Freight Forwarders are one of the most important actors in logistics. Yet, despite their relevance, we often downplay just how large a role they play in international commerce. 

In this article, we look more closely at the role of freight forwarders in logistics, both theoretically and with data. In doing so, we are able to show just how relevant they are to international trade and how these lesser known actors control as much as 3.5% of container traffic at sea and over $277bn—which would make Freight Forwarders comparable to the economies of Portugal or Finland were they a nation.

What are Freight Forwarders?

Freight Forwarders are agents who make bookings in the name of a company seeking to transport goods. Think of them as a middle player that connects companies in need of transporting a product with transportation companies that are able to provide those services. Thus, Freight Forwarders are companies that take over the logistics processes of other companies to the degree that they might need—be it just a fraction of the journey or the journey as a whole.

Usually, in logistics, the company trying to send a product is called a shipper, while the company in charge of the transportation is known as the carrier. In these terms, freight forwarders connect shippers with carriers, taking care of all the needed documentation and bureaucracy to get products to their final destination.

How Large are Freight Forwarders?

The biggest freight forwarders in the world account for a disproportionate share of international trade. Usually, we might downplay their role as mere logistics operators, making calls to carriers and ensuring companies get bookings. But, in so doing, they actually control a large share of the global freight market.

You see, recent estimates from Statista suggest that the 20 largest freight forwarders in the world, when put together, handled over 30.3 million TEUs in cargo. For reference, the global shipping fleet as of the time of writing was made up of over 31.4 million TEUs. This means that, in a year, Freight Forwarders move the equivalent to 96.6% of the entire container market.

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Now, one could rightly argue that this statistic is misleading, since containers are used multiple times in a year—which is a very fair critique. Thus, we can look at the total throughput of containers in a year to determine the impact of freight forwarders in the market. Namely, the total amount of containers handled at each port in the world. 

In 2022—the last year for which there are estimates of the total TEUs used by freight forwarders—it was estimated that global ports handled 866 million TEUs worth of cargo. This would imply that, in that period, freight forwarders operated 3.5% of all ocean traffic—which again, would represent 30.3 million containers. Imagine if a single company in the world was responsible for 3.5% of all imports and exports. That, in essence, is what freight forwarders do.

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It is also important to state just how large freight forwarders have become not just in the logistics industry but in the global economy as a whole. Recently, Armstrong & Associates published the most complete estimate of revenues for the 23 largest freight forwarders. Through it, we are able to estimate that, put together, these companies generate over $277.6 bn in revenues, which is equivalent to the economies of Finland or Portugal.

Why are Freight Forwarders Important?

Freight Forwarders help make the logistics industry more efficient and, at least in theory, help reduce the cost of transportation. All this while providing additional assistance to clients that carriers might be unable to deliver given their focus on transportation.

It is really a matter of economics of scale. Given the large share of the market they represent, right forwarders are able to negotiate better rates with carriers than those that individual shippers could achieve. Think of freight forwarders as aggregators who buy a number of spots in a shipping line and then book them with individual clients. By buying spaces in bulk, they get a better deal than if they were just buying one or two spots in a container ship.

Who are the Biggest Freight Forwarders?

While we don’t have reliable data for all freight forwarders we do have information on the volumes handled by the largest operators in the world. At least, for the 20 largest forwarders currently in operation.

In the figure below, we plotted the number of TEUs each freight forwarder declared they managed in 2022—a good indicator of their sheer size. As the figure shows, the largest freight forwarder—by almost half a million TEUs—was Kuehne + Nagel, handling over 4.3 million TEUs. It was followed by Sinotrans with 3.8 million TEUs and DHL with over 3.2 million TEUs. Of the 20 freight forwarders considered, half saw operational volumes of over one million TEUs in the period examined.

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Armstrong & Associates released similar figures for the year 2023, which allows us to glimpse at how variant the volumes handled by freight forwarders tend to be. In the graph below, we plotted the rank of each freight forwarder in 2022 and 2023 respectively. As the figure shows, there is little variance amongst the five largest forwarders in the world—namely, they all maintained their rank year to year. We only see minor changes afterwards but, even then, most freight forwarders only move a handful of positions, suggesting that the market is remains steady year to year—at least when it comes to volumes.

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The Bottom Line

Freight Forwarders are essential actors when it comes to logistics. They help companies find transportation in a convoluted market, often leveraging their size to get better deals from carriers. Thus, it should come as no surprise that they handle some 3.5% of all import and export operations globally, with billions of dollars in revenue. Simply put, logistics depends on freight forwarders, who still play a crucial role in the industry.