How 2012 shapes up for the forwarding business depends on the forwarder’s focus. If he is concentrating on imports from China, 2012 will be a nasty 12 months. While the 10-year U.S.-China trade honeymoon lasted, it was all wine and roses, but the marriage may be ending in divorce. Overcapcity in U.S.-China trade is endemic across the Pacific both in the air and on the ocean. During 2011, rates out of China began grinding down. The decline will continue this year as the factory to the world suffers from anemic growth, a real estate bubble and accelerated inflation.
The sun is shining, however, on those forwarders who have focused their businesses on U.S. exports. Despite the economic recession, many of these forwarders showed solid results last year and are expected to continue this growth into 2012. I believe a huge bonanza awaits those forwarders who can refocus their thinking to concentrate on U.S. exports. A subtle but growing trend is the coming home of U.S. manufacturing. This trend will accelerate in 2012 and the years ahead.
What about our partners, the air carriers and shipping lines? With the airlines, there will be further consolidation even among the strongest legacy carriers. The newer, ill-financed all-cargo airlines will join together out of desperation or disappear. The weakness in the European economy will lead to a number of consolidations there as governments refuse to bail out their national flag carriers. Recent mergers including British Airways-Iberia may turn out to be mega mergers to become British Airways-Iberia-Alitalia and Air France-KLM to Air France-KLM-Lufthansa.
Shipping lines are in worst shape. Just as rates are sinking to the bottom, huge new container ships are coming on-line to add enormous capacity.
One or two of the highly leveraged lines may be rescued with an acquisition by a stronger company, or vanish from the seas. Even the strongest lines may decide to merge rather than go it alone in the worst shipping environment since the Great Depression.