Guildford, UK – 20th September, 2011: Air, road and sea freight volumes have continued to rise this year despite the logistics industry entering a post-downturn phase in 2010, according to a recent survey conducted by Transport Intelligence (TI) and Kewill, a leading provider of solutions that simplify global trade and logistics.
At the beginning of the year the upturn was intense, with CEVA, in particular, seeing air cargo volumes grow at 45% in the first quarter. Whilst this growth fell off as the year went on, many metrics suggested that the industry had recovered to pre-recession levels. The upturn in freight volumes and the measures which air cargo carriers and shipping lines took to reduce capacity had a dramatic effect on freight forwarders’ gross profit. Upward pressure on rates meant that although revenues soared across the board, margins were squeezed.
The industry was buoyed by economic expansion in China and South East Asia, whilst the shipping sector was amongst the biggest beneficiaries of the recovery. Whereas a year previously the sector had been close to meltdown, the surge in volumes and rates meant that revenues and profits soared. For instance, in the first nine months of the year, market leader Maersk turned around a comparative loss of $300m to a profit of $3.6bn.
Growth in world trade remains strong at around 5%, which augurs well for the sectors such air and sea freight, yet optimism in the freight forwarding sector seems to have waned as the year has progressed. Global trends suggest demand is capable of supporting the sort of growth seen in the global logistics over the past six months, and problems of over-capacity may loom in certain markets - notably shipping - but as ever, this will be a two-edged sword with freight forwarders likely to benefit from lower prices.
Sea and air freight
By early 2010 it appeared that there would be extensive bankruptcy and re-structuring amongst even the largest shipping companies, but the vigour of the recovery and the ability of the shipping companies to re-establish their margins led to a stabilisation in the sector. Volumes fell markedly in the early months of 2009, yet the ‘bounce-back’ was reasonably rapid. Initially driven by rapid driving-down of inventory followed by rapid rebuilding of inventory, underlying demand has seen what appears as a fairly stable recovery in high single figure percentages.
The air freight market has seen a similar recovery; the picture of a strong early recovery followed by levelling-off has been broadly similar. Demand has continued to trend upwards from the lows seen in the recession during late 2008 and the early quarters of 2009. The recovery of early 2010 was interesting. Quite violent in nature, international freight saw a recovery driven by re-stocking and an element of supply distress as shippers struggled to rectify the mislocation of inventory.
The global freight forwarding market, which was severely impacted by the economic downturn in 2009, saw a major rebound as the economy - and in particular, trade - recovered in 2010. Western retailers and manufacturers began replenishing stock, and orders from suppliers resumed. Increasing volumes meant higher capacity utilisation leading to increased rates. This strong volume increase coupled with rising rates led to high double digit growth of 33%, and consequently, the overall size of the sector increased to above the pre-recession level recorded in 2008.
Looking ahead, the freight forwarding market is expected to see moderate, single digit growth over the next five years. Volumes, which have experienced extreme fluctuations during the downturn and recovery period should stabilise. Lower levels of growth are anticipated from 2011, with Ti forecasting that the market will grow at a Compound Annual Growth Rate (CAGR) of 8.9%.
About Kewill plc
Kewill delivers solutions that accelerate global trade and logistics. Our software solutions and deep domain knowledge enable our customers to drive revenue growth and measurable cost savings.
A global company, Kewill provides software that accelerates customs & forwarding, transportation & logistics, and eCommerce & B2B integration. All of our solutions and people are focused on increasing the speed of global trade for our customers.
Since 1972, Kewill has delivered global trade and logistics solutions to the most sophisticated companies in the world. Over 7000 companies use Kewill solutions including Bayer, Ingersoll Rand, DHL, UPS, TNT, Hankyu Hanshin, Scott’s & Co., Hitachi, WaverleyTBS, Mothercare, Black & Decker and Damco.
About Transport Intelligence
Headquartered in the UK, Ti is one of the world’s leading providers of expert research and analysis dedicated to the global logistics industry. Utilising the expertise of professionals with many years’ experience in the mail, express and logistics industry, Transport Intelligence has developed a range of market-leading web-based products, reports, profiles and services used by all the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services.
Transport Intelligence products and services include:
• Ti's news and analysis briefing service, Logistics Briefing
• Exclusive access to Ti’s extensive research output through the ground breaking Global Supply Chain Intelligence portal: www.gscintell.com
• Dedicated research through Ti Consulting
• Market and competitor monitoring
• Industry leading research reports including trend analysis, market sizing, market share, forecasting and ranking across global logistics markets
• In-depth intelligence on the world's leading logistics providers through Supply Chain Leaders Intelligence
• Ti Conferences and seminars: www.ticonferences.com