While 2022 was projected to be a year of recovery, the air cargo industry was riddled with low international trade volumes and decreased demand amid high inventory levels. Despite these challenges, forwarders continued to show increases in revenue, including some not included in Air Cargo Next’s latest Power 25 ranking.
In 2022, tonnage from the Power 25 forwarders ranged from 2.23 million tonnes to 211,484 tonnes, while the previous year’s range was 2.22 million tonnes to 239,400 tonnes.
With new entrants into the air cargo market, heavy investments in technology and several key acquisitions and mergers, these three up-and-coming forwarders were able to overcome capacity strains in the beginning of the year and deliver impressive growth.
“As we moved into the spring of ’22, we had what then became one of the fastest normalizations of that overcapacity of demand that we’ve seen in my few decades of covering the sector,” Ken Hoexter, airfreight analyst and managing director at Bank of America told Air Cargo Next. “You then quickly went from really tight to almost a normalization by September of the marketplace.”
The following three companies were able to take advantage of that market normalization.
With $2.21 billion in revenue and 138,150 tonnes of air cargo handled in 2022, EFL Global is our first forwarder to watch. Despite year-over-year declines of 17.5% in revenue and 32.7% in tonnage, the Sri Lanka-based forwarder took several steps to expand into new territories with multiple acquisitions that position it for greater revenue and tonnage growth in coming years.
EFL acquired 100% of Charleston, S.C.-based IDEA Logistics LLC for $9.7 million in August 2021, according to a filing with the Colombo, Sri Lanka, stock exchange, a move that has bolstered the company’s supply chain near-sourcing.
“The revenue for IDEA since we started doing business with them, it’s really tripled,” Evan Rosen, president of the Americas region for EFL Global, told Air Cargo Next.
He added that the growth has much “to do with the fact that we really saw an opportunity with our main customer base, which is apparel retail-based customers wanting to do more near-sourcing and moving sourcing into the Americas region.”
EFL Global took its time reacting to the poor market conditions in 2022, Rosen said.
“One of the things that we learned was making sure that we don’t take this moment in time to cut and go in and react too strongly to the market being down at this point. We look at what the market will be doing tomorrow and make sure that we’re building toward what that future looks like.”
— Evan Rosen, President, Americas, EFL Global
EFL is differentiating itself from competitors by testing the waters for new industries, Rosen said. The company in February acquired Buffalo, N.Y.-based Trans American Customhouse Brokers for $42 million, which focuses on food and beverage, and automotive segments.
“That really put us into segments that we hadn’t been in in the past and gave us credibility in the customs brokerage space, which is something that we were lacking in the past,” Rosen said.
EFL also acquired Canada-based logistics company Locher Evers International this year, which Rosen said completed the forwarder’s mission to provide services with its own network of businesses from Canada to Panama.
Bucking industry standards of cost-cutting, EFL has a positive outlook for 2023 and is building its employee base in preparation for growth.
“We’re building our ability to handle business across different service levels of our network and freight forwarding in the domestic side and the customs brokerage side,” Rosen said, “so that when the business does turn around — because we do know that things are going to turn around — EFL global will be in a very good position for growth in the future.”
Denmark-based Maersk Logistics, the world’s largest ocean freight carrier, launched its eponymous air cargo business in 2022, and this year secured the No. 25 spot on the Power 25 list.
The company handled 211,484 tonnes of cargo, up about 20% YoY, and grossed $14.42 billion in revenue, up 46.7% YoY. While Maersk Air Cargo launched last year, Maersk has been in the airfreight industry since it acquired carrier Star Air in 1993.
Maersk invested heavily in airfreight throughout 2022 with several key acquisitions. To build its e-commerce services and North American footprint, Maersk acquired:
- Pilot Freight Services, a New York-based supply chain provider with operations in Canada and Mexico that was No. 22 on last year’s Power 25 list;
- Senator International, a global logistics company with headquarters in Hamburg, Germany and
- LF Logistics, based in Hong Kong, solidifying Maersk’s expansion into airfreight in the Asia-Pacific region.
Due to low rates and poor demand, 2022 was a good year for M&A, Cathy Roberson, supply chain consultant and founder of Logistics Trends & Insights, told Air Cargo Next.
“I think Pilot and Senator were the big ones that helped flush out that U.S. domestic and freight forwarding,” she said.
Maersk is continuing to bolster its intercontinental airfreight network in 2023 by adding routes across North America, Europe and Asia-Pacific.
Recently adding converted and newly built cargo planes like the Boeing 767-300 to its fleet has allowed Maersk to increase flight frequency and weekly rotations, advancing the company’s goal of providing an end-to-end supply chain solution. Maersk ordered six B767s in 2022 and has already taken delivery of four.
“The introduction of an additional aircraft together with a substantial increase in rotations will further expand our ability to service our customers with regular flights and controlled capacity while ensuring visibility, reliability and resilience in their supply chains,” Michel Pozas Lucic, Maersk global head of air, said in a June 19 release.
Yet the forecast of low volumes will continue to depress the air cargo market in 2023.
“While the first half-year has developed essentially in line with our expectations, we do not see any signs of an expected volume rebound in the second part of the year,” Chief Executive Vincent Clerc said in its H1 2023 earnings call.
However, looking ahead, “compared to where we were pre-pandemic, the segment now consistently generates value for the company and has a much broader footprint,” Clerc noted. “We expect a return to strong organic growth once the cyclical effects of the normalization have been worked out.”
Worldwide Logistics Group
Coming in 29th in the Power 25 ranking, Worldwide Logistics Group (WWL) saw significant growth in 2022 revenues resulting from several expansions, especially in its Asian markets.
The China-based logistics provider handled 132,845 tonnes of air cargo in 2022, up 4% YoY, and grossed $2 billion in revenue, an increase of 5% from 2021.
However, these strides are not expected to continue in 2023 due to the 40% to 50% decline in shipping rates the airfreight industry has seen so far this year, according to Derek Lossing, founder of Cirrus Global Advisors, which focuses on the e-commerce supply chain, air cargo and global logistics.
“Last year, you had significantly higher rates compared to the 2019 baseline of air global airfreight rates,” he told Air Cargo Next. “On fairly robust demand, or demand that was still in the market, some of it is artificial because of other supply chain constraints on the water.”
WWL offers several logistics services — from airfreight, sea freight, land and road transportation, to e-commerce services, cross trade, project cargo and in-house customs brokerage. The company also operates seven, company-owned warehouses and distribution centers in the United States and Europe, according to its website.
The company opened 18 offices in the last 24 months in Asia, Europe, the Middle East and North America, with the most recent being in Xiamen City, China. The new branch will bolster WWL’s specialty in general consumer products, especially as the shoe business is its biggest market, Willy Fong, President of APAC for the company, said in a press release.
WWL’s expansion into Asia is part of its overall master strategy to globalize the company, according to WWL Chief Executive Joe Monaghan.
“It also affords us the opportunity to make a slight shift in scale and go after larger clients that have complex requirements that really can best be handled by company-owned offices, as opposed to work-through agents,” Monaghan previously told Air Cargo Next.
In May, WWL acquired customs brokerage firm P. W. Bellingall to grow its services business. The San Francisco-based company handled the famous Folgers Coffee Company and primarily focuses on the coffee and food industries, which WWL is familiar with, and has an AIB-certified warehouse in the New York area.
“We love the idea of acquiring a company that is a market leader within a specific niche and all of the expertise that comes along with it,” Tom Peacock, President of Worldwide Logistics Group said at the time.
Editor’s note: This story has been updated to correct the year and purchase price of IDEA Logistics LLC by EFL Global. It is the policy of Air Cargo Next to make corrections to any published material as necessary.
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