BROKER & FORWARDER

BENCHMARK SURVEY

THE FREIGHT PARTY IS OVER

About the Survey

Over the past eight years, Descartes has conducted an annual benchmark survey of customs brokers and freight forwarders to identify the strategies, tactics and technology thinking they are using to address challenges, stay competitive and succeed in today’s rapidly changing marketplace. Survey participants represented a wide range of industry leaders from across the globe including Descartes customers and followers, trade association members and industry publications readers to provide a balanced view of the forwarding and brokerage communities. Each year our benchmark survey:

• identifies key economic, regulatory and industry changes and trends driving the market
• examines the competitive landscape
• uncovers which capabilities, technologies, and competitive strategies/tactics are making the greatest impact
• provides the outlook for future IT investment

THE 2023 SURVEY: WHAT HAS CHANGED IN THE LAST YEAR?

Global logistics slowed considerably in the second half of 2022 and 2023 is shaping up to look more like 2019’s volumes. Forwarders and brokers are adjusting their strategies, tactics and technology decisions to address yet another “new normal” with lower shipment volume, higher costs and customers who are back in control of the market. We are proud to have conducted the benchmark for the 8th year to capture how forwarder and broker thinking has changed over time but will be using data from the past 5 years.

Who We Surveyed

This year’s 272 survey participants represent both domestic and international forwarders, along with customs brokers and NVOCCs. Here’s a quick snapshot of the participant demographics based on service categories, focal transportation modes and shipment size.

• Increase in international forwarding due to the greater global participation
  • International forwarding higher in 2023 than 2022 (72% versus 65%, respectively) because in a number of countries, brokerage operations are handled by shippers
  • Highest percentage of respondents offering customs brokerage services – 21% higher than 2022’s study
  • More focus on multimodal operations
  • More modal coverage by the participants – 82% offer 2 modes, 67% offer 3 modes

Performance Analysis

As in all previous surveys, we asked respondents to rank their company’s financial performance based on profits. Based on this information, respondents were consolidated into two performance groups for further analysis and comparison with results from earlier benchmark surveys.

2023 survey financial breakdown:

• Changes in financial performance metrics
  • Large volume forwarders and brokers (40%) are more likely to be Top Performers than Small ones (28%)
  • How well is your company doing today?

Key Trends & Practices: Changes Impacting the Future Market

We asked respondents several questions regarding how economic and regulatory changes will impact the industry in the future, as well as how ecommerce growth and the competitive landscape are influencing their business today.

Macroeconomic

• Global instability remained on top in 2022 (50%) and a new answer option, inflation, was second (36%)
• Global instability was even more important to Large respondents (62%) than Small ones (39%)
• COVID dropped from #2 (44%) in 2022 to #7 (12%), a 72% decrease
• Bottom Performers (45%) were most concerned about inflation

Key Trends & Practices: The Competitive Landscape

• Greatest advantage
  • High service (44%) was the overall choice followed by tailored services (37%) – a 5-year trend
  • Tailored services is more important to Top Performers (33%) than Bottom Performers (25%)
  • Tailored services is more important to Small volume respondents (32%) than Large volume respondents (22%)

Strategies & Tactics

Survey respondents were asked how they are strategically planning to address economic and industry change, as well as how they would fare against the challenges to profitably grow their business.

• Investing in technology (70%) has been the top and dominant overall strategy for all 8 years, but down 7% versus 2022
  • Top Performers (82%) and Large volume (83%) respondents are more focused on investing in technology than Bottom Performers (54%) and Small volume (58%) respondents
  • Bottom Performers are 2.2X and 2.6X more likely than Top Performers to stay the course and cut costs

Technology Implications

This year’s survey asked participants questions designed to learn how they view the importance of technology to future growth, as well as their plans and strategies for adopting, investing in and leveraging it to create value for their companies.

• The percentage of respondents choosing early adopter in 2023 (18%) was down slightly (3%) in 2023 versus last year’s all-time high
• Top Performers (24%) were almost 2.4X more likely to be an early adopter than Bottom Performers (10%)
• Fast follower was the top response for Large volume respondents (38%), while middle of the pack was the top response for Small volume respondents (39%)

Survey Takeaways

Forwarders and brokers are getting more conservative given lower freight volumes, higher costs and interest rates. Global instability and pricing pressure were top of mind for forwarders and brokers and especially larger ones. Investing in technology has been the top choice for the life of the study and the top way to address macroeconomic and industry challenges. Top Performers are still considerably more aggressive with the business and technology strategies and investment plans. Bottom Performers are much less interested in change and much more focused on cost reduction. Despite financial headwinds, the majority of respondents intend to increase IT investment.