Over the last decade, the UK’s largest freight forwarders recorded a combined growth by sales of 67.5%, representing an average growth rate which is more than twenty times that of small forwarders. (Source: Plimsoll)

In the most recent year, sales among the UK’s small forwarders contracted by an average of 0.7% compared to large companies, who grew on average by 3.3%. But this disparity is even more apparent when restricted to the UK’s top 50 forwarders (by market share), who recorded an average growth rate that is still more than 12 times that of the small forwarder.

While the evidence does suggest that the gap has narrowed in recent years, it remains a constant market characteristic, without spikes, which suggests that the performance gap cannot be explained away by merger and acquisition. If the performance gap cannot be explained away by mergers and acquisition, why are smaller forwarders persistently so far behind their larger competitors, and can they do anything to close the gap?

An obvious advantage for bigger forwarders is access to greater resources, the ability to deploy large sales-forces, or run expensive advertising campaigns – advantages that the smaller forwarder can never match. In reality these capabilities are the preserve of only a handful in the market, with the majority deploying far more modest sales and marketing resources, so the gap must result from other factors.

Those factors, perhaps unsurprisingly, are what have historically ‘hamstrung’ the sector:

• The drive by customers to drive down cost
• Meeting customer demands in operating to tight deadlines

The resulting price differentiation – and time-starved bosses – creates a perfect storm of a siege mentality and a conviction that cost is the only issue that matters. Perpetuation of these beliefs has contributed to the rise of an industry that has low self-esteem and under-values its strengths.

These realities are perfectly illustrated by the lack of engagement with trade and professional bodies. Only twenty forwarding managing directors are members of the Chartered Institute of Logistics & Transport, and professional forums and interest groups are woefully represented, when compared to other sectors. The very institutions that could raise the profile of the sector and articulate the value it provides, and start to diminish differentiation by cost, are starved of the active participation and leadership of the people that would benefit most.

It is inconceivable that the majority of the market leaves the door open to the largest players to take the lion’s share of the market, but that is precisely what has happened in the forwarding sector. The inability of senior management to embrace basic sales and marketing planning has left them competing on price, while the largest players were free to accelerate growth of their market share by simple brand building and positioning strategies.

The performance gap will not close until owners and managing directors of SME forwarders realise that they have the power to transform the way they grow their business, by simply thinking and acting differently.