The resilience of global supply chains is undergoing unprecedented tests. The repeated waves of COVID-19 outbreaks, geopolitical conflicts, surging energy prices, intensified talent competition, and simultaneous inflation and economic recession across multiple regions are creating successive shocks to global trade. In this challenging environment, freight forwarders must help shippers navigate these difficulties while maintaining their own business growth.
Global Freight Market Overview: Challenges and Opportunities
In 2022, the global freight market continued the turbulence of 2021 while facing even more complex challenges. Strong global trade demand coupled with persistent shortages in ocean and air freight capacity drove shipping rates to historic highs, creating profit opportunities for freight forwarders. However, the rapidly changing market conditions also demanded greater operational capabilities from logistics providers.
Brian Bourke, Chief Growth Officer at SEKO Logistics, noted that current challenges differ from those in 2020 and 2021, creating more complexity and volatility in global markets. Shippers increasingly rely on freight forwarders to help them maintain inventory and avoid product shortages. The high freight rates also enabled many forwarders to achieve record profits in 2021.
Evan Armstrong, President of Armstrong & Associates (A&A), observed that the turbulent environment created growth opportunities for all third-party logistics (3PL) providers, particularly those with strong capabilities in carrier management, e-commerce, and air freight forwarding. 2021 saw the fastest growth in the 3PL market since A&A began tracking market size in 1995.
A&A's latest report shows U.S. 3PL market gross revenue grew an astonishing 48.1% in 2021, bringing the total U.S. 3PL market to $342.9 billion. The report also found that the top global freight forwarders largely maintained their positions from A&A's 2020 report with only minor shifts.
Top Freight Forwarders: Rankings and Performance Analysis
In this competitive market, a few leading freight forwarders maintained their dominance through extensive global networks, rich experience, and superior service capabilities:
- Kuehne + Nagel (K+N): Maintained its top position as global market leader. K+N achieved significant growth in the first half of 2022, with substantially increased net turnover and enhanced profitability, driven by comprehensive strengths in ocean, air, and road freight along with continued digital transformation investments.
- DHL Supply Chain & Global Forwarding: Dropped from last year's shared first place to second position. Despite the ranking change, DHL remains strong across all business areas with robust supply chain management capabilities and an extensive global network.
- DSV Panalpina A/S (DSV): Fell from second place in 2020 to third in 2021. Through successful acquisitions, DSV has expanded its global footprint and service capabilities, particularly excelling in air and ocean freight with significantly improved profitability.
- DB Schenker: Declined from second in 2020 to fourth in 2021. The company maintains strong capabilities in road, air, and ocean freight while focusing on customized solutions and digital transformation.
Market Segments: International Transportation Management Leads Growth
A&A research revealed uneven growth across market segments. While Dedicated Contract Carriage (DCC) and Value-Added Warehousing and Distribution (VAWD) segments grew 15.3% and 17.0% respectively, most growth came from International Transportation Management (ITM) and Domestic Transportation Management (DTM), which increased 74.9% and 52.4% year-over-year.
ITM—encompassing air and ocean freight forwarding, customs brokerage, and supplementary value-added services—outperformed all 3PL segments. To meet demand, ITM and DTM providers increasingly turned to spot markets to find carriers.
Profitability Analysis: Significant Earnings Growth
Despite challenges, freight forwarders achieved impressive profits. In H1 2022, Kuehne + Nagel's net turnover grew 55% to approximately $21.531 billion, EBIT increased 112% to $2.299 billion, and earnings rose 113% to $1.672 billion compared to H1 2021.
DSV reported H1 2022 gross profit grew 61% year-over-year, with EBIT in its air and ocean division increasing 105%. Its solutions division (including warehousing, fulfillment, and contract logistics) saw EBIT grow 179%.
M&A Activity: Accelerating Industry Consolidation
Last year's merger and acquisition activity benefited many forwarders through increased global scale. A&A recorded 25 major M&A deals exceeding $100 million in 2021—eight times more than when tracking began in 1999 and triple the previous year's volume.
The most notable was K+N's $1.5 billion acquisition of Apex Logistics International, which made K+N the world's largest air freight forwarder (handling over 2.2 million metric tons in 2021) and largest 3PL provider overall, displacing DHL from both positions while maintaining its lead in ocean freight.
DSV's August 2021 acquisition of Agility's Global Integrated Logistics (GIL) further boosted its growth and strengthened the global freight services market.
Future Outlook: Slowing Demand and Declining Rates
Despite strong growth over the past two years, Florian Neuhaus, Partner at McKinsey & Company, warns that global market dynamics show signs of deceleration—at least in demand. The IMF projects global trade growth will slow from 6.1% in 2021 to 3.6% in 2022 and 2023, with medium-term growth falling to about 3.3%—0.8 and 0.2 percentage points below January forecasts respectively.
Neuhaus notes that demand declines are already reducing freight rates: "In ocean freight, spot prices have fallen below contract rates," he said. "In air freight, prices continue to decline with more passenger flights resuming and airlines implementing summer schedules."
With demand-side pressures likely easing over the next 12-24 months, Neuhaus expects shippers to capitalize on rate declines: "Many shippers will return to the market and re-tender their volumes," he explained. "Simultaneously, many will seek stronger partnerships with logistics providers to build more resilient supply chains."
McKinsey anticipates ocean and air rates will gradually decline from 2021/2022 peaks over the next 4-5 years, remaining slightly above pre-pandemic levels due to constrained supply preventing full mean reversion. "As yields decline, 3PL revenues—closely tied to carrier rates—will follow," Neuhaus added.
Strategic Responses: Technology and Talent Development
To maintain competitiveness, leading forwarders have secured ocean capacity, chartered cargo aircraft amid bellyhold shortages, and proposed alternative transport solutions.
Forwarders are also strengthening their positions through talent development. "For us, that's the CEVA team," said Shawn Stewart, CEVA Logistics Regional Managing Director for North America. "Our diverse team possesses the skills and knowledge to deliver solutions across numerous industry verticals. This expertise combines with strong customer relationships to fulfill what we call our central promise of responsive logistics."
Looking ahead, Armstrong believes true leaders will embrace technological innovation and demonstrate strong carrier management skills: "This enables forwarders to leverage long-term carrier relationships to meet shipper needs rather than over-relying on freight platforms or traditional spot market capacity purchases."
According to Stewart, CEVA implements industry-leading technologies—from WMS and cargo visibility tools to robotics, wearables, and autonomous vehicles—to enhance how suppliers use data. "We're building a culture of innovation where innovation means implementing new ideas with business impact," he said.
Stewart emphasized CEVA's global implementation capabilities: "This global awareness combined with local responsiveness has strengthened our business—and many clients—through challenging times. Our focus on agility will remain crucial in coming months and years."
Neuhaus concludes that forwarders' push toward digital channels and end-to-end transparency has proven critical amid persistent supply chain disruptions: "Generally, larger forwarders are better positioned to make these IT investments that enable transparency and improved digital sales experiences."