Freight Forwarding Services
Description
Companies in this industry provide freight forwarding and customs brokerage services. Major companies include CH Robinson, Expeditors International, and UPS Supply Chain Solutions (all based in the US), along with CEVA Logistics (France); DB Schenker and DHL Supply Chain (both based in Germany); Kuehne + Nagel (Switzerland); Nippon Express (Japan); and Sinotrans (China).
China, Singapore, and South Korea are home to the world's busiest container shipping ports, as well as some of the busiest airports based on cargo volume, according to the World Shipping Council.
The US freight forwarding services industry includes about 22,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $65 billion.
COMPETITIVE LANDSCAPE
Demand is driven by domestic manufacturing output and levels of international trade. The profitability of individual companies depends on efficient operations, extensive relationships in shipper and carrier networks, and industry expertise. Large companies have advantages in account relationships and access to advanced logistics technologies. Small operations can compete effectively by serving a local market, specializing in cargo transfer with specific countries, and facilitating the transport of unusual goods. The US industry is fragmented: the top 50 companies account for 30% of the industry's revenue.
Competitive Advantages:
Modern IT - The freight forwarding industry is rapidly digitizing its operations, moving records and operations that were once handled on paper to Web-based applications. Introducing new technology can be less expensive for new companies that don't have the challenge and expense of integrating legacy systems.
Established Networks - The extensive network of transportation partners utilized by established freight forwarders gives them a substantial advantage over newer companies. Large providers typically work with thousands of contracted carriers.
Geographic Reach - As trade becomes increasingly globalized, the ability to provide service in far-flung locations becomes a critical differentiator.
Companies to Watch:
Among the largest US-based freight forwarders, C.H. Robinson Worldwide has used acquisitions to expand its global operations significantly in recent years.
DHL Supply Chain, the largest freight forwarder in the world, operates in more than 50 countries.
Flexport has helped lead the digitization of freight forwarding, replacing paper manifests with sophisticated software for tracking shipments.
PRODUCTS, OPERATIONS & TECHNOLOGY
Customs brokers add another layer of expertise by facilitating the clearing of goods through international customs barriers. Most companies specialize in either freight forwarding or customs brokering, though some provide both. Major revenue services include freight transportation arrangement and brokerage services for about 95% of the industry's revenue. Other services include management and operation services, warehousing and storage services, and handling services for goods.
Forwarders are well-versed in the schedules, rates, and availability of cargo carriers. They use this expertise to solve logistics challenges, lower expenses, and minimize delays for companies that ship or receive goods. Forwarders book cargo space with carriers; negotiate rates; arrange insurance; calculate the weight, volume, and cost of goods to be moved; prepare quotations, invoices, bills of lading, and letters of credit; and keep extensive records of all transported products. Forwarders may also act as freight consolidators, buying bulk cargo space on trucks, ships, and airlines only to resell it at a higher rate. Many forwarders specialize in a particular region, industry, or mode of transportation, according to DSV Global Transport and Logistics.
Customs brokers clear goods through international customs on behalf of an importing or exporting business. Key responsibilities include preparing documents; submitting information electronically; paying taxes, duties, and excises on behalf of the client; and facilitating communication among the shipper, receiver, and government agencies. Government entities can be both international and domestic, as many goods require clearance and inspection from agencies like the Food & Drug Administration (FDA), US Department of Agriculture (USDA), or the US Fish and Wildlife Service. Just as forwarders tend to specialize, many customs brokers specialize in certain types of transactions, such as clothing, perishables, or obtaining clearance for the crew and manifest of large ocean vessels.
Shipping service providers can range from a sole, independent proprietor working out of a local office to large corporations with a network of hundreds of small offices and agents. Forwarding companies can also be a part of a freight services franchise. Local offices are largely autonomous: they serve local customers and are responsible for local marketing and for dealing with local contract carriers. In addition to their own offices, forwarders also may maintain a network of agents, especially in foreign locations.
China, Singapore, and South Korea are home to the world's busiest container shipping ports, as well as some of the busiest airports based on cargo volume, according to the World Shipping Council.
The US freight forwarding services industry includes about 22,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $65 billion.
COMPETITIVE LANDSCAPE
Demand is driven by domestic manufacturing output and levels of international trade. The profitability of individual companies depends on efficient operations, extensive relationships in shipper and carrier networks, and industry expertise. Large companies have advantages in account relationships and access to advanced logistics technologies. Small operations can compete effectively by serving a local market, specializing in cargo transfer with specific countries, and facilitating the transport of unusual goods. The US industry is fragmented: the top 50 companies account for 30% of the industry's revenue.
Competitive Advantages:
Modern IT - The freight forwarding industry is rapidly digitizing its operations, moving records and operations that were once handled on paper to Web-based applications. Introducing new technology can be less expensive for new companies that don't have the challenge and expense of integrating legacy systems.
Established Networks - The extensive network of transportation partners utilized by established freight forwarders gives them a substantial advantage over newer companies. Large providers typically work with thousands of contracted carriers.
Geographic Reach - As trade becomes increasingly globalized, the ability to provide service in far-flung locations becomes a critical differentiator.
Companies to Watch:
Among the largest US-based freight forwarders, C.H. Robinson Worldwide has used acquisitions to expand its global operations significantly in recent years.
DHL Supply Chain, the largest freight forwarder in the world, operates in more than 50 countries.
Flexport has helped lead the digitization of freight forwarding, replacing paper manifests with sophisticated software for tracking shipments.
PRODUCTS, OPERATIONS & TECHNOLOGY
Customs brokers add another layer of expertise by facilitating the clearing of goods through international customs barriers. Most companies specialize in either freight forwarding or customs brokering, though some provide both. Major revenue services include freight transportation arrangement and brokerage services for about 95% of the industry's revenue. Other services include management and operation services, warehousing and storage services, and handling services for goods.
Forwarders are well-versed in the schedules, rates, and availability of cargo carriers. They use this expertise to solve logistics challenges, lower expenses, and minimize delays for companies that ship or receive goods. Forwarders book cargo space with carriers; negotiate rates; arrange insurance; calculate the weight, volume, and cost of goods to be moved; prepare quotations, invoices, bills of lading, and letters of credit; and keep extensive records of all transported products. Forwarders may also act as freight consolidators, buying bulk cargo space on trucks, ships, and airlines only to resell it at a higher rate. Many forwarders specialize in a particular region, industry, or mode of transportation, according to DSV Global Transport and Logistics.
Customs brokers clear goods through international customs on behalf of an importing or exporting business. Key responsibilities include preparing documents; submitting information electronically; paying taxes, duties, and excises on behalf of the client; and facilitating communication among the shipper, receiver, and government agencies. Government entities can be both international and domestic, as many goods require clearance and inspection from agencies like the Food & Drug Administration (FDA), US Department of Agriculture (USDA), or the US Fish and Wildlife Service. Just as forwarders tend to specialize, many customs brokers specialize in certain types of transactions, such as clothing, perishables, or obtaining clearance for the crew and manifest of large ocean vessels.
Shipping service providers can range from a sole, independent proprietor working out of a local office to large corporations with a network of hundreds of small offices and agents. Forwarding companies can also be a part of a freight services franchise. Local offices are largely autonomous: they serve local customers and are responsible for local marketing and for dealing with local contract carriers. In addition to their own offices, forwarders also may maintain a network of agents, especially in foreign locations.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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