This paper examines the diversification of services and activities by freight forwarders in the UK. Following similar studies conducted in the USA, the paper analyses the trends towards service and revenue diversification that has been observed in this sector.
The study is based on a survey of 100 UK‐based freight forwarders‐based and empirically tests the firms' respective revenue generation structures, as well as the range of services offered. The survey is complemented by semi‐structured interviews at a further four companies in order to provide additional contextual explanations of the empirical findings.
The results show that diversification appears to be closely related to both company size and a diversified asset base. The motivation for diversification stems mainly from a perceived erosion of the traditional freight forwarding revenue streams, as companies are seeking higher profit margins outside their traditional core business, while addressing the increasingly comprehensive needs of their customers at the same time. The findings show that, although diversification is much less prominently seen in their revenue structures, companies are quite diverse in terms of the services offered. Service diversification was found to be a strategy predominantly followed by the larger companies with wider asset bases.
The freight forwarding industry is experiencing significant volatility as a result of technological advances, regulatory changes, customer pressures and increased competition. This study provides the empirical clarification needed for freight forwarding companies to derive a business strategy appropriate to their respective settings.
Previous studies have largely reported findings from research conducted in North America, which features a structurally very different population of freight forwarders and logistics operators. This study presents the status quo and trends of diversification in the UK, which features a population of considerably smaller firms and thus requires a different decision framework towards adopting a diversification strategy.
Markides, V. and Holweg, M. (2006), "On the diversification of international freight forwarders", International Journal of Physical Distribution & Logistics Management, Vol. 36 No. 5, pp. 336-359. https://doi.org/10.1108/09600030610676231Download as .RIS
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