Consultant Insight: Freight forwarders adapt to lower rates, volumes and demand

[caption id="attachment_69752" align="alignleft" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] The pandemic years were very good for most freight forwarders as shippers’ need to keep inventory on shelves was seemingly more important than the cost to receive. Today, though, it’s a different story. As the pandemic fades, shippers are tightening their belts and cutting costs spurring freight forwarders to shift their strategic focus elsewhere in order to maintain growth and profitability. Kuehne+Nagel , for example, introduced its Roadmap 2026 strategy during its Capital Markets Day on March 1. The goal is to “significantly strengthen Kuehne+Nagel’s earnings power. The proven asset-light model will be retained,” according to a press release . The strategic focus is on four cross-divisional cornerstones: Kuehne+Nagel experience: quality, customer satisfaction and employee motivation; Digital ecosystem: data and technology as a competitive advantage ; Living ESG: concrete solutions for sustainability; and Market potential: geographic growth plans and high-margin service offerings. The company’s strategic initiatives are in line with other freight forwarders’ initiatives. Technology, sustainability Indeed, most — if not all — forwarders continue to invest in technology and data to streamline operations, improve efficiencies and increase profits. While many off-the-shelf technology solutions are available and utilized by many forwarders, Kuehne+Nagel is unique in that they develop their core competencies in-house to maintain what they consider a competitive advantage. Another focus for many forwarders is sustainability. DSV , for example, announced last month that it would purchase sustainable aviation fuel (SAF) for all its 2023 business air travel. “DSV is part of the critical infrastructure driving world trade, and we acknowledge our role and the importance of lowering our environmental footprint. The purchase of SAF for all our business flights is not a fix-all solution, and it is, however, a step in the right direction toward achieving our sustainability goals,” said Group Chief Executive Jens Bjorn Andersen. In addition, DSV is also participating and supplying data for the ELISA eHighway project — the possibility of an electrified highway stretching all through Europe. In January, Kuehne+Nagel partnered with Lenovo to offer customers the ability to buy credits to reduce the carbon footprint associated with shipping IT equipment and devices. Customers will then have the opportunity to use these credits to fund using SAF. New services, M&A While Kuehne + Nagel plans to also focus on high-margin service offerings, it appears that DSV may be more open to acquiring versus building high-margin service offerings. “We are ready to do M&A,” Anderson told analysts last month. “So, we go into 2023 full of optimism also on the M&A side. Will we be successful? We cannot promise that. We don’t know. There will be different opportunities that we will pursue. But what we can say is that we want to grow through acquisitions that make sense,” he said. There likely will be a number of opportunities this year. The slowdown in the forwarding market may force some smaller to medium-sized forwarders into the arms of larger freight forwarders to avoid bankruptcy. In contrast, large 3PLs and other logistics providers may sell off their forwarding divisions to reduce risk in this volatile market. Defining the market The pandemic only provided a short respite for the freight forwarding market. Rising competitive threats before the pandemic still exist today and are growing. Technology providers, digital forwarders, 3PLs and ocean carriers such as Maersk aiming to transform into end-to-end solutions providers will continue to question the relevance of many forwarders — if they do not differentiate their services.

Consultant Insight: Freight forwarders adapt to lower rates, volumes and demand

French general strike moderately impacts air cargo

IATA: Soft start to 2023 for air cargo industry

Related Posts

Raya Airways launches first dedicated freighter route to Maldives

Cathay Pacific profit rises as strong demand offsets war, fuel impact

German airport stops flights after drone sighting, collision

IATA: Soft start to 2023 for air cargo industry

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password