2024 Outlook for the Freight Forwarding Industry: Transformation Is Underway

How are the giants of freight forwarding leveraging new technologies?

2023 The year was a period of widespread downturn for the freight forwarding industry, with shipping rates plummeting and shippers focusing on optimizing inventory levels and cutting logistics costs.

Armstrong & Armstrong (A&A) reported that, 2023 Global Third-Party Logistics ( 3PL ) The market size is US$1.2 trillion, down 18.5% from 2022 but still up 25.3% compared with 2019, before the pandemic.

International Transport Management ( ITM) Demand and rates for third-party logistics in air and sea freight have declined sharply, with global air cargo rates falling 41% year-on-year in the second quarter of 2023. Air cargo capacity and revenue have been on a continuous… After 17 months of decline, it began to recover at the end of 2023.

However, The air freight forwarding market remains weighed down by weak demand. London Transport Information Ltd. ( Viki Keckarovska, Research Manager at Ti Ltd., stated: “Air cargo demand remains 8% below pre-pandemic levels, and no catalyst has yet emerged to drive faster growth.”

So far, 2024 has not shown much improvement. Experts speculate that, due to a number of persistent factors affecting the industry—such as political developments in the Middle East, drought at the Panama Canal, and ongoing uncertainty stemming from the current situation at the Port of Baltimore, which has contributed to volatility in the shipping market—the freight market is normalizing at an unprecedentedly slow pace; weak demand and uncertainties in the macroeconomic outlook; as well as… A large number of newly built vessels will enter the market in the second half of 2024.

Total size and growth of the global freight forwarding market ( 2013–2027) Source: Transport Intelligence

Meanwhile, The industry continues to be shaped by the wave of mergers and acquisitions. Sai Kiran Baliji, Head of Logistics Research at Mordor Intelligence, reported: “In 2024, this trend shows no signs of abating. As e‑commerce gains further momentum and an increasing number of small and medium-sized enterprises enter the sector, competition for market dominance is set to intensify.”

01  The freight forwarding industry is facing multiple pressures.

Analysts emphasize that, to maintain a competitive edge, freight forwarders must differentiate themselves and deliver unparalleled value to their customers. This entails addressing a range of challenges that directly impact the industry—such as sustainability concerns, regulatory and customs complexities, and an increasingly volatile global supply chain that is more fragile than ever before.

The need to proactively address sustainability challenges is driving freight forwarders to take action. Baliji pointed out that they found it necessary to adopt strategies to reduce carbon emissions in logistics operations.

In addition, intricate regulations and customs requirements vary by region and industry. Many compliance regulations require meticulous documentation, and ensuring efficient and secure data management is essential for fulfilling reporting and record-keeping obligations.

Meanwhile, global supply chains are becoming increasingly complex, with goods originating from multiple countries and transported through various channels. Adding to the complexity, clients are increasingly adopting nearshore strategies, a direct response to the disruptions caused by the pandemic.

All of this has increased the pressure on freight forwarders. According to… Transport Intelligence’s recently published “2024 State of Logistics” survey found that logistics companies’ profit margins continue to face pressure, Among these, rising operating costs and intensifying competition are the primary drivers of increased pressure.

A&A’s research also found that, during the pandemic, third-party logistics customers recognized the need for greater supply-chain flexibility—meaning they must be able to source products and components from multiple countries, rather than relying on a single nation. This structural shift has made supply chains increasingly complex, This calls for greater reliance on technology to ensure a high level of service.

02  The agency industry is entering a new era.

Technological solutions and platforms are advancing rapidly, ushering the freight forwarding industry into a new era. In fact, the freight forwarding industry is currently undergoing a digital revolution, and analysts predict that companies unable to keep pace with these advancements may risk falling behind.

“A&A President Evan Armstrong stated, ‘In an increasingly competitive industry, freight forwarders must leverage technology to remain agile, flexible, resilient, and responsive to the ever‑changing market environment.’”

Ti recently found that, among the freight forwarders it surveyed, There is 17.5% reported that they have already invested in or plan to invest in data analytics within the next 12 months. Keckarovska said, “The proliferation of internet-connected devices is opening up new possibilities for data collection and analysis, and freight forwarders appear poised to embrace the opportunities this technology presents.”

Accordingly, freight forwarders are increasingly leveraging real-time data and analytics to facilitate seamless communication with their clients and enhance transparency. A spokesperson for DB Schenker stated: “This enables better cargo tracking, real-time updates, and personalized services, while real-time visualization tools provide customers with a simple, user-friendly online booking and quoting platform.”

Freight forwarders are also investing in smart sensors and the Internet of Things ( Investments in IoT devices, which enable better planning and optimization through real-time inventory tracking, reduce costs and ensure product availability, thereby revolutionizing inventory management. Baliji noted, “The logistics industry is undergoing a transformation, with drones and autonomous vehicles fundamentally reshaping last-mile delivery and offering faster, more cost-effective, and environmentally friendly alternatives to traditional methods.”

03  How are the giants of freight forwarding leveraging new technologies?

In what is called In its four-year digital transformation strategy, “Roadmap 2026,” global freight forwarding giant Kuehn + Nagel is committed to responding more swiftly to evolving market dynamics and customer needs. Roadmap 2026 will leverage artificial intelligence across multiple domains, including predictive analytics, data optimization, and customer support. To achieve this, the company requires structured data that is accessible and actionable around the clock.

Kuehn +Nagel is also working to develop and modernize its IT environment, to build, host, and run their digital capabilities in the cloud, and to develop and enhance IT companies have invested significant effort in digital twins, leveraging the integration of all relevant data to deliver a real-time, end-to-end digital representation of Kuehn + Nagel’s operations.

Another logistics giant, DB Schenker, is currently exploring AI-driven predictive analytics. A spokesperson for DB Schenker stated “DB Schenker has implemented artificial intelligence algorithms to analyze historical data and forecast future trends, helping to optimize supply chain operations and anticipate potential bottlenecks. Automation and AI‑driven algorithms streamline processes such as route planning, warehouse management, and inventory tracking, thereby enhancing operational efficiency and reducing costs.”

To enhance visibility into customs expenditures and risks, C.H. Robinson offers a U.S. Customs analytics tool that streamlines reporting, ensures timely compliance with regulations, and identifies potential cost savings. The tool also enables shippers to obtain quotes online, make bookings electronically, and track their shipments.

A survey by Ti Insight found that, Currently, more than half of air and sea freight bookings are placed through digital freight platforms, indicating that these platforms are rapidly gaining traction in the industry. Among the freight forwarders surveyed by Ti, nearly two-thirds reported that they have invested in developing digital freight booking platforms, with the majority being internally developed.

Sea Freight Confidence Index

Source: Transport Intelligence

In addition, the Internet of Things ( IoT and cloud-based solutions have been widely adopted across various industries, such as customer relationship management (CRM) software. “The Internet of Things enables the creation of an ever-expanding network of interconnected entities, spanning multiple partners and both upstream and downstream segments of the supply chain,” says Keckarovska. “Within organizations, the key will be to present the right data in a meaningful way, as the volume of available data is growing exponentially.”

Through radio-frequency identification ( RFID), the Internet of Things enables efficient goods tracking throughout the supply chain. While on-premises solutions remain an option, cloud-based solutions are opening up entirely new frontiers for IoT and digitalization. Armstrong stated, This innovative technology is reshaping the future of freight forwarders affected by the pandemic.

Similarly, artificial intelligence ( AI and advanced machine learning (ML) are also being applied to robotic process automation. From automated forklifts and warehouse automation to inventory management and chatbots designed to enhance customer service, smart ports around the world are driving digital transformation, benefiting the freight forwarding industry.

Many of these new technologies are being driven by start-ups. Although numerous digital freight forwarders are becoming increasingly important, Armstrong emphasized that they often focus on the “light‑asset” segments of the value chain and lack a robust asset‑based foundation.

Accordingly, many analysts expect that digital freight forwarding will not pose a threat to most large freight forwarders. These large freight forwarders offer customer portals that aggregate vast amounts of data to enhance order and shipment visibility, improve freight planning and inventory management, provide predictive analytics, and standardize systems and processes. This helps shippers plan for supply chain disruptions and changes in carrier capacity, which have been highly volatile throughout the pandemic and remain so today.