Top Freight Forwarders 2024: Preparing for the upturn

To say business has been challenging for the freight forwarding sector just may be the understatement of the year. In 2023, forwarding markets slowed considerably due to a worldwide economic downturn and rising inflation, weakened consumer demand, continuing environmental concerns, and deepening geopolitical conflicts that created havoc on supply chains. Consequently, forwarders saw their gross logistics revenues decrease significantly, particularly when compared to 2022.

“The exceptional market conditions of 2022 and 2021 are long gone, and the markets are on a new trajectory, leading to significant downturn in revenue and profits among most of the freight forwarders in 2023,” comments Viki Keckarovska, research manager at Transport Intelligence Ltd (Ti).

Armstrong & Associates (A&A) reports that in 2023, the international transportation management (ITM) 3PL market segment continued to be the most underwhelming sector—down 34.2% in net revenue to $28 billion. Its data indicates that gross revenue was nearly cut in half (-49.3%) to $74 billion.

“It’s hard to believe when, just two years ago, the ITM 3PL Market segment realized an unheard of 74.9% gross revenue gain and 44.6% net revenue jump from pandemic-driven demand from shippers focused on replenishing inventories to meet strong consumer demand,” says Evan Armstrong, president, A&A. “The ITM environment has dramatically changed since mid-2022, with ocean freight rates from Asia to the U.S. trending down to pre-pandemic levels.”

A&A defines ITM as including ocean and airfreight forwarding; associated inland transportation; shipment consolidation and deconsolidation; customs house brokerage, and related warehousing services.

Ti’s most recent report, “The Global Freight Forwarding 2024 Report,” sees the global freight forwarding market normalizing, with demand for sea and airfreight forwarding services remaining soft and expanding by only 1.7% in 2024.

“Challenges arising from a global economic downturn, shifts in consumer behavior, and an oversupply surpassing demand have led the global freight forwarding market to contract by 1.3% in real terms (holding prices and exchange rates constant) in 2023,” writes Thomas Cullen, chief analyst at Transport Intelligence Ltd (Ti), in the report.

A&A’s 2023 Top 25 Global Freight Forwarders (ITM) 3PLs

Largest providers ranked by 2023 gross logistics revenue/turnover and freight forwarding volumes*

* Revenue and volumes are company reported or Armstrong & Associates, Inc. estimates. Revenues cover all four 3PL Segments (DTM, ITM, DCC, and VAWD) and have been converted to U.S. $ using the annual average exchange rate. 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.

*** Bolloré Logistics is now operating under the CEVA Logistics brand. Copyright © 2024 Armstrong & Associates, Inc.

Impact on modes

Ti findings indicate airfreight forwarding shrank by 2.1% in 2023. However, sea freight forwarding experienced a less than desirable performance, contracting by 0.6%.

A&A reports that in third quarter of 2022, ocean shipping rates and domestic transportation rates began disinflation in the U.S. as consumer demand moderated and supply chain operations stabilized. China to U.S. and European ocean shipping rates have declined as much as 90% since the peak in early 2022.

“ITM 3PLs saw rapid declines in air and ocean demand and rates,” says Armstrong. A&A data indicates that global air cargo freight rates decreased as much as 41% in the second quarter of 2023 compared to the prior year. International freight forwarding year-over-year volume declines reported in the United States, Europe, and Asia combined averaged 5.4% for ocean TEUs and 11% for air metric tons.

Air cargo capacity and revenues started to recover in late 2023 after 17 months of consecutive decline. According to A&A, airfreight demand was off approximately 10% from 2022, while overall capacity has expanded with increases in passenger airline capacity globally. Airfreight capacity is generally available at lower rates.

Armstrong notes, however, that ocean carriers indicated an increased willingness in 2023 to provide contracted capacity and good rates for targeted port-to-port pairs as import growth of furniture, consumer, and retail products has waned. “Generally, outside of current labor disputes, ports are less congested, and drayage capacity is readily available,” he says.

ITM has moderately bounced back from the first half of 2023 and has seen some rate benefit from shipping uncertainty in the Red Sea and reduced ocean traffic through the Suez Canal.

“ITM demand should start rebounding from China in the second half of the year once shippers need to replenish inventories,” says Armstrong. “This should stabilize ocean rates from Asia to North America.”

Keckarovska agrees, noting how trade between China and Southeast Asia as well as India and China is increasing. “But the proportion of Chinese exports sold to Western markets is declining as Asian markets increase in size,” she says.

Staying competitive

Given the multiple challenges forwarders are facing, analysts maintain that to stay competitive forwarders must is invest in technology (digitalization), make acquisitions, and focus on high-margin vertical markets such as pharma
and semiconductors.

“The two market leaders—Kuehne +Nagel [K+N] and DSV—have successfully integrated acquisitions in recent years. This has helped both to top the list,” says Keckarovska.

Armstrong notes that CEVA, GEODIS, and Maersk have heavily invested in mergers and acquisitions (M&A) over the past few years. “With its purchase of Bolloré Logistics—the largest M&A deal in 2024 so far with a purchase price of $5.3 billion—CMA CGM continues to solidify CEVA Logistics’ position as a Top 10 global freight forwarder and 3PL, amongst other top rankings,” says Armstrong.

Technology is also offering a key advantage in the competitive forwarding landscape. K+N has been particularly active by introducing Roadmap 2026 in April 2024 to improve its operations. Dr. Joerg Wolle, K+N chairman of the board of directors, stresses how the new streamlined organizational structure, which is heavily based on digital technology, will enable K+N to be more responsive in offering comprehensive logistics solutions that will respond faster to ever-changing markets and customer needs.

“Based on our already existing technology prowess, we’re putting even more focus on how to harness the full potential of generative artificial intelligence (AI) at an early stage,” adds a K+N spokesperson. This includes increasing overall efficiency, pricing, and the quality of its service offerings. “By utilizing the entire digital range from chatbots to robotics, we can create new business models that would benefit our customers’ needs,” he says.

K+N is also leveraging AI across multiple areas in the areas of predictive analytics (e.g., enhanced Sea Explorer ETA), data optimization and customer support to help customers be more resilient. Some new technologies and platforms are included in its corporate digital twin, which represents an end-to-end digital image of K+N’s operations in real time. “It connects all the relevant data,” K+N says.

DB Schenker has implemented AI-powered predictive analytics to analyze historical data and predict future trends to help optimize supply chain operations and anticipate potential bottlenecks. The forwarder is also utilizing IoT sensors to track the condition and location of goods in real-time, ensuring compliance with quality standards and providing insights for proactive maintenance.

In addition, DB Schenker is using cloud-based logistics management platforms that centralize data storage and facilitate collaboration among stakeholders. “This enables real-time access to information and improving decision-making processes,” says a DB Schenker spokesperson. “Robotic process automation [RPA] technologies
are also used to automate repetitive tasks such as data entry, documentation processing, and invoicing, reducing errors and speeding up workflow processes.”

DHL Supply Chain & Global Forwarding offers myDHLi that features a new more user-friendly generative AI-powered virtual assistant. Executives there explain that myDHLi provides users with greater visibility, control, and efficiency across their logistics operations.

“It provides real-time access to quotes, transport modes, carbon emissions, and other key shipment data,” says DHL. “Accessing the interface on any device, customers can analyze their logistics activities using a range of filters and customizable views.”

DHL Supply Chain & Global Forwarding has also completed a major overhaul to its myDHLi Track platform to improve the user interface by displaying shipment information, including house bill, status, exceptions, timestamps and locations, clearly and concisely on a single screen with less need to scroll.

Technology is also becoming more critical in providing benchmarking, trend forecasting, and emissions data needed to identify more sustainable shipping options. C.H. Robinson recently expanded its CO2e Emissions Tool to help shippers establish a baseline for their emissions and identify opportunities for reduction.

“For large, global organizations using many modes to move goods around the world, calculating emissions data by source would be impossible without technology,” says Matt Castle, vice president of global forwarding at C.H. Robinson. “With this visibility, shippers are better equipped to navigate the complex task of assessing cost-to-benefit ratios across various shipping activities to build a more sustainable supply chain.”

In addition, C.H. Robinson is helping an increasing number of shippers use its U.S. Customs analytics tool to streamline reporting, stay current on regulations and uncover potential cost savings.

“Using technology to gain visibility into customs spending and risks allows shippers to identify areas to save costs and minimize disruptions at borders,” says Castle. “As trade regulations evolve, shippers need to stay on top of changing requirements and technology allows them to do that efficiently while keeping goods moving.”