Growth of the global freight forwarding market is propelling, owing to the growth in international trade, expansion of the e-commerce industry globally, and the rise in free trade agreements between nations

There are four broad business models in freight forwarding which differ in their value proposition namely, traditional freight forwarder, digital marketplace, SaaS provider, and digital service provider. With digital transformation becoming the need of the hour, freight forwarders have started embracing technology to optimize their processes and add value to customers. India presently has 10K+ registered freight forwarders catering to the logistics needs of 8L+ registered importers and exporters in the country.

The TAM of the Indian freight forwarding market is poised to grow at a CAGR of ~3.5%, reaching US$ 8B by FY26. The ocean freight market is expected to be the largest contributor in the overall freight forwarding market with a share of ~70%, amounting to US$ 6B.

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The global freight forwarding market has evolved significantly in the last decade, largely owing to newer business models and the adoption of new–age technologies across the value chain. The market is highly fragmented, with the top 25 freight forwarders capturing around 21% of ocean freight and 26% of the air freight market providing digital freight forwarders with a large market to capture and create their own leadership position. Ocean freight caters to ~70% of the overall trade volume across the globe.

Ocean shipping lanes serve as the life and blood of international trade. Shipping lanes, both natural and man-made, are vital contributors to the freight industry, but some are busier and more important than others because of the trade routes they facilitate. In 2020, Mainland east-west routes traded the highest volume in ocean trade, catering to ~40% of the ocean freight volume shipped across major lanes.

Air freight transport services are the most valuable when it comes to moving express shipments around the globe. In 2020, Asia Pacific witnessed the highest air traffic, catering to ~35% of the air freight volume across major regions.

The overall trade volume has reduced by 5.2% on the backs of deaccelerated global economic growth, slowing down of manufacturing activity, and continued trade tensions between China and the United States.

Digitalization has changed the environment of the work carried out by freight forwarders, as well as that of many of their customers and suppliers. Digitalization of the freight forwarding sector has simplified the work dramatically by automating processes that previously required manual intervention. Competition is much tougher than before since the different market operators and new agents have all the options to work with their customer base and to keep pace with the growing competition, many major players have started building and expanding their digital presence in the market. In areas such as spot pricing, digital platforms are more agile than traditional channels.

In FY20, India had 1.5L+ active importers and exporters. Indian ports handled container traffic of 13M+ TEU and Indian airports handled air freight volume of 2M+ MT. The overall value of the ocean and air freight combined in India for FY20 stood at US$ 6.4B within which ocean freight contributed ~70% of the value.

Indian ocean freight is concentrated towards the Americas and APAC which makes ~55% of the overall ocean freight market in FY20 and is expected to maintain the same share by FY26. For air freight, Europe and Middle East Asia and Africa make up ~65% of the overall air freight market in FY20 which also again is expected to maintain the same share by FY26.

Shortage of shipping containers due to inadequate supplies of new storage carriers, freight rate instability and usage of technology to streamline freight booking and along with emergence of digital spot booking are the key trends shaping the container market in India. Along with these, increased focus on sustainability and increased cybersecurity are also key areas of focus for freight forwarders.