In the global trade arena, large freight forwarding companies resemble powerful warlords, expanding their territories through vast resources and networks. Yet technological advancements are igniting hope for small and medium-sized enterprises to stage a comeback. Could data democratization become their weapon to challenge industry giants and reshape the competitive landscape?
The Unstoppable Merger Game in Freight Forwarding
The freight forwarding industry has witnessed relentless merger waves, with major players acquiring competitors to strengthen global footprints and route-specific capabilities. This "survival of the fittest" trend appears to squeeze smaller operators, but industry analysts note emerging technologies are quietly rewriting the rules.
"Forwarders today must adapt to customer needs with unprecedented agility," observes John Manners-Bell, CEO of London-based Transport Intelligence (Ti). "The coming years may bring seismic shifts, with new market entrants seeking efficiency gains and cost reductions."
Strategic Expansion: The Giants' Playbook
Ti's latest Global Freight Forwarding 2016 report details this evolving landscape. Recent notable acquisitions include:
- Deutsche Post's acquisition of Exel (itself a merger between Exel and Ocean Group)
- Deutsche Bahn's purchases of Schenker and Bax Global
- DSV's takeover of UTi Worldwide
- XPO Logistics' acquisitions of Norbert Dentressangle and Con-way
- Kintetsu World Express buying APL Logistics
"These moves reflect diverse strategies," explains Manners-Bell. "DHL combined ocean/air freight with road transport and warehousing through acquisitions, while Kuehne + Nagel strengthened contract logistics to complement forwarding."
New Challengers Emerge
Traditional forwarders now face competition from unexpected quarters. UPS and other parcel carriers are expanding into forwarding services, particularly in electronics airfreight. Shipping lines like Maersk's Damco and NYK's Yusen have also launched forwarding divisions to capture higher margins.
Survival Strategies for Smaller Players
Ti board member Ken Lyon, a 30-year logistics veteran, notes: "Mega-forwarders scale up not just for carrier bargaining power, but to develop premium services. Yet many struggle with legacy IT systems in an era demanding agility."
For midsize operators, Lyon suggests two paths: developing niche expertise to differentiate commoditized services, or evolving into integrated logistics providers. "Their technological capabilities will become critical differentiators," adds Ti research head Lilith Nagorski.
The rise of cloud-based instant quoting systems may even prompt shippers to question traditional forwarders' value. The industry could bifurcate between "data-unified" premium providers and lower-margin "data-fragmented" operators.
Technology Stumbles Affect Even Giants
DHL Global Forwarding's abandoned $1 billion IT system overhaul demonstrates how technological transitions can falter. Despite this setback, DHL still leads Armstrong & Associates' "Top 25 Global Freight Forwarders" ranking, followed by European peers Kuehne+Nagel and DB Schenker.
Leadership Shifts Signal New Directions
Kuehne + Nagel is restructuring its European operations with new leadership, while DB Schenker poached DHL veteran Tim Scharwath to lead its freight division. Regional specialists like Japan's Nippon Express (benefiting from 8.8% growth in automotive/electronics) and Expeditors (6% growth) demonstrate the value of focused strategies.
Trade Outlook: Cautious Optimism
HSBC's Trade Confidence Index shows 77% of U.S. exporters expect trade volume growth, possibly reflecting optimism about trade agreements. "All indicators suggest a rebound," says Brandon Fried of The Airforwarders Association. "Leveraging big data and transparency should support positive momentum."
C.H. Robinson's Rick Mettetel notes free trade agreements historically stimulate freight activity, advising shippers to "partner with forwarders demonstrating technological adaptability to economic shifts."
While global demand remains uneven, U.S. manufacturers—particularly in oil/chemicals benefiting from shale development—appear positioned to capitalize on eventual foreign demand recovery. The freight forwarding industry's transformation continues, with data capabilities increasingly determining which players thrive in this new era.