International Freight - Adapting to Global Challenges

The international freight industry has benefited from an increasingly globalised world economy in recent years. The development of extended supply chains has led to significant growth in levels of international trade and this has of course led to growth in the freight forwarding industry. The growth in profitability for freight forwarders has led to many changes in what used to be a very conservative industry. Recently, there have been a large number of mergers and acquisitions from which a small number of global shipping companies have emerged. The asset light nature of the freight forwarding industry, combined with the high level of profitability, has made it attractive to investors. So private equity has been playing an increasing role in the development of freight transport. A freight company also has the ability to increase margins at times of economic downturn, which gives it a big advantage over other segments of the logistics market. A shipping company can be nimble on its feet and adapt to changing market conditions in a way that many other businesses cannot. This makes the freight transport industry better able than many others to withstand the challenges of the current global economic crisis. As some economies are cooling, others are growing and the international freight industry will adapt to accommodate this. The current economic crisis and in particular the decline of the US economy will have a significant impact on the trans Pacific and trans Atlantic freight transport trade, but growth of intra Asian volumes are likely to go some way to offset this. As well as the growing importance of the China import market, India is an important new market for shipping companies as their economy expands. India has one of the world's fastest growing economies and currently imports more than £2 billion worth of goods and services from the UK.

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