In 2023, due to the global economic downturn, rising inflation, weakened consumer demand, ongoing environmental issues, and intensifying geopolitical conflicts, supply chains have been severely impacted, causing a significant slowdown in the freight market. Consequently, the total logistics revenue of freight forwarders has decreased significantly compared to 2022. The world's leading freight forwarding companies are adopting technology at an astonishing rate to cope with the ongoing global economic fluctuations and to be prepared for a potential recovery.

Recently, Armstrong & Associates (A&A) released the 2023 list of the world's top 25 freight forwarders based on total logistics revenue/turnover.

1. Five Chinese Companies Make the List of the Top 25 Global Freight Forwarders

Globally, A&A ranked the top 25 freight forwarders based on total logistics revenue/turnover in 2023. The top 10 companies are:

1. Kuehne+Nagel (1st)

2. DHL (2nd)

3. DSV (3rd)

4. DB Schenker (4th)

5. Sinotrans (5th)

6. Nippon Express (6th)

7. CEVA Logistics (7th)

8. C.H. Robinson (8th)

9. Expeditors (9th)

10. Kerry Logistics and GEODIS (tied for 10th)

*Revenue and freight volumes are either company-reported or estimates by Armstrong & Associates, Inc. The revenue covers all four 3PL segments (DTM, ITM, DCC, and VAWD) and has been converted to USD using average annual exchange rates. The rankings are averaged based on total revenue, sea freight TEUs, and air freight tonnage.

**Including LCL shipments.

***Bolloré Logistics now operates under the CEVA Logistics brand. Copyright © 2024 Armstrong & Associates, Inc.

Among them, five Chinese companies made the list of the top 25 global freight forwarders: Sinotrans (5th), Kerry Logistics (10th), CTS International Logistics (16th), CIMC TianDa (19th), and EAS International (21st).

Despite the significant decline in profits in 2023, Armstrong & Associates’ ranking of the top 25 global freight forwarders shows little change compared to 2022. Notably, Maersk entered the list for the first time, ranking 12th, tied with Hellmann Worldwide Logistics. China’s CIMC TianDa and EAS International ranked 19th and 21st, respectively, in 2023.

Headquartered in Tianjin, CIMC TianDa is a leading integrated third-party logistics company in China, with sea freight forwarding as its core business. In 2023, CIMC TianDa ranked 13th among the world's top 25 sea freight forwarders and is also one of the top 50 air freight forwarders.

In 2023, EAS International, headquartered in Guangdong, held a sea freight NVOCC license and an air freight Class A license. It ranked 9th in A&A's global top 25 air freight forwarders list but did not make the top 25 sea freight forwarders list. Luxembourg-based Logwin and Shanghai-based Global Link Logistics, which tied for 21st in 2022, have since fallen off the list.

2. Challenges and Strategies in the Global Freight Forwarding Market

According to Viki Keckarovska, a research manager at Transport Intelligence Ltd (Ti): “The abnormal market conditions of 2022 and 2021 are long gone, and the market is on a new trajectory, resulting in a sharp decline in revenue and profits for most freight forwarders in 2023.”

The A&A report indicates that in 2023, the International Transportation Management (ITM) third-party logistics (3PL) segment performed poorly, with net revenue dropping by 34.2% to $28 billion. Data shows that total revenue nearly halved (-49.3%) to $74 billion.

Evan Armstrong, president of Armstrong & Associates, commented, "It’s hard to believe that just two years ago, the ITM 3PL segment saw unprecedented growth of 74.9% in gross revenue and a 44.6% jump in net revenue. Driven by pandemic-related demand, shippers focused on restocking inventory to meet strong consumer demand. Since mid-2022, the ITM environment has changed dramatically, with ocean freight trends from Asia to the U.S. returning to pre-pandemic levels.” (A&A defines ITM as including ocean and air freight forwarding; related inland transportation; freight consolidation and deconsolidation; customs brokerage; and related warehousing services.)

Ti’s "2024 Global Freight Forwarding Report" shows that the global freight forwarding market is returning to normal, with weak demand for ocean and air freight forwarding services. The market is expected to grow by only 1.7% in 2024.

Ti's chief analyst, Thomas Cullen, wrote in the report: "The global freight forwarding market contracted by 1.3% in 2023 in real terms (adjusted for price and exchange rate changes) due to the global economic downturn, shifting consumer behavior, and oversupply." According to Ti’s findings, the air freight forwarding volume shrank by 2.1% in 2023, while the performance of ocean freight forwarding was disappointing, contracting by 0.6%.

A&A reports that by Q3 2022, as consumer demand slowed and supply chains stabilized, U.S. ocean freight rates and domestic transportation rates began to experience inflationary declines. Since the peak in early 2022, ocean freight rates from China to the U.S. and Europe have dropped by 90%.

Armstrong stated, “Demand and freight rates for ITM 3PL's air and ocean transport have rapidly declined.” A&A data shows that global air freight rates dropped 41% year-over-year in Q2 2023. International freight volumes declined year-over-year in the U.S., Europe, and Asia, with ocean TEUs down an average of 5.4% and air freight tonnage down 11%. After 17 consecutive months of decline, air freight capacity and revenue began to recover by the end of 2023. Air freight demand fell by about 10% compared to 2022, while overall capacity expanded as global passenger flight capacity increased.

Air freight capacity is typically offered at lower rates. However, Armstrong noted that ocean carriers in 2023 expressed a willingness to provide contracted capacity and competitive rates, especially for port-to-port pairs importing furniture, consumer goods, and retail products. Overall, apart from current labor disputes, port congestion has reduced, and trucking capacity is sufficient.

ITM has slightly rebounded in the first half of 2023 and benefited from uncertainty in Red Sea shipping and reduced ocean transport through the Suez Canal. Once shippers need to replenish inventory, ITM demand from China should begin to rebound in the second half of the year. Ocean freight rates from Asia to North America are also expected to stabilize.

Keckarovska agrees with Armstrong's view and points out that trade between the Middle East and Southeast Asia, as well as between India and China, is growing. However, as the scale of the Asian market expands, the proportion of Chinese exports to Western markets is declining.

Given the multiple challenges facing freight forwarders, analysts believe that to remain competitive, freight forwarders need to invest in technology (digitization), actively engage in mergers and acquisitions, and focus on high-margin vertical markets such as pharmaceuticals and semiconductors.

In terms of mergers and acquisitions, Kuehne+Nagel and DSV have solidified their leadership in the industry through successful integrations in recent years. Armstrong pointed out that CEVA, GEODIS, and Maersk have also heavily invested in mergers and acquisitions in recent years. CMA CGM's acquisition of Bolloré Logistics for $5.3 billion is the largest M&A deal so far in 2024, further cementing CEVA Logistics’ position as one of the world's top ten freight forwarders and leading third-party logistics providers.

END

Official Account: Cross-Border E-commerce Logistics Baixiaosheng