The report found that while the sea freight forwarding market grew by an impressive 11.5 percent to $63.23bn in 2012, the air freight forwarding market declined by 4.2 percent to $62.62bn as a result of overcapacity, rising fuel prices and other operational costs. This has led many shippers to opt for alternative methods for transporting their goods.

However, Cathy Roberson, lead author of the report, cautioned: "Despite double-digit growth in 2012, the sea freight forwarding market is still vulnerable to long-term overcapacity and erratic rates. Forwarders have benefited from the modal shifts experienced in 2012, but there could be serious problems if these issues are not addressed. Although the airfreight market was weaker in 2012, airlines are removing capacity across the world. If it wishes to continue its impressive growth, the sea freight sector should not continue to ignore these problems."

Asia Pacific accounts for the largest freight forwarding market with a 32-percent share. Although its economy is still heavily reliant on exports, domestic demand is growing and therefore intra-Asian services are becoming more sought after. Therefore, Transport Intelligence expects Asia to hold a 37-percent share of the market by 2016. It is anticipated that this will be of particular detriment to the European market, currently the second largest, which will decline from 31 percent to 26 percent as a result of its ongoing economic issues.

As a result of the new market dynamics, the two sectors have undertaken contrasting strategic focuses to increase volumes and profitability. The airfreight sector has experienced a significant decline in volumes due to the modal shifts and, as a result, forwarders are having a hard time filling up aircraft. Therefore, airfreight forwarders have begun to focus on higher-margin commodities, such as pharmaceuticals and other temperature-controlled goods. For example, in 2012, Kuehne + Nagel acquired two specialised freight forwarders within the perishables industry and DHL Global Forwarding continued to expand its global network of Life Science Competence Centres.

Conversely, Transport Intelligence noted that sea freight forwarders are expanding their less-than-container-load offerings, particularly on Asia Pacific trade lanes. The service offers reduced shipping costs, increased flexibility and improved transit times over full-container-load services. Companies have also developed expedited multimodal offerings such as sea and road transport to provide a door-to-door service and a combined air and sea service which reduces costs, but still provides the faster transit time of airfreight.

The study suggests the overall freight forwarding market will grow by 6.8 percent between 2012 and 2016. "Although we expect the sea freight forwarding market to develop more rapidly, we also anticipate that the airfreight forwarding market will recover over the next five years as shifting trade lanes result in new opportunities in emerging markets," said Roberson.

Source: Transport Intelligence