Freight Forwarding Services Procurement Category Market Research Report from IBISWorld Has Been Updated

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Recent price growth has been the result of rising freight rates, trade, industrial production and consumer spending. The pace of price growth has been subdued by reductions in carriers’ fuel costs and high price-based competition; mild price growth will continue during the next three years, as suppliers’ purchase costs rise moderately and their wage costs remain stable. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has updated a report on the procurement of Freight Forwarding Services in its growing collection of procurement category market research reports.

IBISWorld industry market research
Recent price growth has been the result of rising freight rates, trade, industrial production and consumer spending, but reductions in carriers’ fuel costs and high price-based competition have slowed this growth

Freight forwarding services have a buyer power score of 3.1 out of 5, indicating that buyers have a moderate level of negotiating power. According to IBISWorld analyst Hayden Shipp, buyers benefit from the vast number of forwarders that operate in the market, which heightens competition. While freight integrators (i.e. door-to-door carriers such as UPS and FedEx) and other vertically integrated suppliers that also carry freight have significant market share, most suppliers in the market employ fewer than 10 people and cater to small and midsize buyers. A buyer typically has greater negotiating power when dealing with a smaller forwarder because these firms depend more on an individual buyer's business. Market suppliers include Kuehne + Nagel Inc., United Parcel Service Inc. and Deutsche Post AG.
Prices have risen over the past three years due to heightened demand stemming from moderate growth in trade, industrial production and consumer spending. Fortunately for buyers, high competition, near stability in suppliers' wage costs and a drop in upstream carriers' fuel costs have mitigated price growth, continues Shipp. Price growth is expected to remain relatively mild during the next three years, and prices will continue to be nonvolatile. Low price volatility helps buyers accurately forecast future spending on ad hoc purchases. The market's pricing structure also favors buyers because freight forwarders bundle multiple services (e.g. document preparation, customs clearance and outsourced freight transport) into their quotes, eliminating the risk of significant hidden costs. By doing so, they streamline the shipping process for buyers.
Buyer power is curbed, however, by forwarders' high level of specialization. Suppliers customize their services to fit buyers' needs, taking into account product type, shipping route and shipping priority. Most buyers cannot cost-effectively provide freight forwarding services in-house due to the complexity of many tasks that forwarders perform and the market's licensing barriers for customs brokerage. Additionally, freight forwarders pass carriers' fuel surcharges, which can fluctuate significantly due to volatile fuel prices, on to buyers. The effect of fuel surcharges on total shipping price varies with transportation mode. 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. Freight forwarders handle the logistics of cargo movements and ensure that products are picked up and dropped off at the specified locations and times. Freight forwarders arrange transportation and tracking, negotiate freight charges, prepare documents, arrange customs clearance, insure goods, arrange warehousing and consolidate freight services on behalf of their customers. Freight forwarders generally do not provide transportation services themselves. Instead, they subcontract freight carriers (i.e. trucking companies, rail carriers, cargo airlines and waterborne carriers) to transport buyers’ goods.

Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Competitive Environment
Market Share Concentration
Market Profitability
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics

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 or call 1-800-330-3772.

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Gavin Smith
IBISWorld Inc.
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