The global freight forwarding market is expected to rebound over the next few years after its most challenging year ever. This is according to analysts at Transport Intelligence (TI) who forecast annual compound growth (CAGR) at 5.2% from now until 2024. This demonstrates the lessening of the impact of Covid-19 over the coming years.“The rebound will be seen in both the air and sea freight markets. The airfreight market has been the most impacted over 2020 but it is expected to see higher growth than sea between 2020 and 2024, at a CAGR of 5.4%. The sea freight market is forecast to grow at a CAGR of 5.0%,” reads the report.According to IHS Market, after a 4.2% decline in 2020, global world GDP is projected to increase about 4.6% in 2021. In addition, the International Monetary Fund is predicting that global trade levels will reach pre-Covid levels in 2021. These projections, however, remain subject to much uncertainty – especially as the world currently battles a second wave of the coronavirus.According to TI, at the start of the pandemic, some dire forecasts for trade were projected and any return to pre-Covid trade levels did not look likely. However, trade growth at present looks more positive than what was initially predictedAccording to TI analyst Holly Stewart, unlike the previous global recession in 2009, consumer demand has remained relatively strong. While expenditure in services was hit badly, global lockdowns brought healthy demand for some consumer goods.“Understanding GDP and trade growth dynamics are important to understanding growth in the freight forwarding market. From 2010-2019, trade grew 1.1 times faster than GDP. In previous decades, this multiple was higher, but the globalisation trend has since slowed.“Over 2021-2024, the IMF expects this multiplier to be 1.2, buoyed by a strong recovery in trade in 2021. Trade pacts have an important place in the forwarding market, positively impacting members’ trade volumes and supply chains.”In a recent white paper on forecasting global freight forwarding growth, Stewart said in some areas, such as on Transpacific lanes, trade growth had already comfortably surpassed pre- Covid levels, giving credence to the view that global trade and freight forwarding would recover to pre-pandemic levels in the near future. Capacity is expected to remain tight for the foreseeable future – a trend that could potentially constrain growth in the air and sea freight forwarding markets.“Tight capacity has been a characteristic of both the air and sea freight forwarding markets in 2020. In sea freight, carriers have learned tough lessons from the past decade. After high expenditure on post-Panamax ships, they have since consolidated and formed successful alliances, enabling them to cut capacity during the pandemic, keeping rates at high levels. This trend, although likely not to the same extent, could continue in the years ahead, pushing some shippers to consider other modal options, such as rail or sea-air,” reads the paper. “Meanwhile, capacity has been reduced involuntarily in the airfreight market. The lack of air travel has severely reduced bellyhold capacity.”While services continue to be reintroduced, shippers have been pushed to other modal options in the airfreight sector – and drawing these volumes back in the current uncertain times remains unlikely.Looking at the Middle East and Africa (Mena) region in particular, TI said it forecast CAGR for the region at 3.5% from now to 2024, making it one of the lowest rates of growth for the period. “Growth of the sea market in the region is forecast to be at a CAGR of 3.6% whilst the air market is expected to contract by 3.3% over the same period. 2020 has impacted the region because of its reliance on imports. The low oil prices and the trade slump have reinforced the rationale behind Mena countries’ desires to diversify their economies.”Analysts forecast annual compound growth in the freight forwarding industry at 5.2% from now till 2024.
