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The total output of the UK transport and
communication sector was estimated to be worth some £140bn at current
prices in 1999. Of this, £10.2bn was attributable to freight forwarding
and related activities, compared with £3.9bn for cargo handling and
storage, and £3.6bn for courier activities.
The market for the
services provided by freight forwarders is part of the larger market for the
carriage of goods by all modes, both international and domestic. This market is
in turn becoming increasingly integrated within the larger communications
market, which includes not only telephone, voicemail and facsimile
transmission, but also e-mail and other communications via the Internet. A
traditional freight forwarder has been described as `an agent who arranges
transport and prepares shipping documentation` but this definition is no longer
appropriate as a description of the nature and range of activities carried out
by the present day inheritor of the forwarder`s role.
Over the period
between 1994 and 1999, the service industries grew more rapidly than the rest
of the UK economy, with transport and storage growing significantly faster than
the average for the economy as a whole. Freight forwarding activity expanded in
line with the growth in the economy as a whole, but did not keep pace with
faster growing sectors such as courier operations. One reason for this slower
rate of growth was the competition experienced by the forwarding sector from
operators originally based in other sectors of the transport industry. From the
customer perspective, the primary need is for the timely, safe and secure
delivery of a single consignment, or a stream of items as part of a supply
chain (hopefully `seamless`) between primary producer and ultimate consumer. In
most cases, the customer will be concerned only secondarily, if at all, with
the mode of transport used to achieve that objective, or the nature of the core
business of the service provider. The forwarder has no special claim to
customer loyalty in such a situation.
Several legislative measures have
recently come into effect that are likely to affect the forwarding sector.
Among regulations having a potential impact on the freight services sector are
the Working Time Directive, the Environmental Liability Regime, and the
Immigration and Asylum Bill. Other key issues currently faced by the industry
include the need, notably among the smaller forwarders, to take full advantage
of the opportunities offered by information technology.
This is a trend that
is expected to be reinforced over the period to 2004, with the increasing role
of e-commerce (electronic commerce), both in consumer markets (i.e. Internet
shopping) and in business-to-business markets. Those forwarders who have not
embraced the technology could find they have been left behind by those that
have. It also seems likely that only those forwarders who are able to extend
the boundaries of their business beyond the traditional boundaries will be able
to survive. Prospects for smaller players unable to adapt look bleak.
Nevertheless, despite the competitive threats faced by the sector, freight
forwarding turnover is predicted to reach £13bn by the year 2004.
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Last updated by Alphonso Spinelli 25th October 2000