Expanding FMCG sector, retail sector, food and E-commerce industry in the country has attributed to the growth of the freight forwarding industry in the Kuwait, a report said.
The growth of freight forwarding in Kuwait was supported by development in major industries such as oil and gas, manufacturing, retail, wholesale, construction, agriculture and mining, added the report titled “Kuwait Freight Forwarding Market Outlook to 2022 – By Sea, Air and Road Freight Movement; By International and Domestic Freight; By Express and Normal Delivery; By Flow Corridors and By End Users (Oil and Gas, FMCG, Construction and Others)” by Ken Research.
The Kuwait market witnessed the entry of many foreign players as flexible policies were introduced by the government to boost the economic growth of the country. Entry of new players has further aided the demand in the freight forwarding market.
Kuwait freight forwarding market segmentation
By freight movement
Sea (Inland Waterway and maritime) dominated in freight movement in freight forwarding market in 2017 due to major cargo transportation taking place through ocean such as oil and gas. The port of Shuwaikh is the major port used for sea freight and generates highest cargo volume.
Sea is favourable for shipments which have heavy items involving a longer transit time and is a safe means of transporting goods at a reasonable cost. The majority of the industries have been majorly operating near to Shuwaikh port which further drives the demand for industrial freight cargo in the country.
Air contributed second highest revenue share to the freight forwarding market majorly driven by the express shipments in the country. The international shipments also attributed to the freight movement through air. E-commerce market has driven the air freight market in the country. On the other hand, road contributed the least share and is generally used for the domestic shipments.
By mode of freight
International freight forwarding dominated the freight forwarding industry in Kuwait owing to the free trade agreements of GCC with European Free Trade Association and Trade and Agreement Framework Agreement with the US. Moreover, Kuwait has signed bilateral investment agreements with nations including Austria, Belarus, China, Croatia, Belgium, Bosnia, Bulgaria, the Czech Republic, Denmark, France, Germany, Hungary, India and others which further boosted international freight forwarding sector. The freight movements prevalent in the international freight forwarding include air and sea for the products and services to be transferred internationally.
By type of delivery
Express delivery shipments are time sensitive and the cost is generally higher than the normal delivery. Commercial documents, transport documents, financial documents and government documents involved in international trade such as quotations, sales contract, shipping order, doc receipt and other bills of exchange were observed to be generally traded through express delivery shipment in Kuwait.
By flow corridors
Asia flow corridor is the largest contributor in terms of revenue in the freight forwarding market. This growth has been attributed on the account of strategic location and trade strategy of various companies trying to expand their operations in other Asia Pacific countries. It was followed by Europe, North America, GCC and other flow corridors.
Oil and Gas industry dominated the end user segment in Kuwait freight forwarding market. Kuwait has been a major supplier and member in the OPEC group. Oil comprises approximately half of Kuwait’s GDP. This positively increases the revenue contribution of oil and gas industry in Kuwait freight forwarding market, due to rise in export of crude oil has significantly drive the demand for sea freight and domestic freight in Kuwait. On the other hand, FMCG sector is the second largest end user segment in Kuwait freight forwarding market as Kuwait largely relies on importing goods from other countries rather than manufacturing which automatically increases the use of air and sea freight to import majority of the products from other countries.
The freight forwarding industry in the country is moderately fragmented with the presence of both domestic and international players in the industry. Companies in the Kuwait have been focusing towards providing data oriented solutions and other services for operational excellence, timely customer support and the effective adherence of the consumers’ expectations, thus providing customer satisfaction and retain customers.
Kuwait will witness construction of many new roads and bridges which will aid against the traffic congestion problem in the country and positively affect the trucking industry, hence aiding the domestic logistics. The freight forwarding industry in the Kuwait will continue to dominate the overall logistics market in the coming years. The government of Kuwait has allocated USD 80 billion budget in the year 2015 for construction and transportation project in the country which will in future aid the cargo transportation industry. – TradeArabia News Service
Kuwait, Freight, Ken