New report suggests an uptick for forwarders

Demand, capacity and profitability have all shown huge unpredictability both in the air and sea freight sectors, said analysts, yet it is confidence -- or rather the lack of it -- which has set the overall tone.

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The global trading system is experiencing “extraordinary volatility” and this is being reflected in the performance of the freight forwarding industry, said Jon Manners-Bell of Transport Intelligence (Ti), a London-based think tank. Demand, capacity and profitability have all shown huge unpredictability both in the air and sea freight sectors, he said, yet it is confidence—or rather the lack of it—which has set the overall tone.

“In some respects the past twelve months have been a good time for the sector with demand recovering at a remarkable rate in a number of key routes,” he noted in a recent report.  “The crash in volumes experienced in 2008 and early 2009 appeared to herald a long term slump in global trade and logistics. However this slump has not occurred. Rather the reverse.”

Ti’s latest research indicates that despite the lack of capacity for both air cargo and ocean freight shippers, may well continue to the central problem, however.

According Manners-Bell, the sector was caught in the “perfect storm” of falling volumes and rates.

“Having benefited for so long from the growth of global supply chains, it now found itself in free fall as Western retailers and manufacturers were left with excess inventory in their warehouses,” he said. “This resulted in the suspension of orders to predominantly suppliers many of whom are based in Asia. The timing of this reaction could not have been worse.”

Indeed, he observed that with shipping lines and airlines still increasing their capacity, over capacity became rife on all major lanes and rates dropped dramatically. The result, said Ti analysts, was that the slowdown in 2008 became a slump in 2009 (the market fell by 23.4 percent) although by the end of the year the market was showing signs of upturn.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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