HIGHLIGHTS
- Air freight increased 14.9% – double the price of sea freight – reaching a nominal value of 128.2 billion USD.
- Port congestion has created an imbalance between supply and demand, slowing the growth rate of shipping.
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On the growth momentum of the global freight forwarding market
According to a new official report from Ti Research, the global freight forwarding market has recovered with its strongest growth since 2011: 11.2% in real terms, reaching $284.9 billion. It was a strong comeback from the Covid-19 pandemic, when global trade increased 13% to a record $28.5 million.
“The strong growth in international trade in 2021 is mainly the result of the removal of pandemic restrictions and increased demand for goods thanks to support programs from the government” the report said. government and economic stimulus packages are widely applied.” Furthermore, factors such as the expansion of the e-commerce industry and the rise of free trade agreements (FTAs) have also contributed to the growth of the global digital forwarding market.
Specifically, air freight increased 14.9% – double the price of sea freight – reaching a nominal value of 128.2 billion USD. This was driven by strong demand for PPE (personal protective equipment) at the end of the year, as well as supply chain bottlenecks in sea and land transport.
In the ocean freight forwarding sector, Ti Research notes that growth opportunities are lost due to “lack of capacity and port congestion”. As a result, the market grew 6.6% to $156.5 billion, while freight rates rose 69.8%, as demand was “significantly above current capacity”. In fact, port congestion has created an imbalance between supply and demand, slowing the growth rate of shipping. According to Maersk, around 12%-15% of global containership capacity has been taken out of circulation due to congestion by 2021, while Kuehne + Nagel recorded 80% of global ocean freight disruption related to North American ports.
Opportunities for the air transport market
However, congestion in the sea lanes continues to push shippers into the air freight market, further increasing demand and increasing air freight rates. However, the price gap between air and sea has narrowed over the past year, making the transition to air less expensive than it was before the pandemic. Ti Research shared: “At that time, the average price of global air freight was 12 times more expensive than shipping by sea. By the end of 2021, air freight will be about 2.5 times more expensive than it was before the pandemic.”
However, the air transport industry still has capacity constraints, despite the record number of flights from Asia set to transport goods on e-commerce platforms. Ti Research notes: “Adding air freight capacity for airlines has been the main goal of forwarders over the past year. Demand for air freight continues to outstrip supply, contributing to increased profitability and revenue among airlines.”
Even so, despite an increase in air cargo capacity in 2021 due to an improvement in international passenger traffic, it is still 10.9% lower than in 2019, according to TheLoadstar.
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