Established in 1950, FIDI Global Alliance is the largest global association of quality independent international removal companies.
Their annual state of the industry report is essential reading for those in the relocation industry, so with their 2024 report just in, we decided to look at what’s inside.
'“The challenges faced by the international moving sector mirror those of the broader relocation industry: volatile markets, disruption of the RMC model, and an increase in lump sum assignments. In this landscape, it’s essential for companies to think creatively and seize new opportunities. Enhanced cross-sector collaboration is more vital than ever, highlighting the significant role of industry associations like FIDI globally and ABRA locally.”'
2023 was tough
It won’t be news to anyone, but 2023 was a tough year. Whilst 2022 saw a bounce back in the post-COVID world, last year saw soaring energy costs, global political instability and continued high costs impact global mobility.
Disappointingly, the removal industry is seeing some customers impose extended payment terms on their payment. 60- and 90-day payments are becoming more common, with some customers even taking longer. When margins are being squeezed (only 20% of companies achieve 10% margin on sales), this restriction of cashflow makes things even worse.
All of these elements have led to consolidation in the industry, with many mergers and acquisitions taking place around the world. This type of rationalisation is good for the companies thanks to reduced overhead and competition but does lead to redundancies within businesses.
Customers are also choosing to move less volume when they relocate. Instead of moving the whole household, they are moving only their essentials. This greatly reduces the volumes which need to be moved and degrades profitability in the process.
So, what can be done?
Shift focus
With many removal businesses focusing on the business-to-business (b2b) market, it might be time to look beyond the traditional routes to market.
The shift to business-to-consumer (b2c) has already begun for many, but the expectation is that this move will continue to grow and accelerate. Whilst a b2c project may be smaller than a b2b one, there are some distinct advantages. First and foremost, the improvement to cashflow. Consumers expect to pay upfront, no need to offer extended credit terms.
The profile of the general consumer is somewhat different to the expats the industry is familiar with, with digital nomads and commuters making up a large percentage of this b2c market. This brings a different set of needs and expectations, which will result in the removal business needing less office staff to manage these customers.
FIDI are also seeing removal companies diversify into records management, storage, logistics, fine art removals or luxury goods handling.
The future belongs to the business which is prepared to change approach as the marketplace evolves.
Sustainability becomes more pressing
2024 is the year when the European Union’s Corporate Sustainability Reporting Directive (CSRD), comes into force. Impacting some 50,000 of the largest businesses, this legislation requires these businesses to create an annual report where they detail what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on people and the environment.
These reports may then be used by investors, civil society organisations, consumers and stakeholders to have unprecedented understanding of the impact of a business. This has clear implications for investment and sales prospects for the businesses involved.
Crucially, the CSRD is expected to be expanded to encompass more businesses over the next few years. This makes it more important than ever that businesses undertake a detailed review of their environmental, social and governance (ESG) policies and performance. Undertaking these reviews and implementing meaningful change has never been more time critical.
When an ESG framework has been established, it must then be communicated both internally and to customers. Achieving understanding and compliance is central to the success of this type of initiative. So, getting a buy in from all stakeholders must be a priority from the very start.
Though it is worth noting that the removal industry is actually quite advanced in sustainability best practices and performances by comparison to many others.
Digital solutions ahead?
Whilst it’s good news on the sustainability front, an area where removals don’t fare so well is in digitisation. Even though a plethora of tools and services exist which could greatly improve the efficiency of the industry, uptake has been relatively slow.
Adopting new technology not only lets a business do more with less, but it also impacts sustainability and profitability. For example, tools which optimise the use of resources, such as trucks or containers; monitoring traffic patterns, cutting wastage and empty miles.
This also ties in with the expectations of the consumer market, with many expecting to be able to get a price, place an order and book a service directly online. Removal businesses need to ensure that they have the digital backbone to facilitate this type of service to make the most of the opportunities that sector offers.
It is also this digitisation which will allow businesses to take on smaller, individual consignments and remain profitable. Handing off these smaller ticket sales to a set of digital tools will retain service levels without compromising profitability.
The road ahead is uncertain
What does all this add up to? An industry in flux. Business models change, legislation develops, and technology grows against a backdrop of global instability and uncertainty. Expectations are that this fast moving, impactful change will continue and grow in the years to come.
So, what can removal businesses do?
According to FIDI, the answer is to evolve and become stronger. To utilise new technology, find novel approaches and to grow with the changes. As ever, it is the focussed, hard-working businesses which will survive.
Jesse van Sas, FIDI’s Secretary General, noted, “The challenges faced by the international moving sector mirror those of the broader relocation industry: volatile markets, disruption of the RMC model, and an increase in lump sum assignments. In this landscape, it’s essential for companies to think creatively and seize new opportunities. Enhanced cross-sector collaboration is more vital than ever, highlighting the significant role of industry associations like FIDI globally and ABRA locally.”
The FIDI State of the Industry Report 2024 is certainly sobering reading. But it’s important that we have these honest conversations and look at how, as an industry, we address the issues that they raise.
If you’d like to read the details of the FIDI report (this is just a summary), then you can download your own copy here.
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