LONDON, U.K.–Technavio research analysts forecast the global seafreight forwarding market to grow at a CAGR of more than 3% during the forecast period, according to their latest report.
The study covers the present scenario and growth prospects of the global seafreight forwarding market for 2017-2021. The report also segments the market into services such as packaging, documentation, value-added services (VASs), and transportation and warehousing.
“The global seafreight forwarding market serves major customers that are distributed across many verticals. Its major customers include manufacturing industries such as industrial and automation components, FMCG and retail, healthcare, pharmaceuticals, and chemicals,” says Sharan Raj, a lead analyst at Technavio for packaging research.
The following three drivers are contributing to the growth of the global seafreight forwarding market:
• Increase in trade agreements between nations
• Airfreight market losing share to seafreight market
• Demand for low-cost shipping
The global economic recovery has resulted in the increase in trade volumes between countries. Favorable government trade policies have resulted in a high demand for freight forwarding services. The proliferation of trade agreements and FTAs, such as the Trans-Pacific agreement, has contributed to the increase in trade between countries. These agreements are instrumental in removing supply chain constraints by simplifying customs procedures and reducing tariffs, thus improving the transit times and efficiency of business operations. These trade agreements remove complicated regulatory barriers, reduce trade tariffs, and increase the investment environment of both parties in the agreement.
Such agreements will increase trade and propel the demand for logistics and transportation. Vendors need to keep pace with the high freight transportation needs of importers and exporters. Companies are factoring these trade agreements into their sourcing decisions to gain a competitive edge in the marketplace.
Airfreight market losing share to seafreight market
The shift in customer preference from airfreight to seafreight is proving to be beneficial for the market. As surface transportation is comparatively inexpensive and is much easier to operate, it finds greater acceptance among enterprises. Small and medium-sized businesses prefer such cost-effective services over air cargo services. In addition, with nearshoring activities reducing transport distances, surface transportation is likely be more efficient and cost-effective than airfreight forwarding services. Large-scale manufacturers and the chemical industry too, prefer seafreight for the transportation of their products. The growing preference and demand for seafreight has boosted the global seafreight forwarding market and augurs well for its future.
Demand for low-cost shipping
With companies venturing into markets across international borders, there is an increase in the demand for shipping of cargo at the lowest possible cost. International cargo moves through two modes sea and air. Airfreight is costlier than seafreight because it has a limited carrying capacity compared to seafreight. Its charges are calculated based on the combination of weight and size of the shipment.
Sea cargo movement charges are calculated per container, where size of the shipment becomes the determining factor. Freight forwarders have long-term partnerships with carriers for booking space on vessels, which reduces the cost for shippers. Usually, in cases of direct deals between end-customers and the shipping line carriers, carriers charge higher freight rates because of a lack of market awareness among customers and an inability on their part to forge long-term profitable relationships with the same carrier.