The trade war between the US and China is pointed to as one of the major causes for the global freight forwarding market contracting in the first half of 2019, and there is fear the market could contract at its worst level in a decade, according to a new report from Transport Intelligence (Ti).
Ti’s “Global Freight Forwarding Update 2019/2020” said the trade war has been an inhibiting factor for the growth of the market in the first six months of the year.
The global air freight forwarding market shrank by 4.2% year-on-year in real terms in the first half of 2019. The sea forwarding market has grown, but it has also been struggling given the uncertainty in the wider international trading environment.
Moreover, “the loss of US-China trade has exposed the significant intra-regional supply chains that feed into this lane. Exporters of components and semi-finished goods which are used in finished good exports have suffered significantly as a result,” said the report released this month.
In volume terms, it is likely 2019 will be the first time both air and sea freight exports from China to the US have fallen since the global financial crisis. Overall import volumes for the US remain moderate, with a number of countries filling the void.
“Notably Vietnam has seen more export growth to the US in absolute volume terms by both air and sea than any other country. For a number of the nations gaining volumes at the expense of China, the trade war seems to have accelerated the growth story, rather than jump-started it,” said the report.
But the report also said the rise of new digital services could help support future growth of the industry and help forwarders gain an edge in the years ahead. This as a variety of new digital freight forwarding offerings have sprung up recently providing easy booking and quotation services to shippers.
Andy Ralls, quantitative analyst and co-author of the report, commented, “The escalating trade war has been one of the main reasons behind the contraction of the market in the first half of 2019. With tensions showing little sign of abating, the market could contract at its worst level in a decade.”
Beth Poole, qualitative analyst and co-author of the report, added, “Choosing the right forwarding software is critical to ensuring the company remains competitive. If used correctly, these can be a key differentiator and lead to stronger customer relationships. However, getting this decision wrong can be an expensive mistake.”
Image by Hessel Visser