Higher freight traffic lifts demand and supports industry growth
Melbourne, Australia (PRWEB) June 12, 2013
Freight forwarders purchase transport services in bulk, which they then onsell in smaller quantities to major markets. The distinguishing feature of their activities is consolidation, a process where they combine loads from multiple clients to use transport space as efficiently as possible. The industry's competitive advantage of consolidation services has diminished in the five years through 2012-13 due to changes in the logistics market. As Australia's freight task has grown, the logistics sector has increased in sophistication. According to IBISWorld industry analyst Caroline Finch, “third-party logistics services have increased rapidly and the rise of vertically integrated logistics companies has eclipsed growth in the industry.” Revenue for the Road Freight Forwarding industry is expected to decline at a compound annual rate of 2.1% over the five years through 2012-13 to be worth $2.2 billion. A 0.5% increase in industry revenue is forecast for 2012-13.
The decline in revenue in the five years through 2012-13 partly reflects the lower levels of the global oil price. Transport costs are the bulk of the industry's purchases expense. Oil prices increased rapidly in the years to 2007-08 and industry revenue was inflated as operators passed on the increasing cost of transport to their clients. This stabilised profit. Revenue declines in 2009-10 and 2010-11 reflect the drop and subsequent rises in the price of transport, due to the less volatile behaviour of global oil prices.
The Road Freight Forwarding industry has a medium level of concentration, with larger players earning a disproportionate share of revenue relative to their share of industry employment. The industry’s four largest players are DHL Global Forwarding (Australia) Pty Limited, TNT Australia Pty Ltd, Schenker Australia Pty Limited and Toll Holdings Limited.
“Australia's total freight task is expected to double by 2020, which will support future revenue growth,” says Finch. “Across major markets, demand is expected to vary”. A trend for moving manufacturing offshore to low-cost producer countries has boosted Australia's imports. Export and manufacturing markets are expected to decline commensurately. Australia's imports are dominated by semi-finished inputs in production. Consumer goods are generally transported by road freight, increasing the market for road freight forwarders. Oil price increases in the coming years are expected to put pressure on industry profit and increase road freight rates, which are likely to spur revenue growth.
For more information, visit IBISWorld’s Road Freight Forwarding report in Australia industry page.
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IBISWorld industry Report Key Topics
Forwarders do not actually move the goods themselves. Instead, they are mainly engaged in organising transport services and consolidating goods for transport. Consolidating loads allows road freight forwarders to achieve and pass on rates that their customers would be unable to achieve alone.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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