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Forwarders that embrace agility, specialise in specific verticals, and offer value-added services proved a winning combination during the first half of 2025 in response to a volatile global market.
This combination of agility and vertical focus will likely benefit forwarders for the rest of the year as global markets shift in response to US tariffs.
But after shippers pulled freight forward during the first and second quarters ahead of tariff implementations, how much demand for freight forwarding services will there be during the second half of the year?
“Looking ahead, we expect this volatility to continue, and we also expect a usual seasonal uplift for the peak season,” DHL Group’s chief financial officer Melanie Kreis told analysts on 5 August.
Expeditors International of Washington president and chief executive Daniel Wall expressed a similar sentiment as DHL Group’s Kreis in its second quarter financial statement: “Looking ahead, we continue to expect the freight environment to remain unpredictable… Our customers have become accustomed to this unsettled environment and have come to trust that we can help them navigate uncertainty.”
Indeed, trust is a big factor when using freight forwarders, particularly in such a volatile market. But forwarders will be mindful of their revenue and profit gains.
Instead of chasing volumes for volume’s sake, they will instead be selective, focusing on their margins while providing trusted guidance to existing customers.
Vertical-focused
Kuehne + Nagel was successful during the second quarter by focusing on what it described as ‘high-growth industries’ such as semiconductors and cloud infrastructure.
It also continues to benefit from its perishables offering as it expands infrastructure to support this vertical.
For example, in July, Kuehne + Nagel opened a new logistics centre near Quito in Ecuador. The facility includes 2,280 sq m of refrigerated warehouses.
Meanwhile, DSV highlighted success in the retail and tech verticals despite lower retail volumes in the second quarter.
Perishables proved problematic during the quarter for DSV, although this vertical has never been a focal point for the forwarder.
“It doesn’t produce a lot of income, and it doesn’t really mix with our network business either,” DSV chief executive Jens Lund told analysts.
Interest in the healthcare vertical is also picking up with integrators DHL, FedEx, and UPS, and forwarders such as Kuehne + Nagel, Hellmann, and Yusen Logistics, noting special services and growth within this vertical.
Customs services
It’s no surprise that the most in-demand value-added service has been custom services. These services will continue to be demanded by shippers as additions and changes to US tariffs, sometimes with little notice or guidance, will probably continue through the end of 2025.
CH Robinson and Expeditors International of Washington highlighted their customs services in their second-quarter earnings.
CH Robinson reported its customs-adjusted gross profits increased 31.7%, driven by a 31.0% increase in adjusted gross profit per transaction and a 0.5% increase in transaction volume.
Meanwhile, Expeditors’ Wall said in the company’s second-quarter earnings announcement: “We once again processed a substantial increase in customs clearances requiring greater skill as they have become more complex.”
Trade lane shifts
According to consulting firm McKinsey, trade patterns generally evolve slowly. Some signs of such an evolution have been evident since 2017, as big trading economies have adapted to shifts in geopolitics.
However, the current volatility from the U.S. tariffs may hasten trade lane shifts as freight forwarders look to other trade lanes for growth.
DHL Group’s Kreis noted that there are “growth opportunities and growing lanes in the current environment,” citing positive year-over-year developments in APAC, the Middle East, and Africa.
UPS, meanwhile, reported a 34.8% decline in its China-to-US lane, its most profitable trade lane, in May and June.
Partially offsetting this decline in the second quarter, UPS chief financial officer Brian Dykes told analysts in July, “We saw growth of over 20% out of China to the rest of the world.”
In terms of the biggest revenue gains by region, Expeditors International of Washington reported its Latam region recorded the biggest percentage increase, up 47.6% compared to the second quarter of 2024, followed by South Asia, up 25%.
M&A
As freight forwarders expand their trade lane capabilities and other expertise, acquisitions of smaller forwarders are likely to be made to fill the void quickly.
For example, JAS recently acquired Pentagon Freight Services, a specialised integrated freight forwarding, project logistics, and ships agency provider headquartered in the UK.
“The Pentagon acquisition perfectly complements JAS’s strategic goals, significantly increasing our ability to offer highly specialised logistics solutions for the oil and gas, marine, construction, and energy industries.”
“The Pentagon acquisition perfectly complements JAS’s strategic goals, significantly increasing our ability to offer highly specialised logistics solutions for the oil and gas, marine, construction, and energy industries.
”We are looking forward to finalising this acquisition to welcome Pentagon team members into the JAS family,” Marco Rebuffi, chief executive and president of JAS, said in a statement.
Another example is US-based forwarder, Scarbrough Global, which completed its acquisition of the Netherlands-based FlowFreight B.V. in June and helped to establish Scarbrough’s first European office.
