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SC Ports’ Melvin takes the Helm as President and CEO

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Archives, Global Logistics, Global Trade Daily, News, Ocean Ports

SC Ports’ Melvin takes the Helm as President and CEO

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South Carolina Ports’ Barbara Melvin steps into her new role as president and CEO today, marking the first woman to lead a top 10 U.S. operating container port.
Over the past 24 years, Melvin has served SC Ports in a variety of roles and led major infrastructure projects. Melvin has served as the port’s chief operating officer since 2018.
Melvin will now lead the nearly 1,000-person SC Ports team, who is responsible for keeping freight moving through the Port of Charleston, Inland Port Greer and Inland Port Dillon.
Melvin is the sixth leader in the history of SC Ports. She succeeds Jim Newsome, who served as president and CEO of SC Ports for the past 13 years.
Melvin takes the helm following 15 consecutive months of record cargo volumes, which were handled amid great supply chain challenges. SC Ports provides fluidity in the supply chain for port-dependent businesses throughout the state and beyond.
SC Ports continues to invest in infrastructure to stay ahead of demand. An expansion of Inland Port Greer is underway to enhance capacity at the Upstate terminal. SC Ports is launching its port-operated chassis SMART Pool.
With great support from the SC Legislature, SC Ports is developing the Navy Base Intermodal Facility, a near-dock cargo facility designed to efficiently move goods to and from the Port of Charleston via rail.
The Charleston Harbor Deepening Project is on track for completion this fall, making Charleston the deepest harbor on the East Coast at 52 feet.
Melvin sees growth at SC Ports as making a generational impact on South Carolina, with port operations creating 1 in 10 jobs throughout the state.
About South Carolina Ports Authority
South Carolina Ports Authority, established by the state’s General Assembly in 1942, owns and operates public seaport and intermodal facilities in Charleston, Dillon, Georgetown and Greer. As an economic development engine for the state, Port operations facilitate 225,000 statewide jobs and generate nearly $63.4 billion in annual economic activity. SC Ports is soon to be home to the deepest harbor on the U.S. East Coast at 52 feet. SC Ports is an industry leader in delivering speed-to-market, seamless processes and flexibility to ensure reliable operations, big ship handling, efficient market reach and environmental responsibility. Please visit www.scspa.com to learn more about SC Ports.
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Archives, Global Logistics, Global Trade Daily, News, Ocean Ports

West Coast Labour Talks Expected to Deliver as Parties Are ‘In a Good Place’

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Crucial labour talks between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) are moving forward without any hardship, says the U.S. Labor Secretary.

Talks between the PMA and the ILWU began on 10 May to produce new labour contracts for 22,000 West Coast dockworkers expiring 1 July.

Secretary Martin Walsh told Reuters on 28 June about his weekly updates from the PMA on progress of the talks. They “continually tell me that we’re in a good place,” he said.

Asked about port automation and potential sticking point arising from the talks, Walsh said: “There’s been no issues that I’m aware of that have come up that have made either side concerned.”

US shippers have expressed fears that any breakdown in the port labour talks will further disrupt cargo flows. Despite expectations that no agreement will come before the 1 July deadline, the parties involved issued a joint statement on 14 June stating that cargo operations would continue without a lockout.

In the meantime, US President Joe Biden has met with the ILWU and PMA to discuss their commitment to reach a deal on the margins of his presidential visit to the Port of Los Angeles where he addressed the current state of the global supply and vowed to fight inflation.

Just a few days later, the U.S. House of Representatives approved the Ocean Shipping Reform Act (OSRA) granting extra powers to the Federal Maritime Commission (FMC) to help restrain inflation and ease congestion across the supply chain.

The final approval came on 13 June with a large majority, 362-42, and the bill was later signed by President Biden on 16 June.

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Archives, Commentary, Global Trade Daily, International Trade

Demand Moves from the Fridge to the Freezer 

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The chill is on. Factories worldwide are reporting plunging demand for a range of products. Central bankers and policymakers had their collective fingers crossed for a more palatable outcome, but the demand boom that ignited the post-pandemic recovery appears to be reversing course. Price increases and interest rate hikes are producing an adverse spending effect. Manufacturer surveys from the US to Italy to South Korea are all reporting the same – new orders are down big.  

A curious observation is even in places like the Eurozone (where interest rates have not risen yet), demand is still down. This could benefit the zone’s central bankers as pressures to hike rates might remain low. Long-term, however, higher rates coupled with lowering demand would surely lead firms to lay off employees resulting in a likely recession. Prevailing experts agree that global supply and demand are far from balanced. Inflation will subside if a balancing act can be found.    

Eurozone factory output hit its weakest level since August 2020. US output was no better, as expectations for future output plummeted to its lowest level in roughly two years. Fed Chairman Jerome Powell was in Portugal in late June/early July and did not mince words when warning that policymakers will need to cool consumption so supply has a chance of catching up. Another variable that is muddying the waters is exports from Asia. 

South Korea, for example, slowed sharply in June, and Vietnam registered two months (May and June) of export declines. Taiwan, a major IT export powerhouse, tumbled in June, reporting its biggest export drop in two years. China, on the other hand, expanded its factory activity for the first time in three months, but the bulk of that is due to the easing of Shanghai lockdowns. While production was up, overseas demand continued to be weak. 

On the consumer electronics front, the news wasn’t much better. Japan’s Ryohin Keikaku Company, the owner of the highly successful Muji stores, slashed its full-year profit guidance. Excess inventory was the root cause leading to heavy discounting. Semiconductor Manufacturing International Corporation out of China issued a dire warning in May that demand for home appliances and consumer electronics was dropping precipitously and not likely to improve over the coming months.

On the shipping side, the cost of shipping a 40–foot container from China to the US West Coast had dropped 15% from June 29th, and was 14% lower compared to a year earlier. This is a clear sign of weakening demand and Russia’s invasion of Ukraine has simultaneously pushed food and energy prices even higher. 

Economists see a light at the end of the tunnel come early 2023. While a recession is expected State-side, some feel Europe will narrowly avoid one. Buckle up for a trying second half of 2022.    

   

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Archives, Global Logistics, Global Trade Daily

Myriad Issues Affecting Global Supply Chain Struggles

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Though the world appears to be finally moving beyond COVID-19, the global supply chain network is anticipating a lengthier return to “normal.” The compounding of several structurally embedded issues has made this unique economic recovery particularly challenging.
These setbacks are unlikely to stop the ongoing movement toward a more globalized economy.

Even if the economy stutters or falls into a brief recession, the benefits of globalizing supply chains remain abundant. Nevertheless, in order for the economy to ever reach its full potential, several key obstacles will need to be overcome.

Bracing for Rough Waters

It is unlikely that there will be much relief from the global supply chain crisis before the end of 2022. Many of these problems will likely persist well into 2023 and possibly even beyond that.
But rather than taking drastic action or abandoning any multi-year development projects, it is crucial for all involved to continue to remain patient.

The variables affecting the performance of these supply chains are numerous. Among the most relevant include widespread labor and semiconductor shortages, an unbalanced allocation of shipping containers, and conflicting COVID-19 protocols (particularly, China’s “zero tolerance” policy). Other systematic challenges include global inflation, the ongoing conflict between Russia and Ukraine, access to certain resources, and more.

Unsurprisingly, these challenges have taken a toll on the global economy. A recent GDP report indicated that global GDP decreased by an estimated 1.4 percent (year-over-year) in the first quarter of 2022. If the second quarter also produces negative growth rates—and there are currently quite a few indicators that this scenario is likely—then the economy will have technically fallen into a state of recession.

In many ways, the economic and financial anomalies that occurred over the past few years have made this situation seemingly inevitable. Unprecedented levels of government spending across
the globe—even if warranted in many situations—placed most currencies on the fast track to losing their values over time. And with interest rates being one of the few tools that central
banks can use to influence their money supplies, the recent rollout of interest rate hikes is certainly far from surprising.

Hopefully, the pandemic will be a somewhat isolated incident. But if it’s not, we can at least hope that international governments and their supporting institutions will be better prepared for the next international crisis. If economies continue to globalize and become more interconnected, the stakes will become even higher.

Finding Ways to Steady the Ship

There are still quite a few significant changes that could potentially accelerate the recovery timeline. Even though a full recovery by the end of the year remains unlikely, an accelerated timeline would be universally beneficial.

One of the most obvious shifts would be a temporary (or perhaps permanent) shift of resources from goods consumption to services. When compared to goods, services are typically a bit more flexible and easier to modify in the event that a sudden global challenge has emerged.

Another solution—perhaps a bit more forward-thinking—would be to completely restructure global supply chains and increase room for error or change. In the years leading up to the pandemic, most firms were operating with razor-thin production-time margins, meaning that if an unexpected obstacle were to suddenly arise, they would be unlikely to adapt within an adequate timeframe.

Well, that challenge did emerge, arguably tenfold what even the most conservative supply chain participants were expecting. By reinventing inventory systems (whether by choice or by regulation) will help eliminate the risk and consequences of sudden disruptions, including natural disasters, health pandemics, and even war.

Furthermore, increasing reshoring and nearshoring efforts—a sort of localized restructuring within a broader global system—will help decrease certain shipping costs and make the entire shipping system considerably more predictable. As an added benefit, reshoring and nearshoring will also likely decrease the carbon footprint yielded by the value-added cycle.

In other words, innovation and adaptability will be key to both current and future success. The three countries that will need to take charge and innovate the most will be China, Germany,
and the United States—the largest, second-largest, and third-largest global value chain (GVC) participants, respectively.

There is still ample reason to believe that things can—and will—get better. A three-year recovery timeline, while grueling as it unfolds, is relatively short compared to previous global recoveries. As long as we maintain our natural need to create and consume, we will continue finding ways to do so.

About the Author

Christian Mueller is Vice President and Senior Manager of the Special Risk Management unit for Risk Services – Americas. In this leadership role, his responsibilities include managing Atradius’ most risky buyers’ portfolios.

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Archives, Global Logistics, Global Trade Daily, News

UWL and Swire Shipping Announce Seattle to Vietnam Express US Export Ocean Service 

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21-day Transit and Guaranteed Equipment and Space

UWL, a top 10 American-owned NVOCC and leading provider of global 3PL services and in collaboration with Swire Shipping, has introduced a new dedicated, express ocean export service from Seattle, Washington to Ho Chi Minh, Vietnam.

Offering a 21-day transit time, this new service includes priority berthing at both origin and destination as well as a dedicated equipment pool for suppliers in Seattle. This includes 6000 brand-new containers, with 40-foot-high cube and 20-foot containers already in rotation.

Additionally, reefer equipment is currently being positioned in the rotation and should be available in Seattle by July. This will help exports moving temp-controlled commodities such as apples, grapes, and dairy products. Predictability is assured, as schedules are published 6 months in advance, with 2 sailings per month.

About UWL

UWL is a full service, asset-based global 3PL. We are fully licensed and bonded to provide freight forwarding, customs house brokerage, ocean freight (FCL, LCL), bulk liquid logistics, supply chain visibility, vessel chartering services and project cargo and airfreight internationally.

About Swire Shipping

Headquartered in Singapore, Swire Shipping is a leading provider of specialist customer solutions for a wide range of cargo and aims to provide a full suite of land and ocean solutions to our customers.

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Archives, Global Logistics, Global Trade Daily, Ocean Ports

It Could be a Tense July 

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Talks are getting increasingly tense between West Coast cargo-handling companies, container shipping lines, and dockworkers. At the heart of the negotiations are automation and pay, two issues that have driven the core of most negotiations over the past decade. The US’s busiest container port complex is at Long Beach and Los Angeles. The tension is growing, and some importers have already begun to reroute cargo to East Coast ports. Seaports from Washington state to California will be adversely affected if a resolution cannot be ironed out. 

Labor Secretary Marty Walsh released a statement indicating the discussions had been going smoothly. In fact, in late June the Pacific Maritime Association and the International Longshore and Warehouse Union (ILWU) met with President Biden to provide an overview of their conversations. Soon thereafter they released a statement indicating a strike is neither imminent nor are they preparing for a potential lockout. Regardless, the Biden administration is rightly concerned as West Coast backlogs ahead of upcoming holiday shopping would be a terrible return to the dark logistical nightmares Covid brought upon us. 

The ILWU represents roughly 22,400 dockworkers over 29 ports. Negotiations with the Pacific Maritime Association have been occurring for approximately 6 weeks. In the world of multi-year contract negotiations, this is not a lot of time. The contract expired on July 1st but the union can extend the agreement for an additional 30 days so the talks can continue. The other option would be to have its members work without a contract but should any labor issues emerge that would surely bring about slowdowns or worse.     

In a previous contract, the ILWU had agreed to allow automation. Yet, in practice, the addition of robotics on the docks has not gone smoothly. Of the 13 Southern California container-handling facilities, two have been partially or fully automated and only two others have begun to introduce automation. A group representing maritime employers released a report in May lauding the efficiencies of automation. Specifically, the report claimed that the Southern California reports with the most advanced automated facilities were processing containers nearly twice as fast as their non-automated neighbors. A counter-report released by the union differed, stating the evidence is not 100 percent clear that automation alone results in more streamlined or efficient operations. 

Contradicting narratives are standard in contract negotiations. In terms of pay, the employer’s report noted that an average dockworker with over 5 years of experience earned just shy of $200,000 per year ($190,000) in 2019. The union report countered that the average dockworker in Long Beach and Los Angeles made $89,950 in 2019 and that these dockworkers make up nearly three-quarters of the entire coastwide workforce. 

The two sides are jockeying for leverage, but the wider public likely cares less about automation and wages. Diverting cargo away from the West Coast will have ripple effects for all consumers. Let’s hope this gets resolved before July 31st. 

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Archives, Commentary, Education, Global Trade Daily

How Financial Brands Can Drive Growth and Loyalty Through Travel Rewards

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Like many consumers, my purchasing habits changed during COVID-19. I went from buying the occasional shirt online to purchasing everything from a website. I was not alone. According to Digital Commerce 360, U.S. consumers spent $870.78 billion (about $2,700 per person in the US) online in 2021, up 14% from 2020 and a
level we would not have reached until at least 2023. Despite a broad resumption of in-person experiences, this trend shows no sign of slowing down with online spending in the United States expected to hit a record $1 trillion in 2022.

That presents an incredible opportunity for banks and credit card issuers to capture more consumer spend. After digital and mobile wallets, credit is the most popular way to pay for online purchases. Yet as with any opportunity, there are threats. Credit card companies and banks face a slew of competition from fintech firms like buy now pay later unicorn Klarna, which has a pulse on how Gen-Z and millennials want to pay for their everyday purchases.
That’s why credit card issuers and banks must find ways to engage these up-and-coming generations, who are leerier of debt than their parents.

With most Gen Zers citing “travel and seeing the world” as the top way they want to spend their money, travel rewards can be one of the most effective ways to gain their loyalty. However, simply offering these rewards is not enough to grow this credit-skeptic market and retain existing customers. In a time of incredible choice, financial brands that want to leverage travel to increase their share of wallet and keep their cardholders active and spending need to rethink their travel loyalty game and seek partners like arrivia that will help them turn their programs into full-fledged, digital-first platforms.

Loyalty rewards and the value problem

The modern financial services industry has always been a competitive space, and customer retention is the key to
success; an often cited (but still true!) axiom is that a 5% increase in customer retention can result in 25%-95% revenue growth. Loyalty programs are meant to incentivize this behavior by providing customers with rewards like cashback bonuses and points that can be exchanged against goods when they spend using their cards.
Unfortunately, many programs aren’t generating the retention and engagement they could.

According to a recent arrivia survey on consumer attitudes and preferences around loyalty and travel, 81% of credit-card holders belong to five or more loyalty programs. In comparison, 56% belong to a loyalty program with travel benefits. Though adoption is high, points redemption, which is one of the most important KPIs loyalty
marketers must measure engagement, is comparatively low. That’s because the value of rewards often fails to meet customers’ expectations.

That isn’t a secret. In another arrivia survey around travel loyalty, we asked industry decision-makers about some of their biggest pain points regarding their loyalty programs. Almost 30% of respondents said they struggled to demonstrate the value of their rewards to customers, while another 19% admitted to not being able to offer
customers the variety of rewards that they want. These numbers are even higher when filtering the responses of decision-makers in the financial sector (26% and 23%, respectively).

Putting the value back into loyalty through travel

For a modern loyalty program to successfully attract and retain its members, it must:

1. Offer a variety of highly attractive rewards
2. Provide excellent customer service
3. Make it easy to accrue and redeem points
4. Provide an omnichannel, personalized experience

When it comes to rewards, our research shows that travel is one of the most attractive redemptions available, with nearly half of the consumers we surveyed in January 2022 saying it is “extremely” or “very” important that they can redeem rewards or points when booking travel. This number jumps to almost 60% for Millennials and Gen-Z.

That should come as no surprise as these younger generations are well-known to put a premium on experiences over goods.

In fact, Gen-Z travelers are much more likely than Baby Boomers to use travel points to book an exclusive trip or activity unavailable anywhere else. Though they might be wary of debt, they crave the perks of credit card programs.

Yet, according to our survey, many consumers (53%) say their financial institution offers no travel rewards at all. And when they do, they provide limited options instead of the ability to book their entire trip through their rewards program. Credit card companies and banks that go beyond the big three — air, car, and hotel — to include options like exclusive experiences, cruise and alternative accommodations are more likely to capture a bigger share of their customers’ travel spend and a sizable portion of their everyday spend. By setting up a dedicated booking platform that they fully control, they can generate more revenue on their travel products.

Personalizing the travel rewards experience

Offering the ability to book travel is one crucial aspect of successful travel rewards programs. The next step is incentivizing customers to redeem their loyalty points and maintain engagement with the program. That means doing away with the blanket, one-size-fits-all approach utilized by so many reward programs. With the right
technology partner like arrivia, financial brands can leverage the information members share through their profiles and online activity to craft attractive offers that speak directly to an individuals’ actual desires. According to our Q1 US travel loyalty survey, this is particularly important to digital natives who are more likely to seek trip inspiration from social media and their friends than older generations.

We also found that 23% of surveyed consumers incorporate their travel loyalty programs into the inspiration phase of their planning process, consulting those sites to discover high-value trip ideas. In this context, a dynamic travel booking platform that highlights relevant travel offers based on an individual’s profile is an influential sales tool to increase conversions and redemptions. However, a static platform with no personalization might do the opposite and erode users trust in the platform’s ability to deliver the value they are looking for.

Capitalizing on the travel rebound

After two years of starts and stops, travel is back. In our survey, 69% of respondents said they plan to travel in 2022, while 24% had already booked their trip. But just as they did before the pandemic, consumers prioritize value— an exclusive discount, a good deal on a vacation package or using reward points to defray the cost of a
luxury trip. Credit card companies and banks can satisfy this pent-up wanderlust by ensuring their travel rewards programs provide customers with the travel and booking options they want and savings they can’t find anywhere else. If consumers’ loyalty programs can’t or won’t meet these expectations, they will book – and spend –somewhere else.

Loyalty program technology is part of why companies aren’t meeting their members’ expectations. Our travel loyalty report found that 39% of surveyed business-decisions makers said their program members could not book travel directly through their platform, which is a missed opportunity to capture their travel spend. Companies are also in danger of missing out on the travel rebound because they haven’t adapted their travel rewards strategies
to customers and members changing priorities. They either haven’t expanded the variety of travel options available or taken steps to streamline their earning and redemptions processes or explored new ways to pass on value to their members or incentivize additional travel spending.

Consumers – particularly the younger generations – have clearly articulated their preferences when it comes to travel rewards: they want value, they want options, and they want a one-stop-shop. And as they prepare to travel freely again this year, they will be turning to their loyalty programs. With the right technology partner like arrivia, your rewards program can meet their expectations, capture a bigger share of travel rebound spending, and create more loyal, engaged members along the way.

About the author

Travis Markel is arrivia’s Chief Experience Officer. With more than two decades of experience in travel and loyalty, Travis helps financial service firms and other companies with travel reward programs build long-lasting relationships with their customers.

geodis countbot rugby myparcel GEODIS in Americas Joins Diverse Group of Globally Recognized Companies Prioritizing Ethical Leadership and Corporate Integrity
Archives, Global Logistics, Global Trade Daily, Warehousing

GEODIS Countbot Is To Carry Out The Annual Inventory Of a L’Oréal International Distribution Center

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The new 3-year partnership aims to carry out the annual inventory of a site located in northern France, thanks to the innovative GEODIS Countbot solution, designed in partnership with Delta Drone.

The patented solution is the result of more than three years of R&D and testing; it is totally secure and also guarantees the protection of goods and people (CE certification). GEODIS Countbot consists of a robot, 16 high-resolution cameras, a mast that can reach a height of 10 m and a drone that ensures the stability and hence the quality of the images collected.

Romain Cauvet, Director of Engineering for the GEODIS Supply Chain Optimization Line of Business, said that the  entire operation will be completed in only two 6-hour sessions. Romain also made it known that GEODIS Countbot enables them to provide an exhaustive snapshot of the stocks and to supply HD visuals should any discrepancy arise between the inventory and the WMS (Warehouse Management System).

Following early trials, Ludwig Cresson, Flow Manager at L’Oréal, commented made it known that they are always on the lookout for innovative solutions that improve the efficiency of their processes, their service to their customers and their employees.

About GEODIS  

GEODIS is a global leading transport and logistics provider recognized for its commitment to helping clients overcome their logistical constraints. GEODIS’ growth-focused offerings (Supply Chain Optimization, Freight Forwarding, Contract Logistics, Distribution & Express, and Road Transport), coupled with the company’s truly global reach thanks to a global network spanning nearly 170 countries, is reflected by its top business rankings: no. 1 in France and no. 7 worldwide. GEODIS employs over 44,000 people globally and generated €10.9 billion in revenue in 2021.

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Archives, Commentary, Global Logistics, Global Trade Daily

5PL to Witness Exponential Growth in Future

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With the growth of e-commerce at a stupendous rate, conditions have never been riper to find and sell to customers all across the globe. However, with the demand comes challenges as in
customers want their orders to be processed and delivered in a faster and cheaper manner than ever before. Thus, there is great amount pressure on companies to deliver, and hence, an
effective supply chain strategy is crucial.

The boom in e-commerce contributed to the world economy in a significant way and so did logistics. Without logistics, the implementation of the e-commerce concept would have been
far from possible.

Various types of logistics exist at present such as 1PL, 2PL, 3PL, 4PL, and 5PL. They are unique in their own ways. First party logistics or 1PL refers to the consigner of various goods and services and arrange the transport of goods to their expected destinations. Second party logistics or 2PL refers to provider of services such as storage and warehousing along with transport services.

Third party logistics or 3PL service providers offer services keeping the entire supply chain in mind. Acting as consultants, they provide specific expertise, constant monitoring and efficient communication, thus bringing more strategic insight and management over the supply chain.

Fourth party logistics or 4PL logistics services are managed by companies that provide integration solutions to coordinate each and every aspect of the supply chain. They integrate 3PL resources and others and focus on digital tools. Fifth-party logistics or 5PL the provider offers expertise in engineering and cutting-edge innovative flow automation systems.

3PL existed for over five decades, 4PL are much more modern and 5PL is slowly gaining pace and emerging as an innovation to meet the demands of the rapidly booming e-commerce industry. Focusing mainly on technology, 5PL concentrates on wider supply chains, planning, organization, and implementation of all elements of the logistics needs of an organization.

Making use of technologies such as blockchain, robotics, artificial intelligence, machine learning, and more, the system gains increased value and efficiency from the beginning to the end of the supply chain. Though a novel addition to the logistics sector, 5PLs have the ability to manage numerous supply chains altogether, thus making them an attractive proposition for established and rapidly growing online retailers. Fifth-party logistics manages and coordinates
the operations of 3PLs and 4PLs via strategic solutions related to supply and demand in the e- commerce sector. 5PL comprises Order Management System (OMS), Warehouse Management System (WMS) and Transport Management System (TMS) which are interrelated in a unified system and information technology.

One of the recent developments that took place in the fifth-party logistics space is the agreement between Ni Hsin Ecologistics Sdn Bhd, a subsidiary of Ni Hsin Group Berhad, and Pride Logistics Alliance Sdn Bhd for the 60% acquisition of the latter by the former company.

Pride Logistics is a company that deals with freight, forwarding, haulage & transportation, warehouse and international agency services. According to Khoo Chee Kong, Managing Director of Ni Hsin Ecologistics Sdn Bhd, they plan to set foot into the logistics market with the aim of supporting their food and beverage business. They believe that the acquisition complements their ecosystem using electric vehicles for delivery and by leveraging the knowledge and expertise of Pride Logistics, they would achieve handsome growth in coming years. Ni Hsin also believes that by using fifth-party logistics (5PL), it can carry out all supply-chain methods for
customers.

The 5PL solutions are set to grow exponentially in the coming years as industries continue to automate and the e-commerce industry continues to witness growth. According to a report by Allied Market research, the fifth-party logistics market stood at a revenue of $9.21 billion in 2025, and is likely to reach $17.30 billion in 2035, registering a CAGR of 6.5% by 2035. The growth of the market is backed by factors such as expansion of the e-commerce industry, rise in efficiency of supply chain and management systems, and increase in international trade.

Moreover, technological advancements and introduction of technologies such as blockchain are expected to offer lucrative growth opportunities for the market players. The Covid-19 pandemic led to the decline in market growth in 2020, however, the market started making a steady growth again by the end of 2021.
In order to expand market presence and enhance their solution capabilities, many players started adopting key strategies such as partnering with local vendors, to build up their supply chain offerings. In addition, they are also upgrading the existing logistics solutions to combine emerging technologies such as Internet of Things (IoT), blockchain, artificial intelligence (AI) and
others.

The adoption of the fifth-party logistics solutions varies across regions globally. For instance, Europe is seeing a prolific growth in the sector owing to increase in demand for better logistics
services and rise in number of free trade agreements in the region. Asia is another market where 5PL solutions experiences an exponential growth, owing to rise in manufacturing productions for electronics, automotive and others.

As the needs and demands of the e-commerce industry evolve, so too must the capabilities of the 5PL system. Thanks to the vast degree of technological advancements and innovations which allows unprecedented amounts of data to be captured from various supply chain sources, enabling 5PL to transform supply chain.

Author’s Bio

Sharmistha Sarkar has always had a keen interest in reading and writing. An engineering graduate, she forayed into the field of writing due to her love for words and the urge to do something different. Allied Market Research has given her the chance to gain knowledge about different subjects as a Specialist Content Writer. She can be reached at sharmistha.bose@alliedanalytics.com

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Archives, Commentary, Global Logistics, Global Trade Daily

Freight Forwarding Market Experiences it’s Fastest Expansion Rate In Decade

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Ti’s latest report, Global Freight Forwarding 2022, shows that in 2021 the global forwarding market rebounded and exceeded its pre-pandemic levels. However, limited capacity and record-high freight rates present a challenging market for shippers, as well as opportunities for extraordinary ‘uplift’ in the profitability of freight forwarders.

  • The global freight forwarding market grew by 11.2% in real terms during 2021, the fastest expansion in a decade. The market is forecast to grow 5.7% in 2022 and at a 3.7% CAGR over the five years to 2026.
  • 2022 freight forwarding growth will be driven by air freight, which is forecast to grow by 6.1% in real terms.
  • 2026 forecasts are more pessimistic due to inflation, the war in Ukraine, and consumer spending slowing down.
  • The air forwarding market is forecasted to exhibit slightly faster growth, expanding at a 4.0% CAGR from 2021-2026, while the sea forwarding market is expected to grow slightly less quickly at 3.6% CAGR over the period.
  • Kuehne + Nagel and DSV lead the global freight forwarding market. The two market leaders have successfully integrated acquisitions in recent years which has helped both to top the list.
  • 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.
  • Digital forwarders must combine smart technology with operational experience to be game changers in the industry. Achieving both objectives while remaining profitable will be a challenge, especially if access to capital becomes more limited in the future.

After experiencing one of its most challenging years to date amid the Covid-19 pandemic, the global freight forwarding market bounced back strongly and grew by 11.2% in real terms in 2021. This is the fastest growth rate since 2011, bringing the market value to €269,656m.

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.

As the drivers of the growth momentum are likely to gradually abate, global trade growth is expected to moderate in 2022. As a result of this continued but weakened global economic recovery, the global forwarding market is expected to grow at a slower pace of 5.7%. Continuing the trend from 2021, growth will be driven by the air freight forwarding market, which is forecasted to grow by 6.1% in real terms. The sea freight forwarding market will have to endure more months of challenging conditions caused by the capacity crunch as new capacity is not set to kick in till 2023. It is set to grow at 5.2% in 2022.

2026 forecasts are more pessimistic than previously as inflation challenges intensify, the war in Ukraine threatens global energy supplies and consumer spending slows further. As a result, the global freight forwarding market is expected to grow at a 3.7% CAGR over the five years to 2026. The air forwarding market is forecast to exhibit slightly faster growth, expanding at a 4.0% CAGR, while the sea forwarding market is expected to grow slightly less quickly at 3.6% CAGR over the period. Increases in cross-border e-commerce do however provide a bit more optimism, along with the return of capacity via passenger flights after the ending of Covid restrictions.

The report also provides a snapshot of the funding scene in the digital forwarding sector and discusses the impact that the recent surge in investments will have on established start-ups and new market entrants. The report analyses the competitive landscape in the digital freight forwarding market and compares digital forwarders against one another based on their revenues, global reach, transport mode and freight transported. The findings of Ti’s latest Digital Freight Forwarding Survey 2022 serve to assess the market penetration and outlook of digital forwarders and identify the capability gaps digital forwarders need to close.

Furthermore, the findings from Ti’s Global Freight Procurement 2022 survey provide insight into the latest logistics purchasing behaviour trends and the procurement strategies shippers are employing to better navigate the unpredictable market volatility.

“The global freight forwarding sector has been plagued by a number of supply and demand-side shocks in the past year, driving instability in the market,” said Viki Keckarovska, Ti’s Senior Research Analyst. “Despite all economic indicators pointing towards continued strong demand for cargo, capacity constraints result in lost growth opportunities. Demand for capacity continues to outstrip supply, contributing to increased freight rates and consequently increased yields and revenues among forwarders. Driven by these challenging market conditions, shippers are re-assessing their freight procurement strategies and contractual relationships with LSPs to adjust to the ever-changing environment. Finally, the digitalization 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.”