Analyst Transport Intelligence (Ti) expects the 2021 global freight forwarding market to have grown by 12 percent year on year over 2020 levels.
The annual growth is driven by an especially strong first half of 2021, with growth of 19 percent resulting from the economic rebound from Covid-19. Although the pace of growth has slowed through the second half of 2021, the total market is still expected to be 2.3 percent larger by the end of the year than it was in 2019, before the pandemic hit.
For the full year 2021, the IMF’s October 2021 World Economic Outlook predicts that global GDP growth will rebound with real growth of 5.9 percent. Recovering consumer demand promoted a surge in global trade, resulting in very low inventory levels that shippers have been working to replenish amid a market with severe capacity constraints. This has led to high demand for airfreight services throughout 2021, especially in the first half of the year.
The airfreight market has, and continues, to benefit from improved cost-competitiveness relative to ocean freight, despite historically high airfreight rates. According to IATA, the average price to move air cargo was 12.5 times more expensive than sea shipping before the Covid-19 crisis, whereas in September 2021 it was only three times more expensive.
This shift pushed airfreight forwarding growth up to 26 percent in the first half of 2021. Ocean freight achieved 10.3 percent growth over the same period.
Logistical bottlenecks and supply chain disruption weighed on market growth in second half of 2021 – something that will likely persist going forwards into next year in developed markets. Low-income developing countries have been faced with worsening pandemic dynamics, another drag on growth according to Ti.
Looking ahead to the longer-term prospects for the freight forwarding market, Ti’s latest forecasts show that the market will grow at a 2020-2025 compound annual growth rate (CAGR) of 5.1 percent as the global economy and trade recover from the Covid-19 pandemic. The growth forecast is driven in large part by Asia Pacific and North American expansions over the period, which have CAGRs of 6 percent and 4.9 percent, respectively.
The airfreight forwarding market is forecast to have slightly faster growth, expanding at a 5.6 percent CAGR over the period, while the ocean forwarding market is expected to grow slightly less quickly at a 4.5 percent CAGR out to 2025.
Growth over the forecast period will be tempered by the ongoing recovery from the pandemic, but despite some lockdowns to deal with new variants and spikes in infections, global trade growth has accelerated significantly in 2021. The WTO expects global merchandise trade over the five years to 2025 to return closer to historical averages, with slight growth in 2022, helping to support growth in freight forwarding.
Trade disruption and bottlenecks should also abate over the forecast period. This will result from both the above-mentioned return of demand and trade levels to historical averages, as well as a normalisation of the capacity situation on air and ocean freight markets.
Nick Bailey, Ti’s head of research, said: “It’s been a year of rapid growth for the global freight forwarding market, driven by a potent mix of sky-high demand, capacity constraints and increased activity post-pandemic. The Covid-19 pandemic, however, is still causing disruption to supply chains and global trade, slowing the economic recovery in the short term, and as a result still has the potential to cause significant headwinds to growth.”