Margin in transport, why 5% is not success
The freight industry has long accepted 5% margin as good enough. Here is why that logic destroys companies, and what to do instead.
The logistics industry has long operated on the belief that a 5% margin is acceptable. Take a simple example: freight worth 1,000 euros, 5% margin, fifty euros remain. But from those fifty euros you must cover operational costs, TMS systems, accounting, customer service, taxes, debt collection, and claims risk. Low-margin contracts are usually the most demanding ones.
Rising costs, shrinking room
Logistics costs are rising: minimum wage, carrier liability insurance (up 20%), compliance, ESG audits. Corporate clients expect automation and rapid response. None of this fits inside a 5% margin.
A client who leaves no margin is not a partner, they are a cost. It is better not to have them than to work at a loss while believing that at least something is happening.
Survival is not a strategy
Without margin you become a hostage, to a client who knows you will do anything, to a market that accelerates faster than you can adapt. One claim, one addressing error, one missing document, and a month's profit is gone.
Strong forwarding companies do not compete on price. They compete on predictability, punctuality, and error-free service. That value is visible to clients, but only when you can calculate, communicate, and price it. And that requires margin.