Global freight forwarding market to return to pre-pandemic levels this year. Unfortunately not in Europe

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Global freight forwarding market to return to pre-pandemic levels this year. Unfortunately not in Europe

Freight forwarding services will record growth as early as this year in all major regional markets. Forecasts for the period to 2025 also look optimistic. In Europe, however, the growth rates of the Asian and American markets will be viewed with envy.

A rebound in the global freight forwarding market is expected as early as this year. Analysts from Transport Intelligence (TI) forecast that the global market will grow by 11.6% in 2021. The gradual reopening of economies will contribute to economic growth and international trade, experts say.

The IMF forecast in April that this year’s global GDP would increase by 6%. It also projects a 9.5% growth in international trade this year. TI experts estimate that at the end of this year, the value of the global freight forwarding market should exceed the pre-pandemic level of 2019. That said, it will barely be 1.9% higher.

The value of the global freight forwarding market declined by 8.7% in 2020. The COVID-19 pandemic and its aftermath was obviously the cause here. According to IMF data, global GDP fell by 3.3% last year and the value of international trade dropped by more than 5%.

Of the three main regional markets (North America, Asia and Europe), the Old Continent was the hardest hit by the pandemic. In Europe, the value of the freight forwarding market fell by 10.4%, while in the Asia-Pacific region the drop was 8.5%. North America weathered the first year of the pandemic the best – there the value fell by only 5.8%.

US consumers are driving the freight forwarding market

North America is also expected to lead growth this year. The market for forwarding services there is expected to grow by as much as 15.9%. High levels of consumer demand (which is already helping to push up global sea freight rates and causing congestion at US ports) are expected to be the main driver.

The Asia-Pacific region will also follow the growth path (13.2%). In this part of the world, growth is expected to be driven by demand from US consumers for goods produced in Asia (especially China). In addition, India is expected to benefit from the global pharmaceutical boom as many manufacturers have set up their facilities there.

European freight forwarders will also return to growth in 2021. However, this will be a weaker rebound than on the two continents mentioned earlier, at 8.3%. Contrary to the US and Asian markets, European freight forwarders will not succeed in returning to pre-pandemic levels. According to TI forecasts, the value of freight forwarding services in Europe will be 2.9% lower at the end of this year than in 2019. By comparison, North America and Asia will record growth of 9.2% and 3.6% respectively. It is not until 2022 that the Old Continent’s freight forwarding market is expected to beat 2019 levels.

Asia and America at speed, Europe at a turtle’s pace

The growth in 2021 is expected to be the start of a positive multi-year trend. According to TI estimates, the global freight forwarding market will grow at an average of 5% each year between 2020 and 2025. Experts assume that the global economic rebound will contribute to this. Indeed, the IMF’s April forecast projects average annual global economic growth of 5.2% between 2020 and 2025. In addition, TI’s forecast predicts that pressure on global supply chains will also ease over time. And this in turn will boost international trade.

Asia-Pacific will be the fastest growing freight forwarding market between 2020 and 2025 with an average growth rate of 6% per year expected in the region. By the end of 2025, the market value in the region is expected to be 22.3% higher than before the pandemic. Asia is still to benefit from its position as the world’s factory and demand from the West. On top of that, numerous regional trade agreements will strengthen exchanges between growing Asian countries.

The North American market is expected to grow by an average of 5% between 2020 and 2025, closing the period around 20% above its 2019 value. Here, the driving force is to be the implementation of the new trade agreement between the United States, Canada and Mexico, which replaced NAFTA in 2020.

Forwarding companies operating only in Europe will eye global operators and their counterparts in Asia and North America with envy. Europe will see steadier growth than the other two regions. Moreover, this growth will be lower than the global forecast (16.7%). This is because the average annual growth rate of the freight forwarding market on the Old

Continent will be 4.3%. In 2025, the value of the European market will be just over 10% higher than before the pandemic.

Photo credit @ Pixabay

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