressures. According to a survey by Logistics Management, 92% of shippers believe that sustainability will be important to their organization's future success. Freight forwarders are adopting eco-friendly practices such as alternative fuels, electric vehicles, and optimized route planning to reduce carbon emissions. The International Air Transport Association (IATA) aims to reduce net carbon emissions from aviation by 50% by 2050 compared to 2005 levels.
  • 3D Printing/Additive Manufacturing: The development of 3D printing technology has the potential to disrupt traditional supply chains. According to a report by Deloitte, the global market for 3D printing is projected to reach $51.77 billion by 2026, with a CAGR of 24.6% from 2021 to 2026. 3D printing enables localized production, reducing the need for long-distance transportation. Freight forwarders are adapting their services to accommodate the changing dynamics, such as the transportation of raw materials and the delivery of 3D printed products.
  • Big Data Analytics: The availability of vast amounts of data is driving the adoption of big data analytics in the freight forwarding industry. According to a report by MarketsandMarkets, the global big data analytics in the transportation market size is expected to grow from $14.85 billion in 2020 to $42.48 billion by 2025, with a CAGR of 23.1%. Freight forwarders are leveraging big data analytics to gain insights into supply chain performance, customer preferences, and optimization opportunities, leading to improved operational efficiency and better decision-making.
  • Augmented Reality (AR) and Virtual Reality (VR): AR and VR technologies are finding applications in freight forwarding, particularly in warehouse management and training programs. According to a report by PwC, the global VR/AR market is projected to reach $1.5 trillion by 2030. AR overlays digital information onto real-world environments, assisting workers in picking and packing operations, reducing errors, and improving efficiency. VR simulations are used to train employees in handling complex tasks, optimizing maintenance and repair operations, and enhancing safety measures.
  • Autonomous Vehicles: The development of autonomous vehicles holds significant potential for the freight forwarding industry. According to a report by Allied Market Research, the global autonomous truck market size is expected to reach $556.67 billion by 2026, growing at a CAGR of 39.3%. Autonomous vehicles, including self-driving trucks, drones, and ships, have the capacity to reduce human error, improve safety, and optimize transportation routes, leading to increased efficiency and cost savings.

In conclusion, 

The freight forwarding industry is undergoing a rapid transformation, presenting businesses with opportunities to enhance efficiency and connectivity in their global logistics operations. By leveraging the benefits of freight forwarding, such as streamlined processes, cost optimization, supply chain visibility, risk management, compliance support, global reach, and value-added services, businesses can navigate the complexities of international trade and gain a competitive edge in the global marketplace. Embracing technology, collaborating with freight forwarders, and staying abreast of industry trends will be essential for businesses looking to thrive in the rapidly evolving world of freight forwarding.

 

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