Global freight forwarding sector to escape contraction in 2023

The global freight forwarding sector will escape contraction in 2023 but only expand 0.7% year over year in real terms, reaching a market value of 265.1 billion euros ($282.2 billion). Emerging markets will drive growth, and China’s updated COVID-19 policies could have a major impact on when demand will return, according to the latest research by Transport Intelligence (Ti). The sector will decline 2.4% YoY this year, with market value totaling just over $280 billion. Air and sea freight are forecasted to decline YoY by 2.7% and 2.2%, respectively. Ti’s real growth forecast for the airfreight forwarding market in 2023 is 0.8%. [caption id="attachment_57133325" align="alignnone" width="1252"] Photo/Ti Insight[/caption] “Over the past two years, the airfreight industry has been impacted by declining capacity and growing demand,” Ti Research Analyst Marta Chiriatti stated in the report. “However, from an air cargo perspective, demand is down, and airfreight rates are expected to fall to pre-[COVID-19] levels in the first half of 2023.” Air forwarding outlook 2023 The slow recovery of air cargo belly capacity in Asia Pacific, labor shortages, rerouted European flights due to the war in Ukraine , rising jet fuel prices and high inflation have all impacted the airfreight market in 2022, Chiriatti added. As port congestion eases and ocean reliability improves, shippers may increase the use of ocean freight and consequently reduce demand for air freight services. Both ocean and air should see declining rates in the next year, with air’s dropping slower than its maritime counterpart. “Yet, the relative cost difference between air and ocean freight will play a minor role,” the report added. The focus on reducing the industry’s carbon footprint will likely play a critical role in market growth, Chiriatti noted. On a regional level, Asia Pacific will dominate global growth through 2023, supported by free trade agreements, efficient supply chains and competitive costs. Asia Pacific will experience 1.3% YoY growth in real terms in 2023 for both sea and airfreight. In addition, Southeast Asia and India will benefit from trade diversification away from mainland China. China’s pandemic-driven lockdowns and power shortage issues are still present; however, macroeconomic conditions will likely improve with the expected gradual relaxation of pandemic control measures. “Tensions and geopolitics between the United States and China are expected to continue fueling volatility in Chinese markets,” Chiriatti said. “Recent announcements such as the U.S. CHIPS and Science Act — which will drive significant investment in semiconductor [research and development] in the U.S. — highlight the real impact that geopolitics can have on China’s industry.” Meanwhile, the North American region will experience only 0.1% airfreight growth in real terms in 2023, while sea is expected to remain flat. Economic disruptions caused by the decrease in consumer demand, high inflation and the war in Ukraine could trigger a “mild recession,” according to Chiriatti. The airfreight forwarding market in Europe will experience a “shy” 0.6% growth in real terms in 2023 with rising energy costs posing a long-term threat to the competitiveness of the region’s industry, she added.

Global freight forwarding sector to escape contraction in 2023

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