Classifying 2024 as a 'transition year' for the freight industry would be fair. While the industry can take solace in the fact that there was positive growth, as predicted by industry heavyweights in 2023, it was nothing to write home about. Total goods demand increased 2.5-3.5% year-over-year (YoY), showing consumer resilience despite inflationary winds. Juxtaposed with the contractionary fall in the Purchase Managers Index in Q3 (<50), it signals that the freight industry will face more headwinds in 2025.
However, even the most adversarial markets present opportunities for all stakeholders to build resilience and prepare for a better future. We discuss trends shaping 2025 and how freight forwarders can leverage opportunities to stay competitive.
Can Procurement Trends Help Build Resilience? Procurement and the supply chain logistics ecosystem are the lifeline of global businesses. Effective procurement practices contribute to cost savings, supply chain efficiency, and risk management. A sound strategic vision for procurement can lay the foundation for organizational resilience and enhanced performance. To remain competitive, freight forwarders must understand the business landscape and opportunity shifts to leverage technology and implement best practices at the right time to help their customers stay ahead.
Trend 1: Geopolitical standoffs 2024 saw a deepening crisis in the Middle East, continued escalations in Russia-Ukraine, and general recessionary flavour in the South American, Asian, and African regions. The threat of the Israel-Iran standoff grows, and with it, uncertainty in trade bans and route clogging.
Suggested Approach The freight ecosystem has to provide agility and sharper market insights to deliver right-first-time advice to its customers.
Alternate suppliers/vendors for procurement of critical goods Alternate trade routes Smarter, innovative insurance contracts
Trend 2: Advent of AI in freight and logistics AI's transformative impact on freight procurement cannot be overstated. Modular AI systems, capable of dynamic pricing and integrating legacy datasets, will empower freight forwarders to navigate complex market demands effectively.
The GenAI boom has moved past the trial stage and is finding actual applications across industries. Freight Management and logistics must find their place in the AI gold rush. Applications include route and freight optimization, intelligent warehouse, inventory and fleet management and sharper financial acumen through data processing. AI is here to stay, and the sooner freight forwarders understand and implement its potential, the better for the entire industry.
Suggested Approach: Here are some methods for CTOs to navigate the challenges of AI adoption:
Carefully evaluate the pros and cons of the 'build versus buy' approach. Build modular systems that integrate with legacy data Involve both business and technology leaders in critical decision-making. Prioritize features like RFP responses, dynamic pricing, and AI-powered customer support.
Trend 3: End-to-End Supply Chain Visibility While not exactly a new development, a recent GEODIS survey of global Supply Chain Managers indicated that only 6% had achieved end-to-end visibility for their supply chain. As technology (and AI) continue to find greater acceptance and budgets, companies will do well to digitize their logistics and freight operations for better real-time decision-making. The influx of technology raises a critical requirement for freight forwarders - future talent.
Suggested Approach: The freight industry must redefine people practices to attract the best technology and data analytics talent. GenZ talent needs compelling reasons to consider the freight industry - from growth prospects, to progressive culture, and autonomy.
Trend 4: ESG and Compliance Push The Corporate Sustainability Reporting Directive (CSRD) legislation took effect in January 2023, affecting 50k businesses in the EU. As reporting frameworks become non-negotiable, business leaders will see an impact on US businesses (as subsidiaries of EU businesses first), and we expect 2025 to be a big year of sustainability reporting changes.
Suggested Approach: As critical cogs in the ecosystem, freight companies, producers and logistics providers will have to integrate and comply with stringent reporting norms on sustainability. Steps to consider:
Automating reporting platforms and methods Build knowledge of compliance norms through subject matter experts conduct capacity and capability for Impact, Risk and Opportunity assessments to identify potential gaps.
Trend 5: Business Model Agility – Dynamic Procurement Rates Freight forwarders must prioritize using scalable Freight Rate Management Systems (FRMS) that integrate seamlessly with Transport Management Systems (TMS). The ability to customize these systems for enterprise-level needs and provide top-notch customer service will be critical. Turbulent times call for resilience in pricing, margins and smart scheduling to benefit all stakeholders. More on this here .
Making 2025 a Thriving Year for Procurement In a year with slow growth forecasts, freight forwarders must devise and implement more agile business models to capitalize on opportunities. This includes flexibility in pricing, new rules for underwriting insurance and credit terms and rewarding trusted vendors and partners with better deals. Shedding the old business practices is a top-down exercise and needs internal transformation to turn the corner. Freight forwarders must embrace innovative technologies, strategic procurement, and sustainable practices to thrive in 2025.
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