Imagine a small freight forwarding company leveraging intelligent systems to respond to customer needs as quickly as industry giants, optimize shipping routes, and even offer more competitive pricing. This is no longer a distant dream but a reality emerging from the wave of data democratization transforming the freight forwarding sector. But how exactly will this revolution reshape the industry landscape?
In recent years, the freight forwarding industry has witnessed frequent mergers and acquisitions, with large corporations expanding their global footprints and strengthening dominance on specific trade routes. However, technological advancements have also created new opportunities for small and mid-sized forwarders. As solution costs decrease and become more accessible, these companies can now compete more effectively against larger players.
Industry in Transition
John Manners-Bell, CEO of London-based consultancy Transport Intelligence (Ti), observes: "Forwarders need to be more agile than ever in adapting to customer demands. In coming years, industry structure may undergo fundamental changes as new entrants seek opportunities and efficiency gains."
Ti's research report "Global Freight Forwarding 2016" supports this view, noting that major logistics firms have increasingly turned to mergers and acquisitions to expand global influence and maintain competitiveness.
Notable Mergers Reshaping the Market
- Deutsche Post's acquisition of Exel (itself a merger between contract logistics firm Exel and forwarder Ocean Group)
- Deutsche Bahn's purchases of Schenker and Bax Global
- CEVA's acquisition of EGL
- Geodis buying OHL
- Kuehne + Nagel taking over ReTrans
- XPO's purchases of Norbert Dentressangle and Con-way
- DSV acquiring UTi Worldwide
- Kintetsu World Express buying APL Logistics
Manners-Bell explains these acquisitions reflect diverse strategies responding to market evolution. For example, Deutsche Post DHL created an integrated logistics division through its Exel and Danzas purchases, combining ocean/air freight capabilities with road transport and warehousing from contract logistics operations.
New Market Entrants Emerge
Ti analysts identify another strategic trend: parcel carriers like UPS are encroaching on traditional forwarder business, particularly in electronics airfreight. Shipping lines are also establishing forwarding divisions to capture upstream/downstream spending, exemplified by Maersk's Damco and NYK's Yusen.
Ken Lyon, Ti board member and 30-year logistics veteran, notes: "The industry is evolving at breathtaking speed. Large forwarders aren't just scaling up for better carrier rates and geographic reach—they're developing value-added services to improve margins."
Lyon highlights operational challenges many logistics giants face with legacy IT systems, raising questions about their adaptability in a dynamic marketplace. Meanwhile, small and mid-sized forwarders must transform—becoming more efficient in still-manual environments while elevating commoditized services.
The Technology Imperative
Ti research head Lilith Nagorski emphasizes: "Their technological capabilities will be crucial to customer value propositions." With cloud-based instant quoting/booking systems emerging, some shippers may question traditional forwarders' role. The industry could see divergence between "data-unified" forwarders and lower-margin "data-fragmented" competitors.
Even industry leaders face technological hurdles. DHL Global Forwarding abandoned its $1 billion "New Forwarding Environment" IT system—a modernization centerpiece that failed to deliver expected returns despite aiming to standardize global operations and improve transparency.
Regional and Modal Variations
Armstrong & Associates' "Global Top 25 Forwarders" ranking shows European firms dominating the top spots—DHL, Kuehne+Nagel and DB Schenker all performed strongly. Kuehne+Nagel is establishing dual headquarters in Amsterdam while restructuring European leadership, while DB Schenker poached DHL executive Tim Scharwath to lead its freight division.
Regional specialists also thrive: Expeditors grew 6%, UPS Supply Chain Solutions ranked seventh in North America with 2.5% volume growth, while Japan's Nippon Express rose one spot with 8.8% growth from automotive/electronics demand. Airfreight leaders included Hitachi Transport (11.8% growth), Yusen Logistics (11%) and Hellmann Worldwide (10.6%).
Optimistic Trade Outlook
HSBC analysts report positive freight prospects for U.S. exporters. While its Trade Confidence Index dipped slightly from 127 to 126, 77% of surveyed companies expect increased trade volumes—with 18% anticipating very favorable regulatory impacts, likely reflecting optimism about the Trans-Pacific Partnership.
Airforwarders Association executive Brandon Fried cites multiple reasons for industry optimism: "All signs point to economic rebound. Leveraging big data and transparency will help shape positive prospects." U.S. manufacturers—particularly in capital goods—appear positioned to benefit from recovering foreign demand, with petroleum/chemical products as key growth areas.
C.H. Robinson's Rick Mettetel notes free trade agreements historically stimulate freight activity, advising shippers to partner with technologically advanced, adaptable forwarders amid economic shifts.