Study: Air freight forwarders face significant disruption within next 5 years

Dive Brief:

Approximately two-thirds of logistics personnel expect that traditional air freight forwarding could shrink within the next five years due to tech start-ups, carriers and Amazon, based on a report called Global Freight Forwarding by Transport Intelligence, the Loadstar reported.
The report states that only 17% of respondents believe there is no threat to freight forwarders, even as digitization continues to expand in influence.
As DHL, UPS, TNT and FedEx have expanded into the general freight business, air freight forwarders have experienced an erosion of market share. In the East, Chinese companies such as SF Express and YTO Express are also moving into areas previously occupied by air freight forwarders.

Dive Insight:

Many air freight forwarders have taken steps to embrace technology by acquiring smaller logistics companies, thus growing their base internationally.

Last month, Canadian-based Descartes Group purchased MacroPoint for more than $100 million. MacroPoint, a transportation visibility provider, was bought to help meet Descartes' goal of becoming a more valuable coordinator for shippers and carriers, as well as catering to a small business customer base. XPO Logistics is another transportation company snapping up smaller, strategically placed businesses to further growth, having acquired 17 companies in the past five years. In May, more acquisitions were unveiled, with perishable-forwarder Panalpina acquiring Denmark's Carelog and Kenyan forwarder Air Connection; Groupe Cat working to buy STVA, and UPS purchasing Irish delivery firm Nightline Logistics Group.

Despite the varying size of the purchasers, they all share the same goal: expanding through acquisition, the tried-and-true method of gaining not only more customers but also more knowledge from smaller, more agile organizations. Rather than being eased out of the market by larger players, small forwarders can fight back strategically by incorporating technology to better serve their customers, which then makes them viable targets for acquirers. Thanks to their size, newer platforms need not wend their way through the machinery of a large department; rather, they can be up and running and communicating new offerings to their clients quickly and easily. Rather than worrying about the big guys, they can better serve both the market and themselves by adding services.