With more products requiring shipping, freight forwarding services will be increasingly demanded to help move cargo
Los Angeles, CA (PRWEB) February 21, 2014
Freight forwarding services have a buyer power score of 2.9 out of 5. Low price volatility over the past three years, low total cost of ownership and a large number of suppliers allow for stronger buyer negotiation power, says IBISWorld analyst Lauren Setar. In the past three years, prices have not fluctuated much, because freight forwarding services remain in the mature product life cycle stage.
During this time, prices have grown slowly, primarily due to expansion in economic activity, trade volume, business sentiment and industrial production. This low level of price volatility allows for greater buyer negotiating power. Because tracking services, preparation of documents and the insuring of goods are usually bundled in the overall price by suppliers, the total cost of ownership is low, giving buyers power in the negotiating process, continues Setar. Finally, buyer power remains strong because of high competition among freight forwarding service providers. As a result, buyers can choose from thousands of suppliers to get the lowest price. Major market players include CH Robinson Worldwide Inc., United Parcel Service Inc. and Deutsche Post AG. Buyer power is somewhat limited by a lack of substitute services, though. The main substitute for buyers of freight forwarding services is simply performing the services in-house. The cost associated with doing the services in-house can be quite large, however, because freight forwarders must obtain a license to manage the transportation of products.
In order for freight forwarding service suppliers to arrange product shipment, they must pay for the necessary transportation of the shipment. Depending on the mode or modes of transportation used, these costs can be expensive for buyers and limit buyer power. The moderate level of risk from downstream transportation providers mainly stems from rising fuel costs. Although carriers can generally negotiate base rates down through volume or a reliable shipping record, fuel surcharges are generally nonnegotiable and add extra costs for freight forwarders, which are then passed on to buyers. Through the supply chain risk, buyers experience less negotiating power.
For more information, visit IBISWorld’s Freight Forwarding Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of freight forwarding services. This does not include the actual movement of freight; instead, freight forwarding services handle the logistics of product movement and ensure products arrive to the correct destination on the specified date and in proper condition. Suppliers arrange transportation and tracking, prepare documents, arrange warehousing, negotiate freight charges, insure goods and consolidate freight services on behalf of its shippers. Freight forwarding services use relationships with many different kinds of carriers, like airfreighters, trucking companies, rail transportation providers and ocean liners. Freight forwarders are generally used to handle international freight shipments.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.