Freight Forwarding Brokerages & Agencies in The US Industry Report

Freight Forwarding Brokerages & Agencies in the USMay 2014 1
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Ship shape: Industry revenue will grow in line

with improved international trade levels
IBISWorld Industry Report 48851
Freight Forwarding Brokerages

& Agencies in the US
May 2014
Leah Goddard
2 About this Industry
16 International Trade
31 Regulation & Policy
Industry Definition
17 Business Locations
32 Industry Assistance
Main Activities
Similar Industries
19 Competitive Landscape
33 Key Statistics
Additional Resources
19 Market Share Concentration
33 Industry Data
19 Key Success Factors
33 Annual Change
19 Cost Structure Benchmarks
33 Key Ratios
4 Industry at a Glance
21 Basis of Competition
5 Industry Performance
22 Barriers to Entry
Executive Summary
22 Industry Globalization
Key External Drivers
Current Performance
23 Major Companies
Industry Outlook
34 Jargon & Glossary
23 C.H. Robinson Worldwide Inc.
11 Industry Life Cycle
24 Deutsche Post AG
25 United Parcel Service Inc.
13 Products & Markets

13 Supply Chain
29 Operating Conditions
13 Products & Services
29 Capital Intensity
15 Demand Determinants
30 Technology & Systems
15 Major Markets
30 Revenue Volatility
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About this Industry

Industry Definition
Companies in this industry arrange the

transportation of freight between shippers
and carriers. These operators are usually
Main Activities
The primary activities of this industry are
known as freight forwarders, marine

shipping agents or customs brokers and
offer services for many modes of transportation.
Freight forwarding
Providing marine shipping agency services
Customs brokering
The major products and services in this industry are

Agency and brokerage services
Freight forwarding
Process consulting
Other freight-related services
Similar Industries
48121 Charter Flights in the US

Companies in this industry provide air transportation of passengers or cargo with no regular routes or
regular schedules.
48211 Rail Transportation in the US
Companies in this industry operate railroads including line-haul and short line railroads.
48311 Ocean & Coastal Transportation in the US
Companies in this industry provide deep-sea, coastal, Great Lakes and St. Lawrence Seaway water
transportation.
48321 Inland Water Transportation in the US
Companies in this industry provide inland water transportation of passengers and cargo on lakes, rivers or
intracoastal waterways (except on the Great Lakes System).
48411 Local Freight Trucking in the US
Companies in this industry provide local general freight trucking.
48412 Long-Distance Freight Trucking in the US
Companies in this industry provide long-distance general freight trucking.
48422 Local Specialized Freight Trucking in the US
Companies in this industry provide local specialized trucking.
54161 Management Consulting in the US
Companies in this industry supply tariff and freight rate consulting services.
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About this Industry
Additional Resources
For additional information on this industry

www.airforwarders.org
Airforwarders Association
www.ncbfaa.org
The National Customs Brokerages and Forwarders Association of America
www.tianet.org
Transportation Intermediaries Association
www.bts.gov
US Bureau of Transportation Statistics
www.census.gov
US Census Bureau
www.dot.gov
US Department of Transportation
I
BISWorld writes over 700 US
industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com
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Freight Forwarding Brokerages & Agencies in the US May 2014
Industry at a Glance
Freight Forwarding Brokerages & Agencies in 2014
Key Statistics
Snapshot
Revenue
Annual Growth 09-14
Annual Growth 14-19
Profit
Wages
Businesses
$102.4bn 5.9%
4.5%
$14.4bn 66,464
$6.2bn
Total trade value
Revenue vs. employment growth
Market Share
C.H. Robinson
Worldwide Inc.
9
.9%
20
15
10
10
United Parcel
Service Inc.
4.2%
% change
% change
Deutsche Post AG
5
.9%
0
5
10
10
20
Year 06
08
10
Revenue
12
14
16
18
20
15
Year
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 23
Products and services segmentation (2014)
1.2%
Process consulting
Total trade value
Consumer spending
5.3%
Industrial
production index
World price of crude oil
49.7%
World GDP
Agency and
brokerage services
43.8%
Freight forwarding
p. 5
Industry Structure
Life Cycle Stage
Regulation Level
Medium
Revenue Volatility
Medium
Mature
Technology Change
Medium
Capital Intensity
Medium
Barriers to Entry
Industry Assistance
Low
Industry Globalization
Concentration Level
Low
Competition Level
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33
Low
Medium
High
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Industry Performance
Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage
Executive
Summary
The Freight Forwarding Brokerages and

Agencies industry transports goods using
third-party trucks, trains, ships and
planes, and helps importers and
exporters clear goods through customs.
Operators generate revenue by acting as
middlemen between shipping customers
and third-party transportation carriers
and assisting exporters and importers
with trade documentation. As a support
industry, freight forwarders and customs
brokers are vulnerable to the health of
upstream markets. Consequently,
participants need to maintain strong
business and customer contacts in order
to compete in this industry.
I

ncreased international trade will boost
demand for freight forwarding agencies
During times of strong economic
growth, demand for freight
transportation services rises as
consumers and businesses purchase
more goods that need to be shipped.
This growth in demand increases
freight tonnage, which boosts industry
revenue. Conversely, slow economic
activity leads to a reduction in trade
values and service fees, which
diminishes demand for freight
transportation, hurting industry
revenue. In addition, businesses may
attempt to cut costs by moving
forwarding and customs functions in
house as opposed to outsourcing these
Total trade value

Demand for international freight
forwarding and customs brokering
largely depends on the level of trade
between the United States and the rest of
the world. Increased trade, in volume and
value, spurs demand for freightforwarding brokerages and agencies. The
activities to industry operators,

amplifying the impact of reduced
demand on industry revenue.
The recession decimated consumer
demand and industrial production,
resulting in lower trade volumes and
putting pressure on industry operators to
reduce prices to attract customers, which
caused revenue to contract in 2009.
Conditions recovered markedly in 2010
and 2011, but industry growth has slowed
in recent years due to economic
uncertainty and global supply chain
disruptions. Nevertheless, revenue is
expected to increase 1.7% to $102.4
billion in 2014, contributing to an
annualized increase of 5.9% over the past
five years due to a strong recovery in
freight transportation.
Freight forwarders and customs
brokers benefit from rising international
trade, which bolsters demand for
industry services and, thereby, revenue.
Increasing globalization, particularly in
supply chains, will drive industry
growth over the next five years as
manufacturers outsource freight
transportation and logistics to industry
operators. As industrial production
picks up and international trade
improves, the industry will continue
expanding. During this period, revenue
is forecast to increase at an average
annual rate of 4.5% to $127.6 billion by
2019. Additionally, the number of
companies and employees will grow
in order to handle the increasing
number of shipments.
total trade value is expected to increase

in 2014, presenting a potential
opportunity for the industry.
Consumer spending
An increase in consumer spending
underpins industry growth because
demand for freight forwarding and
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customs-brokering services depends on

consumer demand for goods. When
unemployment and economic uncertainty
rose during the recession, consumers
reduced spending, hurting demand for
goods in upstream industries and
lowering freight volumes. Consumer
spending rebounded in 2010 and is
expected to increase in 2014, boosting
demand for industry services.
Industrial production index
The industrial production index (IPI)
indicates the level of output from the
mining, manufacturing and utility
sectors. Industry services benefit from
rising industrial activity because most
industries require freight forwarders
and customs brokers to transport raw
materials and other semifinished
products at various points in their
supply chain. In addition, industry
services are used for shipping
manufactured goods domestically and
internationally. The IPI is expected to
increase in 2014.
World price of crude oil

Increases in oil prices hurt the
profitability of upstream manufacturers
and transportation operators. As these
businesses seek to cut costs, they reduce
demand for industry services. Therefore,
changes in the world price of crude oil
impact industry revenue. Historically,
crude oil prices have been extremely
volatile. While the world price of crude
oil is expected to decrease in 2014,
fluctuations in crude oil prices pose a
potential threat to the industry.
World GDP
The global financial crisis reduced world
GDP growth. Consumption fell worldwide,
hampering manufacturing activity. Because
freight forwarding agencies are in the
business of shipping inputs and finished
products, a slowdown in manufacturing
reduced demand for industry services. As
financial markets stabilized and consumer
demand returned, manufacturing activity
started to recover. World GDP is forecast to
rise in 2014.
Consumer spending
Total trade value
10
% change
15
% change

continued
0
5
10
15
Year
1
0
1
08
10
12
14
16
18
20
Year
08
10
12
14
16
18
20
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The Freight Forwarding Brokerages

and Agencies industry is closely linked
to general economic activity and
international trade. The industry also
relies on the degree to which
companies outsource freightforwarding and customs-brokering
functions that they might otherwise
perform in house. In 2009, demand for
freight transportation and related
services deteriorated as a faltering
financial market and rising
unemployment rate caused businesses
and consumers to reduce spending on
goods. Lower retail sales led many
businesses to rely on inventory
surpluses as opposed to ordering more
products. Reduced demand for goods
depressed manufacturing activity and
international trade. However, in 2010,
increased consumer spending led
businesses to restock inventories,
increasing demand for freight
transportation and industry services.
As a result, revenue has grown strongly
since 2010, rising another 1.7% in
2014. Overall, revenue is projected
to increase at an annualized rate of
5.9% to $102.4 billion over the five
years to 2014.
Strong industrial activity in the
mining, manufacturing and utilities
sectors increases the demand for
services provided by freight forwarding
brokerages and agencies, because these
services are used in conjunction with
the transport of materials and goods.
Before the recession, industrial
production expanded steadily.
However, the fallout from the subprime
mortgage crisis shattered investor and
consumer confidence, resulting in the
industrial production index (a measure
of the output from industrial activities)
Industry revenue
20
10
% change
Current
Performance
0
10
20
Year 06
08
10
12
14
16
18
20
dropping 11.3% in 2009. Industrial

production started to recover in 2010 as
access to credit, business investment
and consumer spending began to
stabilize, thereby increasing demand
for freight transportation and industry
services. The industrial production
index is expected to grow another 2.9%
in 2014.
Similar to revenue, profit margins
have increased over the five years to
2014. Profit has not fluctuated as much
as revenue, because the majority of
industry expenses, such as fuel costs,
are passed on to customers. For
instance, rising fuel prices in 2010
caused industry operators to impose
fuel surcharges, which helped bolster
revenue. However, profit suffered
because the jump in fuel prices was too
steep to be completely passed on to
customers. Fortunately, the world price
of crude oil has stabilized in recent
years, helping profit margins to expand
along with revenue. Consequently, the
average industry profit margin is
projected to grow from 3.6% of revenue
in 2009 to 6.1% in 2014.
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Disruptions in global
supply chain
The rise of JIT and

JIS
Prior to the recession, rising international

trade underpinned growth in freight
transportation, increasing demand for
freight-forwarding brokerages and
agencies. After contracting in 2009,
international trade has improved markedly,
with the total value of US trade surpassing
its prerecession high and reaching $4.7
trillion in 2014. Over the five years to 2014,
the total value of trade is expected to
increase at an annualized rate of 5.5% due
to growing consumer demand for goods
globally. While this has boosted demand
for industry services, disruptions in global
supply chains resulting from natural
disasters and political instability have
hampered international trade in recent
years, thus dampening industry growth.
In March 2011, Japan suffered the worst
earthquake in its history. The 9.0
magnitude earthquake off the eastern coast
of Japan caused massive supply shortages
across the country. Major automakers
Toyota and Honda were forced to make
drastic production cuts because they could
not supply components and parts to their
facilities around the world as the
earthquake and subsequent tsunami
crippled Japans infrastructure. The United
States has the worlds second-largest car
market, and cars are major products that
require freight transportation services. As a
result, demand for industry services
declined. While sales have returned, fear of

another natural disaster that threatens
supply still lingers, such as the floods in
Thailand in July 2011 and the typhoon in
the Philippines in November 2013.
The Arab Spring represents a longer,
ongoing geopolitical issue, beginning in
December 2010 with the Tunisia uprising.
Since then, many Middle Eastern countries
have experienced civil unrest, with four
governments being overthrown and several
others going through large governmental
changes. In July 2013, Egypt overthrew
their government for the second time in
two years. As unrest continues in many of
these oil-rich nations, fears are raised over
possible oil supply shortages and price
spikes, which reduces demand for freight
transportation and industry services, if
protests continue to turn increasingly
violent. Similarly, the United States and its
European allies sanctions against Russia
over its involvement in Ukraine could
hamper international trade and impact
commodity prices.
To combat these volatile conditions,

businesses have looked for ways to reduce
costs and improve operating efficiencies.
Industry operators have embraced
strategies like just-in-time (JIT) logistics
and just-in-sequence (JIS) inventory
management. JIT is a production strategy
that manufacturers use to reduce
inventory costs by ordering inputs only as
needed in the production process. JIS
complements JIT by scheduling the
delivery of components and parts
according to the manufacturers assembly
line sequence. To fulfill these goals,

manufacturers are turning to larger
industry operators with greater
technological capacity and consistent
global coverage that have the resources to
support their JIT and JIS strategies.
Developing a worldwide network for
these systems adds a considerable
indirect cost to the industry in servicing
its customers. There is an increasing
trend toward vertical integration of the
supply chain; small and medium-size
enterprises are merging or being bought
N

atural disasters and civil
unrest caused shortages
of shipped products,
hurting demand
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The rise of JIT and

JIS
continued
out by operators in other transportation

and distribution industries, increasing
competition for freight forwarding
brokerages and agencies. In response,
larger players have expanded the scope
of their operations over the five years to
2014. In comparison, nonemploying
entities, which primarily consist of
independent customs brokers, have been
able to enter the industry as companies

increasingly require assistance
navigating complex trade laws. For these
reasons, the number of industry
establishments is forecast to increase at
an annualized rate of 0.6% to 72,394,
while the number of workers is projected
to grow at an average annual rate of
0.8% to 289,467.
Industry
Outlook
The industry will grow more strongly

in coming years, particularly as the
economy enters sustained recovery
and international trade rises. Over the
five years to 2019, revenue is forecast
to increase at an annualized rate of
4.5% to $127.6 billion. As the US
economy recovers, consumer spending
and industrial production are expected
to increase, raising freight volumes

transported domestically and shipped
internationally and thereby boosting
demand for industry services.
Additionally, many shipments of
inputs or products will require
multiple modes of transportation,
which companies in this industry will
be hired to arrange.
Improvements in
trade and technology
Demand for US goods and services will

grow in line with a stronger global
economy. Over the five years to 2019, the
total value of US trade is forecast to
increase at an average annual rate of
4.0%. Total US exports are projected to
grow faster than imports, at an
annualized rate of 4.2% over the period,
driven primarily by rising demand in
emerging economies. Additionally, the
economies of Canada and Mexico, key
export markets for the United States, are
forecast to improve, further supporting
demand for US goods. Over the same
period, total US imports are expected to
rise at an annualized rate of 3.8% as US
consumer spending and industrial
production increase.
In addition to globalization,
improvements in process management
will support industry growth. As
S

teeper technology
requirements may lead
smaller operators to fold
or merge
technology improves, industry
participants will be better able to manage
shipping activity, logistics and customer
inquiries. Participants with international
operations will also rely heavily on
technology because payment systems and
tracking services are conducted
electronically through the internet.
Additionally, as consumers increasingly
buy goods online, demand for freight
forwarding brokerages and agencies to
manage the transport of these products
will increase.
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Competition prevents
profit growth
Industry participants rely on thirdparty cargo carriers to actually

transport freight, but these carriers are
increasingly undertaking freight
forwarding themselves through internal
logistics operations. As a result,
external competition is expected to rise
and profit is expected to remain
relatively flat despite stronger demand
for industry services. Increased
competition will curb profit margins as
businesses undercut competitors to
increase market share. In addition,
higher wages and other employeerelated costs are expected to increase
pressure on profit margins, with
businesses competing to retain talent.
Consequently, the average industry
profit margin is projected to marginally
decline to 5.9% of revenue in 2019.
According to Section 641 of the Tariff
Act, the Treasury must individually and
personally license customs brokers, and
brokerages must obtain a separate
license. A copy of the insurance policy
must be filed with the Surface
Transportation Board at the US
Department of Transportation for the
protection of the forwarders customers.
To be licensed, a freight forwarder
brokerage or agency must pass a
comprehensive test. Moreover, most
freight forwarding brokerages and
agencies consist of autonomous offices
that have strong relationships with
customers and carriers, so participants
must retain knowledgeable, licensed
D

espite stronger demand,
increased price competition
will keep profit flat
employees with excellent customer
service skills to remain competitive.
Consequently, wages are forecast to
increase at an average annual rate of
4.0% to total $17.5 billion over the five
years to 2019 as industry players raise
average employee salaries.
Due to the development of online
application and processing systems, some
larger clients are expected to bring
customs processing in house. However,
due to the complexity of customs
regulations, many businesses will
continue to outsource brokerage services
to industry operators. Since independent
customs brokers comprise the majority of
industry establishments, the number of
establishments is forecast to increase at
an annualized rate of 2.2% to 80,525 as
customs brokers enter the industry to
take advantage of increased demand.
Moreover, operators in the freightforwarding segment of the industry will
likely work to increase the efficiency and
reduce the cost of transporting freight
over the next five years. Rising fuel costs
and environmental standards will result
in increased demand for freight
forwarders to ensure that products are
moved in the most timely and costeffective way.
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Slowing technological change will
focus on improving efficiencies
Life Cycle Stage
Enterprise growth will slow as new entrants

are deterred by intense competition
% Growth in share of economy
There is wholehearted market acceptance

of the industrys services
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic

importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Mature Industry

Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
10
Quantity Growth
Many new companies;

minor growth in economic
importance; substantial
technology change
Freight Forwarding Brokerages & Agencies
Rail Transportation
Local Freight Trucking

Charter Flights
Ocean & Coastal Transportation
Inland Water Transportation
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
% Growth in number of establishments

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Industry Life Cycle

T
his industry
is Mature

Agencies industry is in the mature phase
of its life cycle. Globalization and
international trade will continue to be the
major drivers of industry growth. Over
the 10 years to 2019, IVA is projected to
grow at an average annual rate of 5.0%.
While this is higher than the anticipated
GDP annualized growth rate of 2.7% over
the same period, the IVA growth rate has
been bolstered by the recovery of
industry wages and profitability since
2009. Slowing technological change and
enterprise growth are more indicative of
the industrys life cycle.
Outsourcing manufacturing and
importing semi-finished goods, coupled
with a move toward just-in-time
inventories, has increased demand for
freight transportation arrangements over
the past couple of decades. Larger
operators have responded to these trends
by providing integrated logistics services

for supply chain management in addition
to freight forwarding and customs
brokering. Current improvements in
services and technologies are focused on
increasing efficiency and decreasing
transport costs. No new developments
are expected to revolutionize freight
forwarding and customs brokering.
The industrys services are well-known
and wholeheartedly accepted by its
major markets.
To expand their customer base and
market share, larger operators have
increasingly acquired smaller
participants. Over the 10 years to 2019,
the number of enterprises is projected to
rise at a low annualized rate of 1.4% to
73,387 operators. Despite the prevalence
of independent customs brokers, new
entrants will be deterred by intense
competition among industry operators.
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Products & Markets
Supply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES

31-33
Manufacturing in the US
Manufacturers use freight forwarders to arrange the transportation of production components.
42
Wholesale Trade in the US

Wholesalers require freight forwarding services to manage the movement of goods.
44-45
Retail Trade in the US

Retailers demand various services for packing, storage and documentation.
48-49
Transportation and Warehousing in the US

Transportation providers use brokerage services to find new clients.
KEY SELLING INDUSTRIES

48-49
48211
Rail Transportation in the US

Freight forwarders hire railroads to transport stock for customers.
48311
Ocean & Coastal Transportation in the US

Freight forwarders lease space on ships to transport goods.
48411
Local Freight Trucking in the US

Freight forwarders subcontract local transportation activities.
48412
Products & Services
Transportation and Warehousing in the US

Transportation and warehousing is an important supplier to this industry. It provides services
that freight forwarders utilize for transportation and consolidation of freight.
Long-Distance Freight Trucking in the US

Freight forwarders subcontract transportation services to trucking companies.
Many operators offer customs brokerage

services as well as freight forwarding
services to provide integrated logistics
services for clients. This trend includes
the provision of services across
international borders and is expected to
continue as the industry moves into the
mature phase of its life cycle and as
globalization progresses. Many major
players note that the majority of growth
is derived from international markets,
especially those emerging in Asia.
Agency and brokerage services make up
49.7% of industry revenue. This segments
share of revenue has been fairly stable
because clients consistently require
agencies and brokerages to engage in
international trade operations. Customs
brokers advise importers in determining
proper classifications and calculating the
value of goods being transported.
Additionally, importers require

information surrounding international
quota and tariff regulations. Brokers
operations often expand beyond customs
as they have to contact other government
agencies, such as the US Department of
Agriculture (USDA) on meat importation,
the US Environmental Protection Agency
(EPA) on vehicle emission standards or
the US Food and Drug Administration
(FDA) on product safety.
The development of online application
and processing systems has created
competition for customs brokerage
services in recent years as larger clients
bring customs processing in-house.
However, according to Section 641 of the
Tariff Act, the Treasury must individually
and personally license customs brokers,
and brokerages must obtain a separate
license. A copy of the insurance policy
must be filed with the Surface
Transportation Board at the US
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Products & Markets
Products & Services

continued
Products and services segmentation (2014)
1.2%
Process consulting
5.3%
43.8%
Freight forwarding
Total $102.4bn
Department of Transportation for the
protection of the forwarders customers.
To be licensed, a freight forwarder
brokerage or agency must pass a
comprehensive test. Therefore, due to the
complexity of customs regulations and
licensing costs, many business will
continue to outsource these services to
industry operators.
Freight forwarding
Freight forwarders advise clients on the
best rates, routes and modes of
transportation to or from any area in the
world and account for 43.8% of industry
revenue. Forwarders match services to
clients, ensuring that products are moved
in the most timely and cost-effective way.
The large volume of freight handled by
forwarders gives them advantages over
individual shippers or integrated carriers.
The freight-forwarding segment has not
fluctuated greatly for the same reason
agencies and brokerages remain relatively
stable: clients engaging in international
trade requires these services.
This segment may change in coming
years as a result of increasing awareness
of environmental issues. Freight
forwarders will likely work to increase
49.7%
efficiency and reduce the environmental

impact of various modes of
transportation. This segments share of
revenue is likely to increase as this
movement creates unique work and
worker requirements, which calls for
more workers with specialized skill sets.
Other
Other freight-related services include
storage and distribution services. This
segment generates about 5.3% of
industry revenue. Very few operators
offer these services because many lack
the infrastructure and facilities required.
Generally, only the larger operators offer
these additional services.
Process consulting is a growing product
segment for the industry, albeit from a
very small base. This segment accounts for
about 1.2% of industry revenue. It
generally involves industry participants
that provide consulting services to
importers, exporters and other companies.
This segment advises the company about
methods, process, technology, systems
and transportation modes. Some
companies also provide information
regarding integrated logistics
management and warehouse operations.
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Products & Markets
Demand
Determinants
Major Markets
Over the past 25 years, the industry grew

strongly and enjoyed an increasing share
of GDP. This trend has closely followed
movements in trade volumes; the greater
the volume of trade, the greater the need
for transportation arrangements and
brokerage services. Freight
transportation arrangements are more
influenced by the volume of imports into
the United States, which increases
demand for industry services regarding
customs regulations for finished
consumer goods and semi-finished inputs
to domestic production. Stronger growth
in exports due to emerging market
demand is slowly shifting the use of
industry services toward exported goods.
The manufacturing sector depends on
timely and reliable deliveries of raw
materials, or semi-finished products as
inputs to further processing. It also
requires finished products to be
transported to warehouses or distribution
centers. The freight forwarders may
arrange for transportation to domestic or

overseas markets. The trend toward
just-in-time (JIT) inventories has also
created increased demand for
transportation services as manufacturers
seek smaller and more frequent
deliveries. JIT allows companies to
improve profitability by purchasing
materials only as needed, thereby
reducing inventory costs. Those
companies thus need freight forwarding
brokerages and agencies more often,
boosting demand for this industry.
The major determinant of
manufacturing demand is consumer
spending. The downturn in consumer
spending during the recession
negatively impacted imports of finished
goods as well as domestic goods. As
international trade and domestic
manufacturing recover from the
recession and continue to grow,
demand for industry services will
continue its upward trend.
Major market segmentation (2014)
15%
Others
23%
Importers and wholesalers
62%
Manufacturers
Total $102.4bn
Manufacturers
The manufacturing sector supplies an
estimated 62.0% of industry revenue.
During the recession, manufacturing
activity in the United States declined
heavily in line with weak consumer

spending and inventory destocking. As
a result, the share of industry revenue
generated by manufacturers contracted
slightly. Demand from emerging
WWW.IBISWORLD.COM
Products & Markets
Major Markets
continued
economies for US manufactured

exports helped to offset some of the
decline in domestic demand.
Importers and wholesalers
Services to importers and wholesalers
generate about 23.0% of revenue. Over
the past decade, the import and
wholesale sector has been on the rise
due to gradual liberalization of markets
and trade links with countries that
feature low input costs. This growth in
trade led to greater import penetration
of US markets. However, the global
financial crisis and the global recession
reshaped the market. Falling demand
from wholesalers caused imports to
plummet in 2009. Imports have grown
International Trade
Despite its reliance on traded goods for

revenue, the Freight Forwarding
Brokerages and Agencies industrys
services cannot be imported or exported.
since 2010 as wholesalers began to

rebuild inventories as the economy
recovered, increasing this markets
share of industry revenue.
Others
The other markets make up about
15.0% of industry revenue and include a
range of small niche markets, such as
small-volume transportation for
retailers and direct-to-public services.
Generally, the direct-to-public services
are focused on physically large,
valuable or fragile goods such as cars,
art and antiques. This market has
rebounded from recessionary lows as
Americans have slowly renewed
demand for luxury goods.
Companies in the industry arrange the

domestic and international transportation
of many different types of freight including
goods and commodities, among others.
WWW.IBISWORLD.COM
Products & Markets

Business Locations 2014
West
New
England
AK
0.3
Great
Lakes
WA
ND
MT
2.7
Rocky
Mountains
ID
OR
1.2
West NV
0.6
1.5
SD
0.3
WY
0.4
MN
0.3
0.4
Plains
CO
0.8
KY
0.6
OK
0.6
NC
2.4
TN
AZ
NM
1.6
0.2
Southwest
TX
11.0
HI
0.4
Additional States (as marked on map)

1 VT
2 NH
3 MA
SC
Southeast
5 CT
6 NJ
7 DE
8 MD
0.7
0.2
4.3
1.6
0.2
0.2
1.2
0.7
MS
AL
0.9
1.1
GA
3.4
0.4
LA
1.2
FL
9.4
Establishments (%)
4 RI
0.1
AR
0.1
1.8
14.5
WV VA
1.8
1.1
1.9
CA
West
2.9
MO
KS
1.2
OH
1.7
5.9
2.7
IN
IL
0.5
UT
PA
2.2
0.8
0.3
1 2
3
NY
8.3
5 4
MI
1.4
IA
NE
0.1
WI
ME
MidAtlantic
9 DC
0.1
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
WWW.IBISWORLD.COM
Products & Markets
Distribution of establishments vs. population

30
20
10
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
Great Lakes
0
West
Most industry activity is concentrated in

states dominated by manufacturing,
trade and other commercial activities: the
Southeast, West and Mid-Atlantic
regions. Because of its large population
and commercial base, the Southeast
region has the largest share of industry
establishments at about 24.5%. The
Southeast represents 25.4% of the US
population and houses major US ports.
The region also hosts a large proportion
of rail freight employees and rail
maintenance and support enterprises.
The West is the second-largest region
in terms of industry establishments with
19.7%. Ports on the West Coast are major
transit points, especially for goods
entering the country from Asia. Freight is
then transported via roads and railways
from ports on the West Coast to the East
Coast. California has three of the largest
container ports in the United States: Los
Angeles, Long Beach and Oakland. Asian
products bound for the East Coast can
save a week moving through Los Angeles
compared with a 25-day trip via the
Panama Canal.
The Panama Canal expansion project
could divert demand away from West
Coast ports, as cargo ships will be able to
traverse the canal more quickly and
possibly transport products directly to
Southeast ports. The project, which is
expected to be completed in 2014, will
make the canal bigger, so that more and
larger ships can pass through it. More
than double the ships and goods will be
able to make it through the canal when
the project is done. As a result, the canal
will allow previously unable vessels to
travel through to the US Atlantic and
Gulf coasts. In the meantime, ports in the
East and Southeast are investing in
expansion projects of their own in
preparation for the potential traffic
increase. West Coast ports have focused
investment to increase their
competitiveness; they seek to streamline
Business Locations
Establishments
Population
and speed the flow of goods moving to

and from the ports of Los Angeles and
Long Beach, with other improvement
projects planned.
As a traditional manufacturing base,
the Great Lakes region houses a
significant share of establishments. This
share is proportional to the number of
consumers, as the region holds 16.7% of
establishments and 15.5% of the
population. Establishments in the
Southwest states benefit from freight
generated by nearby low-cost producers
in Mexico and Central America.
Additionally, populations and
demographics of the United States are
shifting. Traditionally, the highest
proportion of the population and the
industry centered on the Great Lakes and
Mid-Atlantic regions, however, the US
population over the past 10 years has
shifted to the Southeast, Southwest and
the West. Business locations, particularly
manufacturers, have also been shifting to
the Southeast. Over the next five years,
the industry is anticipated to continue to
shift toward the Southeast and the West.
WWW.IBISWORLD.COM
19
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level

Concentration
in
this industry is Low
Key Success Factors

I
BISWorld identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:

Agencies industry is estimated to have a
low level of concentration, as the top
four players are expected to account for
about 25.5% of industry revenue in
2014, up from 23.1% in 2009. Despite
the presence of international players,
the industry is dominated by small- and
medium-size enterprises, with close to
55.0% of all companies employing one
to four people and more than 70.0% of
establishments consisting of
nonemploying entities, such as
independent customs brokers.
However, industry concentration
has increased over the past five years
due to the recession, which forced
smaller operators to exit the industry or
be acquired by larger players due
to low demand for freight

transportation services.
Over the five years to 2019, as the
overall economy continues to grow,
more brokerages and agencies will be
needed to handle the increasing
number of shipments due to growth in
cargo traffic. Many shipments require
multiple modes of transportation as
well, so operators in this industry will
be needed to manage the processes. As
demand increases, the industry will
attract new entrants, but existing
players will be in a better position to
take advantage of these opportunities.
Technological advances are also
expected to increase the scope of larger
players as customers increasingly
demand real-time tracking services.
Ability to quickly adopt new technology

Clients are increasingly seeking
forwarders with strong information
technologies for monitoring purposes.
and maintain excellent customer

relations is essential.
Understanding government
policies and their implications
As this industry includes customs
brokerages, it is essential to
understand the changing customs
tariffs and schedules.
Having contacts within key markets

The industry revolves around
connecting shippers and carriers.
Hence, a firm with contacts across
various commercial and geographic
markets is able to arrange a greater
number of transportation offerings.
Access to quality personnel

Because the customs-broking function
is built on personal trust, having access
to quality personnel who can develop
Cost Structure
Benchmarks
Provision of superior after sales service

Superior service to clients before and
after transactions are completed
enhances service quality and creates
opportunities for future transactions.
The cost structures of companies in this

industry vary depending on a variety of
factors, such as if participant employ
workers, the number of workers, the
value of contracts gained and the
companys geographical reach.
Profit
The industry has a low market share
concentration and is very competitive,
which leads to low industry profitability.
In addition, the majority of service costs
are passed on to consumers in the form
WWW.IBISWORLD.COM
20
of transportation charges and fees for

additional services, so profitability does
not typically fluctuate as much as
revenue. However, profit margins are
forecast to improve markedly over the
past five years as revenue growth
outpaces various industry costs. The
average industry profit margin is
projected to expand from 3.6% of
revenue in 2009 to 6.1% in 2014.
Purchases
The majority of industry costs are
related to purchasing transportation
services from other companies and
warehousing operations. Purchases are
expected to consume 58.0% of industry
revenue in 2014. At the same time,
larger forwarders and brokers tend to
save money by consolidating shipments
from multiple customers and
concentrating buying power. As a
result, larger players are able to
negotiate favorable prices from direct

carriers than customers would
otherwise be able to negotiate
themselves. Sourcing and brokerage
fees are also major costs, such as the
cost of subcontracting services to
smaller specialized players and renting
equipment for particular consignments.
Wages
Industry wages are estimated to consume
14.0% of industry revenue in 2014. The
industry requires highly skilled personnel
with detailed understanding of customs
regulations and tariff duties. Employers are
reluctant to dismiss staff even in dismal
economic conditions, so most cut back
hours to reduce costs while maintaining
employees and their knowledge base. In
addition, most brokers earn wages based on
commission per transaction; during periods
of fewer client transactions, wage costs
essentially fall with revenue. Wages are
Sector vs. Industry Costs

Average Costs of
all Industries in
sector (2014)
100
Industry Costs
(2014)
7.5
6.1
Profit
Wages
Purchases
Depreciation
Marketing
Rent & Utilities
Other
14.0
80
Percentage of revenue
Cost Structure
Benchmarks
continued
27.7
60
58.0
31.5
40
20
5.6
7.0
18.9
1.8
2.0
5.3
0.3
14.3
0
WWW.IBISWORLD.COM
21
Cost Structure
Benchmarks
continued
anticipated to grow in coming years as a

shortage of skilled labor causes industry
participants to outbid each other for top
candidates. This is evidenced by Expeditors
Internationals decision to adopt an
incentive compensation program where key
personnel are rewarded for the
performance of different operating segments.
Other
Other costs include those costs
associated with general and
Basis of Competition
Level & Trend

Competition
in this
industry is Highand

the trend is Steady
Overall, the Freight Forwarding

Brokerages and Agencies industry has a
high level of competition. Companies in
the industry not only compete against
one another, but they face competition
from shippers in-house operations.
Internal competition
Agencies industry is very competitive and
expected to remain so in the foreseeable
future. Price, quality of service,
information systems capability, global
network capacity, reliability and
responsiveness are all primary factors
that contribute to success in the industry.
One of the largest points of competition
has been the increased use of logistics,
which has heightened competition from
large integrated carriers. These
companies took full responsibility for
cargo and promised shippers door-todoor service over great distances. This
proved to be difficult for small forwarders
and brokers to overcome and so, to
negate some of the effects of this threat,
smaller freight forwarding brokerages
and agencies continue to call attention to
their ability to provide customized service
that large carriers do not offer. Larger
freight forwarding brokerages and
administrative expenses. Rent and

utilities, which include purchased fuels
for transportation and electricity,
account for about 5.3% of revenue.
Depreciation costs are relatively low
and account for only 2.0% of industry
revenue. Most players do not own
transportation vehicles, warehouses
or storage units. Instead, companies
in the industry mostly act as
intermediaries between transportation
suppliers and customers.
agencies, however, have established

more overseas networks in response to
this globalization.
An increasing number of industry
operators are emphasizing customer
service as an integral function of their
supply chain management processes.
This growing attention to service has led
to innovation within the tracking portion
of the business. Customers inquire as to
the status of their shipment; in response,
industry operators have innovated new
ways for customers to track their
package, including online freight
tracking, which provides a real-time
location and estimated delivery date.
External competition
For the most part, external competition
stems from in-house operations of major
shippers. While this is not a major threat
at the moment, this threat could increase
as global networks grow and
consolidation continues. For example,
major player United Postal Service is not
only the second-largest freight forwarder,
but also the worlds largest package
delivery company. UPSs ability to gain
considerable market share in both
industries highlights the growing threat
of external competition.
WWW.IBISWORLD.COM
22
Barriers to Entry
Level & Trend

Barriers to Entry
in this industry are

L
owand Steady
Industry
Globalization
Level & Trend

Globalization
in
this industry is
M
ediumand the
trend is Increasing
Barriers to entry in the Freight

Forwarding Brokerages and Agencies
industry are low. Once a new player has
established itself, growth can be very
difficult. It is relatively easy to set up a
single route or to specialize in a
particular area, but true economies of
scale exist in national and international
operations. Thus, major players have
developed extensive systems that involve
terminal facilities and tracking
technologies to service shippers needs.
Additionally, low capital investment and
high fragmentation add to ease of entry
in the market.
After entering the industry, sufficient
volume must be generated to be eligible
for discounts from the different modes of
freight transportation. Larger forwarders
with specialist facilities can advertise an
This industry is inherently globalized by

the nature of its business. While there are
numerous small domestic operators, the
major players in the industry have
operations that span internationally.
Major players C.H. Robinson and UPS
have hundreds of branches throughout
the world and earn a significant amount
of their revenue from international
operations. Meanwhile, Germany-based
Deutsche Post AG delivers mail from to
Barriers to Entry checklist

Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
Level
High
Low
Mature
Medium
Medium
Medium
Low
international network and are in a better

position to attract business.
Consequently, competitive conditions for
smaller forwarders are fierce. To survive,
smaller players can specialize in niche
markets with particular routes and align
themselves with local customers.
40.7 million households globally and

operates in the United States through its
DHL unit. Similarly, Switzerland-based
Kuehne + Nagel is one of the worlds
leading freight forwarders and logistics
operators with over 1,000 offices in more
than 100 countries, including the Untied
States. As the world economy continues
to grow, international shipping, and
therefore industry globalization, is
expected to increase with it.
WWW.IBISWORLD.COM
Major Companies
C.H. Robinson Worldwide Inc. | Deutsche Post AG
United Parcel Service Inc. | Other Companies
Major players
(Market share)
Deutsche Post AG 5.9%
80.0%
Other
United Parcel Service Inc. 4.2%
Player Performance
C.H. Robinson
Worldwide Inc.
M
arket share: 9.9%
C.H. Robinson Worldwide Inc. 9.9%
Headquartered in Eden Prairie, MN, C.H.

Robinson Worldwide (CHRW) is one of
the largest third-party logistics
companies in the world. Operating
through a network of 285 offices, the
company serviced more than 46,000
active customers and handled about 12.7
million shipments in 2013. CHRW has
contractual relationships with more than
63,000 transportation companies,
including motor carriers, railroads
(primarily intermodal service providers),
and air freight and ocean carriers. In
November 2012, CHRW expanded its
global freight-forwarding network and
market presence through its acquisition
of Phoenix International Freight Services,
an international freight forwarder based
in Chicago. CHRW earned $12.8 billion
in revenue in 2013.
CHRW provides freighttransportation services and logistics
solutions to a range of customers,
selecting and hiring the appropriate
transportation for each shipment. The
company works with truckload and
less-than-truckload (LTL), intermodal,
ocean and air carriers. CHRW often
consolidates partial LTL shipments for
several customers into full truckloads.
The company transports freight by a
combination of truck and rail through
its intermodal service. CHRW is also a
licensed ocean transportation
intermediary and certified indirect air
carrier. The companys customs brokers
are licensed and regulated by US
Customs and Border Protection to
assist importers and exporters in
meeting federal requirements

governing imports and exports. In
addition to these services, CHRW
provides value-added logistics
solutions, such as freight consolidation,
supply chain consulting and analysis,
optimization and reporting.
CHRW is a leading developer of
interactive information technology. The
company has developed systems that can
automatically select the optimal mode of
transportation, build and consolidate
shipments and identify appropriate
carriers based on customer requirements.
The CHRWTrucks web-based platform
and mobile application allows contract
carriers to access available freight,
perform on-line check calls, keep track of
receivables and upload scanned
documentation. In October 2012, the
company launched Navisphere, a single
platform offering sophisticated business
analytics and enabling customers to
communicate worldwide with every party
in their supply chain across languages
and currencies.
Financial performance
Over the five years to 2014, CHRWs
revenue generated by US transportation
services is forecast to increase at an
annualized rate of 13.7% to $10.2 billion.
The company has produced strong results
after revenue fell in 2009 as a result of
contracting commerce during the
recession. As developed economies began
to regain strength and emerging markets
continued to prosper, revenue rebounded,
driven by higher volumes in nearly all of
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
the companys transportation modes, the

Phoenix acquisition and higher prices,
including the impacts of higher fuel costs.
However, for these same reasons, profit
margins have declined due to an increase

in administrative expenses related to the
Phoenix acquisition and higher
transportation costs.
C.H. Robinson Worldwide Inc. (US transportation operations) financial

performance*
Year
Revenue
($ million)
(% change)
Net Income
($ million)
2009
5,347.0
-17.3
412.7
5.9
2010
6,761.1
26.4
454.1
10.0
2011
8,061.4
19.2
540.2
19.0
2012
8,827.0
9.5
524.8
-2.9
2013
9,599.5
8.8
513.9
-2.1
2014
10,156.3
5.8
528.3
2.8
(% change)
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
Player Performance
Deutsche Post AG
M
arket share: 5.9%

Industry Brand Names
Deutsche Post DHL
DHL
Deutsche Post AG (DP) is Europes

largest postal service provider. Based in
Germany, the company delivers mail to
40.7 million households globally. DP
participates in the US Freight Forwarding
Brokerages and Agencies industry
through its DHL unit. The company is
one of the worlds leading providers of
express delivery and logistics services,
including freight-forwarding,
transportation-management and
warehousing services and distribution.
Overall, DHL-branded segments account
for more than half of DPs total sales.
The company began as a governmentowned enterprise that handled mailrelated services in Germany. Since the
company went public, its operations have
expanded dramatically despite the
German governments 30.0% ownership.
DHL Global Forwarding has US origins
in Air Express International (AEI),
founded in Miami in 1935. It was the first
freight partner of Pan American World
Airways. AEI grew with the US Postal
mail-distribution service, but its

international expansion began in 1953.
AEIs global operations grew steadily
over the next 50 years, including notable
acquisitions such as ocean freight
forwarder Votainer in 1993, customs
brokerage service providers Radix Group
in 1995 and J.V. Carr in 1996. Deutsche
Post acquired AEI in 2000.
DHLs main activities include express
delivery, global forwarding and freight
and supply chain services. Within the
global forwarding and freight division,
DHL provides air and ocean freightforwarding services, in addition to
transport management and customs
clearance. The company has more than
850 branches to facilitate its global
forwarding operations. Within the supply
chain division, DHL offers warehousing,
distribution, managed transport, logistics
consulting and other value-added
services. The company focuses on the
consumer, retail, technology, healthcare,
automotive and energy sectors.
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Over the five years to 2014, DHLs
revenue from US global forwarding and
supply chain operations is forecast to
rise at an annualized rate of 9.3% to
$6.1 billion. As with most companies in
the industry, falling global demand
during the recession resulted in a
dramatic drop in revenue in 2009.
Revenue bounced back strongly in
2010 and continued to grow through
2012. However, global forwarding

revenue decreased in 2013 due to lower
air and ocean freight volumes. Lower
freight volumes resulted from a decline
in demand from several large
customers in the technology and
manufacturing sectors. In response to
this volatility, DHL has focused on
efficiencies and increased operating
profit from a loss in 2009 to a gain of
3.8% of revenue in 2014.
Deutsche Post AG (US global forwarding and supply chain operations)

financial performance*
Year
Revenue
($ million)
(% change)
Operating Income
($ million)
2009
3,880.6
-38.0
-3.2
-65.0
2010
5,460.9
40.7
141.0
4,458.6
2011
5,646.4
3.4
183.7
30.3
2012
5,900.1
4.5
212.2
15.5
2013
5,766.6
-2.3
213.1
0.4
2014
6,056.4
5.0
230.0
7.9
(% change)
*Estimates
Player Performance
United Parcel
Service Inc.
M
arket share: 4.2%
The United Parcel Service (UPS) is the

worlds largest package-delivery
company, delivering over 16.9 million
packages for 1.5 million customers to
businesses and individuals in over 220
countries. The company is also a leader
in global supply chain management,
providing logistics solutions that lower
costs, improve services and provide
highly customizable supply chain control
and visibility. UPS offers ground, air and
ocean freight shipping and related
services, including freight forwarding and
customs brokerage, to customers around
the globe. Founded in 1907 as a private
messenger and delivery service in Seattle
and currently headquartered in Atlanta,
UPS earned $55.4 billion in 2013.
UPS is organized into three primary

business segments: US domestic
package, international package and
supply chain and freight. Within the
supply chain and freight segment, the
company operates its industry-specific
forwarding and logistics business. UPS
is one of the largest air-freight carriers
domestically and top international
air-freight forwarders globally. As a nonvessel-operating common carrier, the
company provides ocean freight fullcontainer load and less-than-container
load shipments between most major
ports worldwide. UPS is also one of the
largest customs brokerages globally by
both the number of shipments processed
annually and the number of brokers
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
worldwide. UPS offers customs

clearance, trade management and
international trade consulting services.
In addition to freight forwarding and
customs brokerage, the company
provides a range of logistics solutions.
For instance, UPSs distribution services
allow companies in the healthcare,
high-tech, retail and aerospace industries
to streamline supply chains, minimizing
their capital investment and positioning
their products closer to their customers.
In addition, the companys postsales
services support goods after they have
been delivered or installed in the field.
These businesses complement one
another because each service allows
customers to store, import, export or
transport freight entirely through UPS.
billion. Since the recession, UPS has

continued to work on growing its supply
chain and freight division by using
customizable logistics solutions. While
many retail and high-tech companies
use UPSs services, UPS is branching out
into the global healthcare distribution
market, which has high growth
potential. In January 2010, UPS
announced UPS Healthcare Facilities
expansions in Kentucky, Singapore,
Netherlands and Canada. These factors
have helped drive growth up from
recessionary lows. However, forwarding
revenue decreased in 2012, primarily
due to lower rates in UPSs air
forwarding business as a result of
industry overcapacity in key trade lanes,
particularly the Asia-outbound market.
This trend was exacerbated in 2013 by
lower tonnage in the companys air
forwarding business because of weak
overall market demand, particularly in
the technology and military sectors, as
well as competitive pressures.
Over the five years to 2014, the
companys US forwarding and freight
revenue is forecast to rise at an
annualized rate of 2.4% to total $4.3
United Parcel Service Inc. (US forwarding and logistics operations)

financial performance*
Year
Revenue
($ million)
(% change)
Operating Income
($ million)
(% change)
2009
3,857.7
-16.5
235.4
-33.2
2010
4,477.0
16.1
452.2
92.1
2011
4,516.9
0.9
449.2
-0.7
2012
4,463.4
-1.2
11.2
-97.5
2013
4,143.8
-7.2
508.5
4,440.2
2014
4,342.7
4.8
534.5
5.1
*Estimates
WWW.IBISWORLD.COM
Major Companies
Other Companies
Kuehne + Nagel
Estimated market share: 3.7%

Founded by August Kuehne and
Friedrich Nagel in 1890, Kuehne +
Nagel (K+N) is one of the worlds
leading freight forwarders and logistics
operators. Headquartered in Switzerland,
the company has over 1,000 offices in
more than 100 countries and employs
over 63,000 people. K+N operates six
segments, with air freight, sea freight,
road and rail logistics and contract
logistics being the largest segments
and comprising the vast majority of the
companys revenue. In recent years,
K+N has tried to grow their business
through acquisitions. To this end, the
company acquired Universal Freight
Services LLC, Oman in 2013 and Link
Logistics International, Australia;
Flowerport Logistics, Netherlands; and
AgriAir Logistics, Netherlands, in 2012.
Over the five years to 2014,
IBISWorld expects that K+Ns US
industry-relevant revenue will grow at
an annualized rate of 6.3% to $3.8
billion. After a drop in revenue in 2009,
the companys revenue has grown
strongly every year. K+N has been able
to grow their business through acquiring
companies and by decreasing their
exposure to risky and turbulent
European markets. This is evidenced by
Europes share of revenue falling from
67.0% in 2009 to 60.0% in 2013. Given
these factors, K+Ns US industryrelevant is forecast to increase 6.3% in
2013, earning the company a 3.7%
market share.
Ceva Logistics Inc.

Ceva Logistics provides international
air-freight forwarding, including
transportation and logistics-related
services. Headquartered in the
Netherlands, Ceva designs, implements
and operates supply chain solutions for
multinational and large and medium-size
companies on a national, regional and

global level. The companys freightmanagement services consist of
international air and ocean and domestic
freight forwarding, customs brokerage
and other value-added services. Cevas
contract logistics services include
inbound logistics, manufacturing
support, outbound/distribution logistics
and aftermarket/reverse logistics.
Ceva operates in more than 1,000
locations in over 170 countries,
employing more than 44,000 employees.
The company has built leading market
positions by providing customized
logistics solutions that address industryspecific supply chain requirements. The
company develops cost-effective
solutions to a range of industries,
including the automotive, technology,
consumer and retail, energy and
industrial markets. As demand from
these sectors continues to grow in 2014,
Cevas US industry-relevant revenue is
projected to rise 4.4% to $2.0 billion.
Expeditors International of
Washington Inc.

Expeditors International of Washington
was formed in 1979 as an ocean-freight
forwarder. Since then, the Seattle-based
company has grown to a global leader
in logistics services, including air and
ocean freight consolidating and
forwarding and customs brokerage. The
company uses unaffiliated air and
ocean shippers around the world. It
buys large blocks of wholesale cargo
capacity on those carriers and resells
space to others at rates lower than
carriers can offer. In addition,
Expeditors International provides
value-added services at the destination,
such as warehousing and distribution,
time-definite transportation services
and consulting services, none of which
generate a significant amount of the
companys revenue.
WWW.IBISWORLD.COM
Major Companies
Other Companies
continued
Expeditors International derives its

revenue from air freight, ocean freight and
customs brokerage. Over the five years to
2014, the companys US industry-relevant
revenue is forecast to grow at an
annualized rate of 10.6% to $1.8 billion.
After plummeting in 2009, revenue
surged 36.8% in 2010 as the company
benefited from rising international trade
activity. Revenue growth continued in
2011 as customers continued to seek out
customs brokers with sophisticated
computerized capabilities, including rapid
responses to changes in the regulatory and

security environment. However, revenue
declined in 2012 because of an overall
decrease in the global air-freight market.
This was primarily due to improvements
in technology, which are resulting in
increasingly small and light consumer
electronic products, as well as
improvements in customers supply chain
efficiency. Increased demand from
existing and new customers helped propel
revenue in 2013 and is projected to drive
growth in 2014.
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance
Capital Intensity
Level

The level
of capital
intensity is Medium
The industry displays a moderate level

of capital intensity, with wages
expected to account for 14.0% of
revenue in 2014, while depreciation
costs amount to 2.0%. On average,
industry operators invest about $0.14
in capital equipment for every dollar
spent on labor. Most establishments do
not operate their own transportation
operations, so more than 50.0% of costs
are attributed to the payment of freight
carriers. Capital investment in
equipment and infrastructure is
relatively low for most operators.
However, the large multinational
operators deliver integrated logistics
services that include transportation and
warehousing, which require higher
levels of capital expenditure.
Capital intensity
Capital units per labor unit

0.5
0.4
0.3
0.2
0.1
0.0
Economy
Transportation Freight Forwardand Warehous- ing Brokerages &

ing
Agencies
Dotted line shows a high level of capital intensity

In contrast, small to medium

operations are more labor intensive
with manual sorting and packing
Tools of the Trade: Growth Strategies for Success

Investment Economy
Recreation, Personal Services,

Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Freight
Forwarding
Brokerages &
Agencies
Wholesale Trade
Traditional Service Economy
Rail Transportation
Ocean & Coastal Transportation
Manufacturing
Capital Intensive
Labor Intensive
New Age Economy
Old Economy
Wholesale and Retail. Reliant

on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Agriculture and Manufacturing.

Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
Change in Share of the Economy
WWW.IBISWORLD.COM
Capital Intensity
continued
systems in place. Larger operators

remain relatively labor intensive, with
skilled labor required for freight
forwarding and customs brokerage
services. Depreciation costs are fairly
low, as the industry has limited assets
in mobile plants such as trucks, planes,

railroads and ocean-going vessels. The
average annual wage per employee is
relatively high, at about $49,600,
which reflects the high skill levels that
are required.
Technology
& Systems
Overall, the Freight Forwarding

Brokerages and Agencies industry has a
moderate level of technological change. It
is increasingly important for operators in
this industry to invest in business-tobusiness e-commerce technology and
online ordering systems since their
customers may install or already have
these systems in place.
Barcode technology is used
extensively to sort small freight and
parcels. The latest technology in radio
frequency identification (RFID) is
coupled with modern advances in
two-dimensional barcode (light wave)
technology. In the past, RFID has been
used for basic tasks such as the
evaluation of postal performance, but
there have been larger innovations in
RFID technology in the industry. RFID
technology is a wireless link to uniquely
identify objects or people, which allows
for greater efficiency and fewer human
errors. Electronic tags are attached to
an item and then scanned with an RFID
reader. RFID tags are much more
versatile than bar codes; RFID tags can
store larger amounts of information
and can be updated at any point of

travel. Additionally, RFID tags can be
scanned even if the tag is on the inside
of a package and the reader can scan
hundreds of tags simultaneously. This
technology has been increasing over the
past five years, becoming less expensive
as well, and is expected to grow over
the next 10 years. Additionally, the new
data-dense, invisible ultra-violet
snowflake magnetic ink imprints uses
wireless logistics technologies that
make it possible to track and view
assets virtually.
In January 2008, UPS became the
first package carrier to offer customers
a paperless international shipping
option and a package return capability
to 98 countries and territories. UPS
Paperless Invoice enables customers
that ship small packages internationally
to go paperless. This process
integrates order processing, shipment
preparation and commercial invoices.
UPS Paperless Invoice allows
shipments to clear customs using
electronic data in lieu of error-prone
paper forms.
As a support industry, operators are

vulnerable to the health of upstream
industries, which they cannot control.
Revenue fluctuates with trends in the
quantity of domestic shipments,
international trade and real GDP growth
but tend to be more dramatic than those
observed with GDP. While slowing
growth in consumer spending and
manufacturing do impact industry

revenue, shifts in trade values have a
greater impact. As a result, industry
revenue has been volatile over the past
five years. This variability is a result of
the recessions widespread effect on
upstream and downstream industries.
Over the past 25 years, the Freight
Forwarding and Brokerages industry has
Level

The level
of
Technology Change
is Medium
Revenue Volatility
Level

The level
of
Volatility is Medium
WWW.IBISWORLD.COM
become increasingly dependent on

international trade as a revenue stream.
Accordingly, industry revenue has
fluctuated in line with trade. The
depreciation of the US dollar has added
A higher level of revenue
volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
to revenue volatility. IBISWorld projects

that revenue volatility will decline over
the next five years as the economy and
industry return to more normalized
growth patterns.
Volatility vs Growth
1000
Revenue volatility* (%)
Revenue Volatility
continued
Hazardous
Rollercoaster
100
Freight Forwarding
Brokerages & Agencies
10
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)

* Axis is in logarithmic scale
Regulation & Policy

Level & Trend

The level of
Regulation is
M
ediumand the
trend is Steady
The National Customs Brokers and

Freight Forwarders Association of
America Inc. provides some selfregulation by providing professional
accredited courses to its members. For
instance, it offers the Certified Ocean
Forwarders program that grants the
distinction of professional ocean freight
forwarder to qualified individuals.
Customs brokers are well-regulated
and licensed by the US Treasury
Department. The Federal Maritime
Commission (FMC) licenses ocean freight
forwarders, while the International Air
Transportation Association (IATA)
accredits international air cargo agents.
Surface freight forwarders are accredited
by the Surface Transportation Board and
provide cargo insurance. According to
Section 641 of the Tariff Act, the Treasury
must individually and personally license
customs brokers, and brokerages must
obtain a separate license. A copy of the
insurance policy must be filed with the
STB for the protection of the forwarders

customers. To be licensed, a freight
forwarder brokerage or agency must pass
a comprehensive test.
Following the September 11, 2001
terrorist attack on the United States
and the subsequent war against
terrorism, the Federal Aviation
Administration (FAA) introduced a
new security-related directive
pertaining to cargo that originates from
a foreign location destined for the
United States via a passenger aircraft.
Carriers must review all documentation
submitted by any forwarder prior to
uplifting any shipment. This includes,
but is not limited to, the waybill,
manifest and commercial invoice. The
FAA also requires carriers to contact
each shipper directly to verify the
contents of the shipment. If the shipper
cannot be identified or contacted by
the airline, the shipment will not be
accepted for carriage.
WWW.IBISWORLD.COM
Regulation & Policy

continued
All companies involved in ocean, truck

or rail forwarding must be licensed by
either the FMC or the Interstate
Commerce Commission. Since
deregulation of the US air transportation
industry, air freight forwarders have not

been subject to formal licensing
requirements; however, most air cargo
agents involved with international
forwarding are endorsed by the IATA.
Industry Assistance
This industry is not directly affected by

tariffs. However, customs brokers need to
understand the prevailing tariff
schedules. The National Customs Brokers
and Freight Forwarders Association of
America provides training and advocacy
services for its members.
Trade facilitation programs
conducted by the Office of the United
States Trade Representative indirectly
assist international trade between the
United States and the rest of the world.

Programs include free trade
agreements, Bilateral Market Access
Agreements and the Generalized
Systems of Preferences (GSP). The GSP
is a program designed to promote
economic growth in the developing
world and provide preferential dutyfree entry for about 5,000 products
from nearly 150 designated beneficiary
countries and territories.
Level & Trend

The level of
Industry Assistance
is Lowand the

trend is Steady
WWW.IBISWORLD.COM
Key Statistics
Industry Data
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
Revenue
($m)
73,835.6
76,452.6
89,567.1
88,996.1
76,966.1
87,109.9
95,429.3
98,844.9
100,651.5
102,400.3
107,611.1
112,854.0
118,189.8
122,925.6
127,619.0
3/42
96/1301
Annual Change
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
Revenue
(%)
3.5
17.2
-0.6
-13.5
13.2
9.6
3.6
1.8
1.7
5.1
4.9
4.7
4.0
3.8
30/42
886/1301
Key Ratios
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Sector Rank
Economy Rank
IVA/Revenue
(%)
20.90
22.49
20.47
22.28
21.81
21.43
21.63
21.88
22.12
22.14
21.97
21.86
21.75
21.63
21.51
41/42
942/1301
Industry
Value Added
($m)
15,435.3
17,197.4
18,338.5
19,825.4
16,786.7
18,667.0
20,638.5
21,623.1
22,266.2
22,673.5
23,646.8
24,667.1
25,703.9
26,587.8
27,452.4
6/42
124/1301
Establishments
54,207
56,868
70,812
72,303
70,172
72,076
68,753
70,850
70,728
72,394
73,329
75,946
77,010
79,549
80,525
6/42
116/1300
Enterprises Employment
49,947
219,304
52,335
237,760
65,974
265,074
65,913
296,989
63,971
278,475
65,951
269,280
63,220
271,881
65,096
280,480
64,932
283,853
66,464
289,467
67,181
299,514
69,499
311,757
70,339
322,249
72,605
333,771
73,387
343,268
6/42
7/42
111/1300
135/1301
Exports
---------------N/A
N/A
Industry
Value Added
(%)
11.4
6.6
8.1
-15.3
11.2
10.6
4.8
3.0
1.8
4.3
4.3
4.2
3.4
3.3
26/42
824/1301
Establishments
(%)
4.9
24.5
2.1
-2.9
2.7
-4.6
3.1
-0.2
2.4
1.3
3.6
1.4
3.3
1.2
8/42
432/1300
Enterprises Employment
(%)
(%)
4.8
8.4
26.1
11.5
-0.1
12.0
-2.9
-6.2
3.1
-3.3
-4.1
1.0
3.0
3.2
-0.3
1.2
2.4
2.0
1.1
3.5
3.5
4.1
1.2
3.4
3.2
3.6
1.1
2.8
8/42
16/42
389/1300
563/1301
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Figures are inflation-adjusted 2014 dollars. Rank refers to 2014 data.
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue per
Employee
($000)
336.68
321.55
337.89
299.66
276.38
323.49
351.00
352.41
354.59
353.75
359.29
361.99
366.77
368.29
371.78
9/42
491/1301
Wages/Revenue
(%)
13.91
14.81
13.24
15.40
15.84
13.99
14.07
14.04
14.00
14.02
13.91
13.86
13.77
13.74
13.67
39/42
818/1301
Imports
---------------N/A
N/A
Wages
($m)
10,273.1
11,325.7
11,858.0
13,707.2
12,187.9
12,189.8
13,428.1
13,881.2
14,091.3
14,353.1
14,967.4
15,637.9
16,270.7
16,887.6
17,450.2
7/42
123/1301
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Total Trade
Value
($b)
3,553.9
3,811.0
3,998.2
4,030.5
3,559.8
3,993.7
4,226.9
4,345.6
4,432.3
4,655.7
4,922.4
5,152.0
5,342.9
5,514.7
5,659.5
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
10.2
4.7
15.6
-11.1
0.0
10.2
3.4
1.5
1.9
4.3
4.5
4.0
3.8
3.3
21/42
694/1301
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Total Trade
Value
(%)
7.2
4.9
0.8
-11.7
12.2
5.8
2.8
2.0
5.0
5.7
4.7
3.7
3.2
2.6
N/A
N/A
Employees
per Est.
4.05
4.18
3.74
4.11
3.97
3.74
3.95
3.96
4.01
4.00
4.08
4.10
4.18
4.20
4.26
35/42
1014/1300
Average Wage
($)
46,844.11
47,635.01
44,734.68
46,153.90
43,766.59
45,268.12
49,389.62
49,490.87
49,642.95
49,584.58
49,972.29
50,160.54
50,491.08
50,596.37
50,835.50
20/42
626/1301
Share of the
Economy
(%)
0.11
0.12
0.12
0.13
0.12
0.13
0.14
0.14
0.14
0.14
0.14
0.14
0.14
0.15
0.15
6/42
124/1301
WWW.IBISWORLD.COM
Jargon & Glossary
Industry Jargon
LESS-THAN-CONTAINER LOAD (LCL)Shipments that

do not occupy the space of a single standard cargo
container.
JUST-IN-TIME (JIT)A strategy implemented to

improve profitability by reducing inventory and
purchasing the raw materials that are needed for the
immediate term only.
IBISWorld Glossary
INTEGRATED LOGISTIC SERVICESProvision of

transportation activities from door to door through the
vertical integration of the supply chain.
LESS-THAN-TRUCKLOAD (LTL)When carriers fill trucks

with merchandise from several companies, as opposed
to one firm. Combining multiple shipments allows
carriers to be more efficient.
BARRIERS TO ENTRYHigh barriers to entry mean that

new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
INDUSTRY CONCENTRATIONAn indicator of the

dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
CAPITAL INTENSITYCompares the amount of money

spent on capital (plant, machinery and equipment) with
that spent on labor. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labor; medium is $0.125 to $0.333 of capital to $1
of labor; low is less than $0.125 of capital for every $1 of
labor.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
real growth or decline in industry metrics. The inflation
adjustments in IBISWorlds reports are made using the
US Bureau of Economic Analysis implicit GDP price
deflator.
DOMESTIC DEMANDSpending on industry goods and
services within the United States, regardless of their
country of origin. It is derived by adding imports to
industry revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and seasonal employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists
of one or more establishments that are under common
ownership or control.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by US companies to customers abroad.
IMPORTSTotal value of industry goods and services
brought in from foreign countries to be sold in the
United States.
INDUSTRY REVENUEThe total sales of industry goods

and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is
also described as the industrys contribution to GDP, or
profit plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%, medium is 5% to 20%, and high is more
than 20%. Imports/domestic demand: low is less than
5%, medium is 5% to 35%, and high is more than
35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industrys life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industrys products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENTBusinesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.
WWW.IBISWORLD.COM
Jargon & Glossary
IBISWorld Glossary
continued
VOLATILITYThe level of volatility is determined by

averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate
volatility is 3% to 10%; and low volatility is less than
3%.
WAGESThe gross total wages and salaries of all

employees in the industry. The cost of benefits is also
included in this figure.
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Freight Forwarding Brokerages & Agencies in the USMay 2014 1

Ship shape: Industry revenue will grow in line

IBISWorld Industry Report 48851

Freight Forwarding Brokerages

2 About this Industry

31 Regulation & Policy

19 Market Share Concentration

19 Key Success Factors

19 Cost Structure Benchmarks

Key External Drivers

34 Jargon & Glossary

23 C.H. Robinson Worldwide Inc.

11 Industry Life Cycle

13 Products & Markets

13 Products & Services

30 Technology & Systems

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Freight Forwarding Brokerages & Agencies in the USMay 2014 2

About this Industry

Companies in this industry arrange the

The primary activities of this industry are

known as freight forwarders, marine

The major products and services in this industry are

48121 Charter Flights in the US

Freight Forwarding Brokerages & Agencies in the USMay 2014 3

About this Industry

For additional information on this industry

Freight Forwarding Brokerages & Agencies in the US May 2014

Annual Growth 09-14

Annual Growth 14-19

Total trade value

Revenue vs. employment growth

Products and services segmentation (2014)

Key External Drivers

Total trade value

Other freight-related services

Life Cycle Stage

Freight Forwarding Brokerages & Agencies in the USMay 2014 5

Executive Summary | Key External Drivers | Current Performance

The Freight Forwarding Brokerages and

Key External Drivers

Total trade value

activities to industry operators,

total trade value is expected to increase

Freight Forwarding Brokerages & Agencies in the USMay 2014 6

customs-brokering services depends on

World price of crude oil

Total trade value

Key External Drivers

Freight Forwarding Brokerages & Agencies in the USMay 2014 7

The Freight Forwarding Brokerages

dropping 11.3% in 2009. Industrial

Freight Forwarding Brokerages & Agencies in the USMay 2014 8

The rise of JIT and

Prior to the recession, rising international

declined. While sales have returned, fear of

To combat these volatile conditions,

line sequence. To fulfill these goals,

Freight Forwarding Brokerages & Agencies in the USMay 2014 9

The rise of JIT and

out by operators in other transportation

able to enter the industry as companies

The industry will grow more strongly