Robert Keen’s Column
BIFAlink
www.bifa.org
Making hay whilst the sun shines
BIFAlink is the official magazine of the British International Freight Association Redfern House, Browells Lane, Feltham TW13 7EP Tel: 020 8844 2266
The saying that headlines this piece came to mind as I was reading a recent report issued by consultant Transport Intelligence (Ti) about the current state and future prospects of the freight forwarding market. As farmers in the UK are predicting excellent harvests this summer, Ti reports that according to its research the global forwarding market had a record ‘harvest’ of its own in 2021, rebounding and exceeding its pre-pandemic levels. It added that whilst limited capacity and record high freight rates present a challenging market for shippers, this has presented opportunities for extraordinary ‘uplift’ in the profitability of freight forwarders, which is certainly the case from the conversations that I have had with many Members.
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(A company limited by guarantee. Registered in England: 391973. VAT Registration: 216476363) Director General Robert Keen r.keen@bifa.org Executive Director Robert Windsor, Policy & Compliance – Surface & Legal
Ti reports that the global freight forwarding market grew by 11.2% in real terms during 2021, the fastest expansion in a decade, and forecasts that the market will grow 5.7% in 2022 and at a 3.7% compound annual growth rate over the five years to 2026. This also corresponds with many of the anecdotal comments about growth that I am hearing from BIFA Members and will be music to your ears. The market’s expansion was driven by global trade which reached new record highs during the year as recovery from the COVID-19 pandemic boosted demand. As well as the phasing out of pandemic-related restrictions on economic activity, government support schemes and economic stimulus packages introduced in many countries remained, keeping demand for goods at elevated levels. Factors such as the expansion of the e-commerce industry and the rise of free trade agreements have also been contributors to the growth of the global digital freight forwarding market in 2021. However, Ti’s report foresees that the drivers of the growth momentum are likely to gradually abate, with forecasts for the period 2023-2026 being more pessimistic due to inflation, the war in Ukraine, and consumer spending slowing down. The entrance of shipping lines into the acquisition market has created a new driver of industry consolidation, not least due to the carriers’ almost unlimited funds and access to ‘cheap’ money. But ocean freight and port congestion show few signs of improvement and will continue to push traditional ocean shippers into the air freight market. It was interesting to read that the digitalisation trend in the forwarding industry, which was already gathering pace before the pandemic, has been accelerated further by the crisis with the adoption of digital forwarders, online freight booking platforms and marketplaces increasing threefold since 2019. Many believe these ‘newbies’ could become game changers in the industry, and I was somewhat surprised to read that digital forwarders and booking platforms are used by 81% of the shippers and logistics service providers (LSPs) that were surveyed by Ti. What it does not indicate is whether the users are satisfied with their experience, nor how successful the digital forwarders and booking platforms have been in their aim to combine smart technology with actual operational experience. Clearly, however, driven by challenging market conditions, shippers are re-assessing their freight procurement strategies and contractual relationships with LSPs to adjust to the ever-changing environment. Something that another of my old bosses, who has recently hung up his boots, will have seen plenty of during a 62-year career in the freight industry. After a couple of recent obituaries, I am honoured to mark the retirement of industry stalwart, Gerry Burgin, who has been attending meetings of the BIFA Air Policy Group for over 20 years. I worked under Gerry at Transglobal in the early 1980s and he was a dynamic leader then with boundless energy, which is still evident today. Knowing Gerry, I expect he will still be on the forwarding social scene for many years to come and I am sure he will agree with me when I suggest that Members should take heed of the headline of this column and invest profits wisely now to meet the current and future issues that they will face.
r.windsor@bifa.org Executive Director Spencer Stevenson s.stevenson@bifa.org Executive Director Carl Hobbis c.hobbis@bifa.org Policy & Compliance Advisor – Customs Igor Popovics i.popovics@bifa.org Policy & Compliance Advisor – Air David Stroud d.stroud@bifa.org Editorial Co-ordinator Sharon Hammond s.hammond@bifa.org Communications Manager Natalie Pitts n.pitts@bifa.org Membership Supervisor Sarah Milton s.milton@bifa.org
Published by Park Lane Publishing peter@parklanepublishingltd.com Contributors
Robert Keen, Robert Windsor, David Stroud, Spencer Stevenson, Carl Hobbis, Sharon Hammond, Natalie Pitts, Igor Popovics Note to media: If you wish to use items in this magazine that are older than one month, please contact the editor to ensure that the item in question still reflects the current circumstances. Please be advised that BIFA DOES NOT OFFER LEGAL ADVICE. BIFA is not a law firm and the authors of this publication are not legally qualified and do not have any legal training. The guidance and assistance set out herein are based on BIFA’s own experience with the issues concerned and should not be in any circumstances regarded or relied upon as legal advice. It is strongly recommended that anyone considering further action based on the information contained in this publication should seek the advice of a qualified professional.
Robert Keen Director General
August 2022
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