Save articlePlease Sign in to your account to use this feature
Freight forwarders are preparing for the new year by expanding into new trade lanes, reducing costs, and investing further in technology
Belly cargo being loaded
Freight forwarders described the third quarter as one of overcapacity and softer demand, as the US de minimis ended and inventory front-loading eased.
The fourth quarter is expected to be a quiet one, with some forwarders not expecting a peak for airfreight while others expect only a small, shortened one, at best.
However, depending on how successful the fourth-quarter holiday season is for retailers and the potential need for seasonal inventory, inventory replenishment will likely be necessary towards the end of the fourth quarter and early 2026, which could boost freight forwarders’ revenue and perhaps profitability if there is a reduction in market capacity.
Demand from US manufacturers, however, will likely be muted through at least the first quarter of 2026. US manufacturing indices have remained below 50, meaning contraction, for most of 2025 due to the geopolitical environment.
In such an environment, forwarders such as Kuehne+Nagel and Expeditors International of Washington have found some success by focusing on specific verticals.
Kuehne+Nagel benefited from perishables and semiconductors, including hyperscalers, while Expeditors benefited from technology, pharmaceuticals, and aviation.
“We also continue to benefit from the significant investments being made by our technology customers in artificial intelligence infrastructure,” noted Expeditors’ executives in the company’s third-quarter earnings announcement.
Besides specialisation across various verticals, forwarders are also focusing on new trade lanes that exclude the US due to the tariff rollercoaster and struggles to keep up with customs changes as they relate to threats of and actual tariff changes.
DHL Group chief executive, Tobias Meyer, said during the company’s third-quarter earnings call in early November: “I think most notably that was visible in the September export figures of China, where trade to the US was down 27%, but you had double-digit growth in the trade with Southeast Asia, with the trade of Europe as well, and particularly the trade to the Middle East and Africa was growing a lot, Latin America as well.
“These being long-haul trades and that compensating for some of the decoupling that we see as it relates to the US, which clearly has a lower share of participation in global trade as is increasingly replaced by China as the most important trading partner for many countries in the world.”
Expeditors International is perhaps the exception. It historically has had a strong US customs brokerage offering.
During the third quarter, it benefited from this strength as noted by its recent earnings announcement: “All of our businesses within this category [customs brokerage] continued to generate strong growth.
“The products and services in this group tend to be more stable than those in our air and ocean businesses. Our customs brokerage business continues to deliver strong growth, given the high demand for our services due to the dynamic trade environment.”
As forwarders enter 2026, they are also focusing on cost control. For example, as it integrates with the former DB Schenker, DSV plans to continue to monitor activity levels across its organisation and will adjust capacity and its cost base as necessary.
Meanwhile, Kuehne+Nagel announced layoffs and “facilities-related costs and a basket of other variable expenses,” according to chief financial officer Markus Blanka-Graff.
In addition to cost reductions, Kuehne+Nagel is reviewing “large language models and digital agent capabilities” and “will further identify areas where we can leverage digital agents, which should help us to reduce our cost to serve”, chief executive Stefan Paul said during the company’s third-quarter earnings call.
Expect more forwarders to embrace ‘digital agents’ to reduce costs. CH Robinson, for example, highlighted its investments in artificial intelligence (AI) within its overall business by improving its productivity and operational performance by automating tasks that free up its employees to focus on more strategic, higher-value work, according to chief executive David Bozeman.
According to early 2026 outlooks, volatility will be the norm instead of the exception. While tariff tensions have temporarily eased, the path ahead remains unsettled, as higher borrowing costs, shifting fiscal policies, and elevated geopolitical risks weigh on growth prospects.
“We are focused on aligning our operating cost structure with a lower growth environment, while continuing to make strategic investments in high return areas to drive sustainable, profitable, and capital efficient growth,” according to Expeditors International chief financial officer David A. Hackett.
Indeed, most, if not all, the top global freight forwarders will follow Expeditors International’s lead as 2026 draws near.