Dublin March 2015
INSTITUTE TO RESEARCH THE IMPACT OF INDEPENDENT FREIGHT FORWARDING IN GLOBAL LOGISTICS
The independent freight forwarding sector is now more vibrant and successful than ever, despite the global economic woes of the past few years. The rise of the independent agent has now been borne out by a whole range of statistics and data that prove that far from shrinking, the independents are growing faster and taking market share from the multinationals.
2014 figures from Drewry consulting show that 41 per cent of all ocean freight is now controlled by 3PLs or forwarders and by the end of the decade analysts are predicting that the market share will rise to 50 per cent – a remarkable switch in business practice by BCO’s over the past two decades. 20 years ago some 75 per cent of all sea freight volumes were booked directly with carriers.
Even more remarkable is that it is independent freight forwarders and not multinational 3PL’s are expected to make up the lion’s share of this total at some 30%
This trend by BCO’s to outsource the management of their container traffic to independent freight forwarders, is being driven by increasing frustration with the lack of service, price volatility, schedule unreliability and onerous credit terms experienced in dealing directly with carriers in the sea freight industry.
Carriers due to the huge downward pressure on rates are being forced to increasingly commoditized their product. As a result carriers are increasingly incapable of meeting shipper’s needs through direct relationships as they lack the end to-end service supply chain capabilities, focusing instead almost entirely on cost. Sales and customer service teams have been slashed as the fight to the bottom on rates continues. The advent of super alliances has further eroded the personal interfaces between the shipping lines and the end customers.
This move away from direct booking with carriers by BCO’s is a great opportunity for independent forwarders to gain significant new business and volumes. For the logistics industry this is also a positive development and will help to further integrate the global supply chain.
So what exactly is the state of the independent freight forwarding market at this important juncture and more importantly how is the segment responding to this increasing demand from Beneficial Cargo Owners (BCO’s) for their services?
These are the questions that our research will answer and in so doing provide much needed insight into what BCO’s can expect from the sector and more importantly what independent freight forwarders need to do to take advantage of these new more profitable opportunities.
The research program will take almost 2 years to complete (2015-17) and will publish its preliminary findings in June 2016. Interim findings are leveraged to give final direction to the research process and responds to intelligence gathered in the process to date.
The report will be structured using a Q&A format asking and specifically answering 3 key questions:
- What is the typical profile of the IFF that BCO’s are looking to?
- What do independent freight forwarder needs to demonstrate to attract this business?
- How are these services delivered?