According to Ti's latest report, "Global Freight Forwarding 2010," the international freight industry went into freefall last year, with the market falling by 23 percent. This followed a small increase in 2008 of 2.4 percent, in itself a marked slowdown from double-digit growth seen in the mid-2000s.
The market contraction was caused by a combination of falling volumes and rates — the former caused by a huge inventory overhang in Western consumer markets, and the latter by air and sea over capacity on all major lanes. At the beginning of 2009 shipping and airlines were still increasing their capacity, despite signs of slowdown, and this meant that the "gap ratio" between supply and demand widened significantly throughout the first six months of the year.
Only in the last quarter was this dynamic reversed. The drastic steps taken by air and sea carriers to address overcapacity consequently created the volatility seen in the first six months of 2010. Figures published in the report indicate that in the first half of this year, the air freight forwarding market grew by 38 percent and ocean forwarding by 13 percent. Forwarders who only six months earlier had been contending with a crisis in volumes now faced a high demand/low capacity environment in which their gross profits were being undermined.
Looking at the prospects for the next five years, Ti's chief analyst, John Manners-Bell, takes a cautious view. "The surge in volumes seen in the first half of this year has been caused by a correction in supply chain inventories," he said. "We expect volumes to moderate in the next six months, followed by a period of lower growth. This means that, across the period as a whole, some air and sea forwarding markets — most notably Europe — will not return to 2008 pre-recession levels until after 2013."
However not all markets have been so badly affected. "Although the first into the recession, Asia Pacific was also the first out," Manners-Bell explained. "The stimulus measures adopted by China meant that the emphasis shifted towards intra-regional trade. This has left the market in a strong position, and it will enjoy higher levels of growth than either Europe or North America in the coming years."
The "Global Freight Forwarding 2010" report examines the state of the present market and provides a retrospective look at the trends and developments of 2009. The report includes market share, growth and forecasts as well as company profiles of all the major global freight forwarders. New for 2010 is a segmentation of the sea freight market by trade lane in terms 20-foot equivalent units (TEUs). More information on the report is available here.