The global air and road freight markets are growing at compound annual growth rates (CAGR) of 3-5 percent and 4-5 percent respectively, according to Beroe Inc. With the increase in e-commerce and global trade, APAC and parts of Africa are expected to be the future growth-driving markets for road freight service, however, trade tensions between the U.S. and China and the impact of Brexit could bring risks over the next several years.
“Shipping demand is increasing worldwide as global GDP continues its solid growth trajectory,” says Valekumar Krishnan, vice president, research and indirect services, Beroe Inc. “We expect to see a dramatic expansion of the air and road freight markets over the next few years, particularly in Asia and Africa. With retail e-commerce growing at 14-15 percent every year, we’ll also see new demand for logistics in this market, and digital innovation will be more important than ever for air and road freight suppliers looking for a competitive edge.”
Retail sales are expected to increase by 5-6 percent in 2019, and freight transport volume and demand will experience rapid growth again. The Asia-Pacific region and parts of Africa are expected to help grow driving markets for road freight, while the air freight market in the Middle East and Africa are currently growing at a rate of 17-18 percent, with considerable growth in the coming years.
“Ultimately, fuel prices and the global trade climate will make or break the potential growth in these markets,” adds Krishnan. “We are already seeing demand growth outpace capacity growth due to US-China trade sanctions, forcing shippers in China to deliver shipments to Europe to fulfill their volume commitment. Further taking into account the new fuel taxes being levied by several governments in response to climate change, it will be a volatile few years for the air and road freight markets.”
Major trends to watch with air and road freight include the fallout from Brexit as trade volume increases between the EU and emerging economies, the introduction of digital identifiers for accurate tracking of shipments and the looming threat of railway freight. Trans-Pacific eastbound and westbound air freight routes are projected to be particularly volatile in the next few years and could face inflation of nearly 5 percent.