Top 25 Freight Forwarders: Strong Growth, Abundant Opportunity

As savvy forwarders embrace and utilize more sophisticated digitized solutions to set them apart from the pack, industry analysts are seeing the race narrowing. Evidence of this trend is made clear when the Top 25 features nearly a half dozen players vying for the same coveted ranking.

By · September 5, 2018

A close look at this year’s Top 25 freight forwarders as compiled by the consultancy reveals that five companies are flatout tied for positions in the report. In 2018, DHL Supply Chain & Global Forwarding and Kuehne + Nagel are tied for first. Geodis and Kintetsu World Express are in a dead heat for 12th, followed closely by Yusen Logistics, Kerry Logistics, and C.H. Robinson all vying for the 13th spot. 

“In these cases, it’s too close to call,” says Armstrong & Associates chairman “Some had impressive revenue numbers, while others captured their rankings by cargo volumes. It’s a complicated mathematical process, but it’s balanced and fair.”

However, all 25 players had one thing in common, says Armstrong: Business plans that lead to aggressive growth. “DHL was especially impressive,” he adds, “given the fact that they had been losing money for so long in the recent past.” He recalls how the company had invested heavily in a new information technology network two years ago that didn’t deliver the expected returns. Now that they’re back in the black, Armstrong contends that the DHL example may serve as a cautionary lesson for other mega forwarders.

“Wholesale changes in your IT can be very dangerous,” says Armstrong. “At the same time, however, companies can’t become too complacent about new adaptations. The risk comes from both directions.” Nor does he see any real slowdown of mergers and acquisitions in the global arena. For example, DHL, DB Schenker, and K+N are all well positioned to buy other forwarders or transportation assets.

Meanwhile, market leaders are coming to terms with ongoing pressures to stay well ahead of the pack. , CEO of DHL Global Forwarding, says that there will be several key technology differentiators for global forwarding leaders. “Digitalization and paperless operations will remain vital,” he says, “as well as operational efficiencies via process automation and robotics.”

According to Goldberg, the integration of physical and digital worlds through IoT—resulting in reduced operating costs, improved productivity and product development—is also a crucial process for DHL. “Finally, we have to continue to focus on integrated and secure supply chains and harnessing data’s power via advanced analytics for decision-making and deeper insights,” he says.

Trond Prestroenning, executive vice president, ocean freight Americas at DB Schenker, agrees that working with new technology providers will be essential to his company’s growth plans. “We saw 40% gains in business over the past year,” he says, “and we feel that’s sustainable if we move in a measured way.”

Having just created a regional headquarters in Miami moves DB Schenker closer to markets in Brazil, Mexico and Argentina, says Prestroenning. “At the same time, we will continue to focus on the trans-Pacific for expansion opportunities,” he adds.

Finally, while growing through acquisition is still a viable option, Prestroenning believes that “buying for the sake of buying” is not the best strategy. “Just as we carefully choose our technology partners, we must make sure that any smaller forwarder has the synergies we need for a good fit,” he adds. “It’s not just about enlarging your footprint. Any purchase of a small forwarder has to make sense in the marketplace, and give our shippers another service of value.”

Top 25 Global Freight Forwarders

Ranked by 2017 Logistics Gross Revenue/Turnover and Freight Forwarding Volumes***

A&A Rank Provider Gross Revenue Ocean TEU's Air Metric Tons

1*

27,598 3,259,000 2,248,000
1* 22,574 4,355,000 1,570,000
2 18,560 2,169,000 1,300,000
3 9,530 3,360,300 533,300
4 11,374 1,389,611 635,655
5 6,921 1,070,424 985,549
6 5,621 1,520,500 995,900
7 16,720 600,000 835,755
8 7,981 600,000 935,300
9 5,012 864,000 640,700
10 6,994 729,000 480,000
11 3,305 897,379 654,104
12* 6,255 690,000 330,000
12* 4,752 663,915 580,228
13** 3,914 774,822 368,198
13** 3,951 1,053,485 313,800
13** 6,911 522,300***** 335,500
13**
 
14,869 698,000 175,000
14 3,500 740,000 415,000
15 5,935 500,000 280,000
16

2,700 664,000 206,000
17

4,660 434,000 91,000
18

9,506 131,500 72,600
19 4,454 310,850 57,014
20 1,735 144,483 321,704

 

*Tied in 1st place, **Tied in 12th place, ***Tied in 13th place
****Revenues and volumes are company reported or Armstrong & Associates, Inc. estimates. Revenues have been converted to
US$ using the average annual exchange rate in order to make non-currency related growth comparisons. Freight forwarders are
ranked using a combined overall average based on their individual rankings for gross revenue, ocean TEUs and air metric tons.
*****Includes LCL shipments.
Copyright © 2018


Force magnifier

According to “Global Freight Forwarding 2018,” the recent report produced by the London-based think tank Transport Intelligence (Ti), the sector “stands at a crossroads,” with forwarders large and small facing significant challenges and threats in a market characterized by strong growth and abundant opportunity.

“After being caught unaware by the entry of a new breed of tech-enabled forwarders into the market, the traditional players have come to see technology as a force magnifier in value creation, but not as the center of their offer,” says Nick Bailey, head of research at Ti. He reveals that at the surface level, some forwarders are indeed running down the wrong path when seeking a quick technology fix.

According to Bailey, all forwarders are vulnerable to considerable risk if they invest in a tech-based solution that doesn’t fit their operations or their clients’ needs. He adds that there’s been a big focus on robotic process automation in which repetitive and low value back-office tasks are driving efficiency gains and freeing people up to undertake higher value contact with clients.

“Alongside this, forwarders are using new solutions to track and make much more operational data available to clients through reporting tools and dashboards, greatly improving visibility and offering shippers much greater control and visibility,” says Bailey. “These are both examples of technology implementations that create potentially huge benefits for forwarders and shippers.”

Ultimately, the short-term future of forwarding will be driven by the use of technology to deliver against the need to improve operational efficiency and enhance “customer-centricity,” contends Bailey. “There’s no established route to success, and forwarders are likely to need a suite of internal and external tools to meet all the demands they’ll face.”

Competitive threats

Recent research conducted by , president of the consultancy, reinforces observations made by Ti. “Traditional forwarders still have time to address the competitive threat posed by digital platforms,” she says. “That was made clear when DB Schenker partnered with u-Ship to provide an online freight platform for its European road services. Since then, Schenker has taken an equity stake in the online platform provider.”

Morrow Roberson also agrees that small-to-medium sized enterprises (SMEs) have been given an even greater incentive to dive into the forwarding fray. “Cloud-based technology and digital platforms have literally opened the door wider for SMEs to participate and compete against larger competitors faster. Furthermore, they’re more agile and require very little up-front investment,” she says

Global market remains on “tariff watch”

According to the online intermediary, freight forwarders will be keeping a close eye on tariff developments.

“Our shippers have been rather relaxed about the issue so far,” says Klaus Lysdal. “In fact, the China lanes have stayed pretty busy.”

However, that doesn’t mean that the Miami-based forwarder can ignore the ongoing threats of a trade war, admits Lysdal, who adds that his company could be “hit hard” because Florida’s ports may be in the eye of the storm.

“Our state is among the top 10 in the nation for exports,” says Lysdal, “and international trade makes up a larger share of Florida’s GNP than elsewhere in the U.S. Shippers in South Carolina are also concerned about this for the same reason.”

Lysdal adds that his company is already seeing foreign companies making contingency plans for moving their exporting operations overseas. “For example, some of the foreign automakers may keep a few production plants here, but will likely relocate the rest to soften the impact of tariffs,” he says.

Lysdal feels that a trade war will also create new hardships for air cargo shippers. “The pharmaceutical industry is especially exposed,” he says. “India is a very attractive sourcing alternative, given its proximity to China. “The apparel industry is already under pressure for the same reasons.”

— Patrick Burnson, executive editor

At the same time, many large forwarders are specifically targeting this group of shippers by offering specific consulting services as basic as how to expand and operate a business in a specific country to identifying key trade lane partners. “DHL is a good example of a forwarder offering this kind of service,” says Morrow Roberson. “UPS also noted in its second quarter earnings call the success it’s achieved within the middle market. Another good example is Agility’s introduction of Shipa Freight, an online freight marketplace targeted to SMEs that allows them to book and manage international freight.”

Indeed, amid all the growth and opportunity, the freight forwarding market is not likely to remain static, contends Morrow Roberson. “The most interesting development this year was CMA-CGM’s acquisition of a 25% stake in CEVA. This deal should set CMA-CGM to compete with Maersk and its subsidiary DAMCO,” she says.

By way of forecast, Morrow Roberson believes Panalpina will continue to acquire niche perishables forwarders such as and .

“E-commerce is another area of acquisitions,” says Morrow Roberson. “For example, Alibaba and Cainiao invested $1.38 billion in , while FedEx acquired P2P Mailing Limited which provides customers with last-mile delivery options, leveraging its relationships with private, postal, retail and clearance providers in over 200 countries.”

Furthermore, says Morrow Roberson, its technology and processes provide “plug-and-play” options with carrier networks and customer systems. P2P now operates as a subsidiary of FedEx Cross Border within the FedEx Trade Networks operating company.

“For the rest of the year, we expect a continuation of smaller, niche acquisitions,” adds Morrow Roberson. •


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 [ protected]

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