Imagine a small freight forwarding company equipped with an advanced cloud-based system, capable of responding to client demands as swiftly as industry giants, providing precise quotes and efficient service. This is no longer a distant vision of the future but an emerging reality. Technological advancements are transforming the freight forwarding sector at an unprecedented pace, with data democratization becoming a powerful equalizer for small and medium-sized enterprises challenging market leaders.
Industry analysts note that mergers and acquisitions continue to reshape the freight forwarding landscape, with major players expanding their global footprint and enhancing capabilities on specific trade routes. Simultaneously, advanced technologies are unlocking transformative potential for freight forwarding and trade processes. Analysts add that this trend may enable smaller firms to compete more effectively against larger corporations, as solutions become increasingly affordable and widely accessible.
"Freight forwarders need to adapt to customer requirements with greater agility than ever before," said John Manners-Bell, CEO of London-based consultancy Transport Intelligence (Ti). "The coming years may see 'fundamental' changes in industry structure as new market entrants focus on opportunities and efficiency gains."
Strategic Industry Trends
Ti researchers outline several key developments in their latest report, "Global Freight Forwarding 2016." Over recent years, all major logistics companies have actively pursued mergers and acquisitions to strengthen their global market presence and capabilities.
Notable transactions include:
- Deutsche Post's acquisition of Exel (itself a merger between contract logistics firm Exel and freight forwarder Ocean Group)
- German Rail's purchases of Schenker and Bax Global
- CEVA's acquisition of EGL
- Geodis' purchase of OHL
- Kuehne + Nagel's takeover of ReTrans
- XPO's acquisitions of Norbert Dentressangle and Con-way
"The rationale behind these acquisitions varies," observed Manners-Bell, "but reflects unified market logic. For instance, Deutsche Post DHL combined ocean/air freight capabilities with road transport and warehousing through its Exel and Danzas purchases."
New Market Entrants
Ti analysts highlight another strategic trend: parcel delivery firms like UPS are encroaching on traditional freight forwarding territory, particularly in electronics air cargo. Shipping lines are also establishing forwarding divisions to capture upstream and downstream client spending, as seen with Damco (Maersk) and Yusen (NYK).
"The industry is evolving at remarkable speed," said Ken Lyon, Ti board member with 30 years' logistics experience. "Large forwarders aren't just scaling up for carrier bargaining power—they're expanding service portfolios, particularly high-margin value-added services."
This evolution presents challenges. Many logistics giants grapple with legacy IT systems, raising questions about their adaptability in a dynamic market requiring rapid response capabilities.
"Meanwhile, smaller forwarders must also evolve," Lyon added. "They need greater efficiency in manual data environments while strengthening commoditized offerings." Some specialize in niche sectors with high entry barriers, while others transition into full-service logistics providers.
"Their technological systems are becoming crucial to customer propositions," emphasized Ti research head Lilith Nagorski. Cloud-based instant quoting and booking platforms may lead some shippers to question traditional forwarders' utility, potentially creating industry bifurcation between "data-unified" and "data-fragmented" players.
Technological Challenges
Even industry leaders face implementation hurdles. DHL Global Forwarding abandoned its $1 billion "New Forwarding Environment" IT system—a key modernization initiative that failed to deliver expected returns.
Despite setbacks, DHL leads Armstrong & Associates' "Top 25 Global Freight Forwarders" ranking, followed by Kuehne+Nagel and DB Schenker. Leadership changes have contributed to success—Kuehne+Nagel recently established two organizational units in Amsterdam and appointed new regional leadership, including former DB Schenker executive Hansjoerg Rodi.
Regional and Modal Performance
Expeditors achieved 6% growth, while UPS Supply Chain Solutions ranked seventh in North America with 2.5% volume growth. Asia's top performer, Nippon Express, rose one ranking position with 8.8% growth driven by automotive and electronics demand.
Air freight growth leaders included Hitachi Transport Systems (11.8%), Yusen Logistics (11%), and Hellmann Worldwide (10.6%). HSBC analysts note cautiously optimistic U.S. export prospects, with 77% of surveyed companies expecting increased trade volumes—potentially reflecting optimism about trade agreements like the Trans-Pacific Partnership.
"All indicators suggest a rebound," said Brandon Fried of The Airforwarders Association. "Big data utilization and transparency should contribute to positive momentum."
U.S. manufacturing—particularly investment goods—appears positioned to benefit from anticipated foreign demand recovery. Petroleum and chemical products may see significant growth through shale oil development. While strong domestic demand supports imports, exports face headwinds from weak global demand and dollar strength.
"Free trade agreements have historically stimulated freight activity," noted C.H. Robinson's Rick Mettetel. "In their absence, shippers should prioritize technologically advanced, adaptable forwarders capable of navigating economic shifts."