Dive Brief:

• DSV CEO Jeans Bjorn Andersen revealed his outlook for the freight forwarding industry in a recent interview with Reuters, spelling out the importance of acquisitions, the challenge of technology, and his disdain for diversity or sustainability requirements.
• The company grew to become the world's fifth largest freight forwarder through a string of acquisitions. Andersen adds acquisitions are an effective way of gaining market share in the fragmented global market, but for that reason only large acquisitions are worth the efforts. He added the company was not planning on further acquisitions until the UTi purchase proved successful.
• The company's business-model is profit reason, and for that model almost completely decentralized. He commented technology, while a threat, is unlikely to challenge the traditional forwarding industry given the sector's heavy fragmentation. Customers hire them for a service apps cannot replace, he added.

Dive Insight:

The CEO dispels two notions about the freight forwarding industry: first, that fragmented markets are easily broken into; and second, that similar to the travel agent, the freight forwarder may disappear in face of web-based apps.

A look to the general logistics industry can shed some light into how a heavily fragmented market is not so easily consolidated. Despite the XPO's, C.H. Robinsons, and Penske's of the world, mom-and-pop carriers are still thriving through a local dominance and relationship-based service offerings.

Many have larger ambitions, and may pursue acquisitions as a way to expand their geographic reach, but businesses are anchored in their communities and small stores at times offer better customer service for a similar price as their larger competitors, with less large reach.

Then there is the TMS technology, the Mercury Gates and Logility's of the world, that ended up acting as intermediary systems connecting shippers and carriers in a complementary way.

Although web-based startups like Freightos may threaten to disrupt the freight-forwarding industry, their systems may end up complementing the traditional sector rather than replacing it — specially with so many actors competing for market share.