Congestion Fees

Congestion charges are imposed by carriers for additional costs they incur due to external factors such as high traffic volumes, infrastructure limitations, and regulatory procedures. These charges generally compensate for the extended use of equipment, additional labor hours, and prolonged occupancy of storage and handling facilities. Freight forwarders encounter such charges most frequently in major seaports where ships remain anchored for extended periods before unloading. Busy European ports experiencing vessel bunching such as Rotterdam, Hamburg, and Antwerp often impose congestion fees to cover added expenses associated with the use of additional equipment, extra labor shifts, and extended gate hours.

Seasonal Charges

Carriers and terminal operators impose seasonal charges in periods of high shipping volumes such as the pre-holiday season in late autumn and early winter when both e-commerce and retail experience spikes in consumer purchasing. Similarly, seasonal charges can be observed during agricultural peak seasons such as the wine harvests in regions like Bordeaux and Tuscany where there is a need to transport high volumes of sensitive cargo.

Ports, container terminals, airports, and rail operators frequently impose seasonal charges during peak periods. Airports, for example, implement these fees to cover additional labor, extra equipment, and temporary structure enhancements. Extra labor often includes ground handling staff, ramp agents, cargo supervisors, and load planners. Furthermore, airports may use additional equipment for which seasonal charges can be imposed, including pallet jacks, straddle carriers, reach stackers, and aircraft pushback tractors. A variety of structural enhancements are also used by airports during peak seasons. These can include temporary customs inspection stations, mobile security booths and trailers, and pop-up offices to handle the surge in documentation.

Security Charges

Security surcharges are implemented by carriers and operators to address the costs associated with enhancing security measures during periods of increased threat or heightened risk. In Europe, where cargo traffic is dense and the threat of theft and terrorism is a constant concern, these surcharges help maintain stringent security standards.

Such security surcharges may be imposed by seaports, airports, rail operators, trucking companies, and intermodal terminals to protect cargo and comply with regulatory requirements. Rail operators, for instance, may impose security charges on routes that transport high value or hazardous goods, those that pass through border areas, and routes connecting to rail interchange points.

Along these routes, they may invest in secure fencing and controlled access points to prevent unauthorized access. Furthermore, they may deploy extra security personnel such as K9 units, bridge and tunnel inspection patrols, trackside surveillance teams, and perimeter fence monitors.

Further measures to secure cargo in transit for which surcharges may apply include under-carriage scanning systems at key checkpoints to detect hidden threats or tampering attempts. Additionally, high-risk routes may be equipped with electromagnetic cargo scanning portals which verify container integrity by detecting unauthorized openings or structural modifications while the train is in motion.

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Consumer Demand in Emerging Markets

In Asia, the middle-class demographic is expanding rapidly and is expected to account for 66% of the global total by 2030. This growth is driving a significant rise in consumer spending across the region. This, in turn, is prompting European freight forwarders to extend their services to these emerging markets. For instance, some providers are already expanding their offerings to include not only transportation but also warehousing and distribution in key Asian markets such as China, India, and Southeast Asia.

Growth of E-Commerce

The e-commerce sector is expected to exceed 6.4 trillion by 2026, fueled by higher Internet penetration rates, increasing worldwide spending per person, and rising disposable income. This exponential growth in e-commerce presents opportunities for European forwarders, with many already leveraging these changes. For example, providers are increasingly investing in automated sorting centers located in major European cities like Paris, Berlin, and Rome. These facilities are equipped with cutting-edge technologies such as robotics, AI-driven sorting algorithms, and advanced scanning systems to expedite the sorting and dispatching of small parcels.

Additionally, European forwarders are forming strategic partnerships with e-commerce platforms. These collaborations typically involve providers taking over key logistics functions, including inventory management, order processing, and return handling, which were traditionally handled by the retailers themselves.

When freight forwarders manage inventory, for example, they gain direct access to real-time sales and stock data. This information offers insights into customer purchasing patterns, demand changes, and product turnover rates. Order processing is also streamlined under these arrangements. When a customer places an order, the information is automatically transmitted from the e-commerce platform to the freight forwarder’s system. From there, the provider manages every subsequent step, including picking, packing, and shipping the order directly to the customer. Additionally, forwarders manage return operations which includes the collection, processing, and restocking of returned items.

Reduced Geopolitical Conflicts

In 2025, notable geopolitical developments have contributed to a more stable global trade environment. The ceasefire agreement between Israel and Hamas, established in January, has ended a 15-month conflict in Gaza. Additionally, the diplomatic engagement between China and India, marked by their first formal meeting in five years, has eased tensions along their disputed border.

For freight forwarders, a more stable geopolitical climate, with the prospect of long-term peace and economic stability, can justify the higher upfront costs of advanced technology investments. One example is the implementation of automated cross-border clearance platforms which streamline customs processes between nations with newly solidified trade agreements. Another example includes analytics tools that leverage economic and political data to assess the viability of entering markets in regions that have recently stabilized.

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Balancing Oversupply

The forwarding sector is navigating a challenging scenario, with capacity expanding and freight demand dropping. The size of the ocean fleet is projected to expand to unprecedented 2.7 million TEU, reflecting a 7.8% increase. In contrast, container volumes worldwide are expected to grow modestly by 3% to 4% this year.

With fewer goods requiring transportation and surplus capacity, maritime freight rates might drop and make ocean shipping more economically appealing. Ground freight forwarders, competing against these lower-cost options, might need to revise their pricing strategies or seek other ways to remain competitive. This could involve focusing on the logistics of goods that are challenging to transport by sea such as extremely time-sensitive pharmaceuticals, live animals that require frequent care, and proprietary designs that demand maximum security. Alternatively, forwarders might focus on serving regional markets with consistent demand where the logistics requirements are less suited to long ocean voyages.

Closing Digital Lags

In the European logistics industry, 69% of freight forwarders report having adopted digital innovations, including customs brokerage along with warehousing logistics and transport management solutions. However, many forwarders still lag in integrating automated invoicing, online quotation, and e-booking capabilities.

The absence of automated invoicing, in particular, increases the risk of discrepancies and delays in payments. Without online quotation capabilities, forwarders fail to provide instant pricing which can lead to a loss of customers to competitors who offer immediate, transparent rates. Lastly, the lack of e-booking capabilities limits the ability to handle high volumes of orders efficiently and impacts the forwarder’s responsiveness during peak demand periods.

To mitigate these issues, freight forwarders should prioritize the integration of digital tools that streamline operations from end to end. Additionally, investing in robust training programs for staff to effectively navigate specific software functionalities will facilitate smoother technology transitions and sustain operational efficiency. Moreover, forming strategic partnerships with tech companies could accelerate the adoption of advanced systems that streamline service delivery.

Navigating Driver Shortages

Forwarders are contending with a driver shortage largely because a large proportion of the workforce is aged 55 or older across various global regions. What is more, a recent report indicates that the percentage of drivers under 25 remains at 12% or less in Europe, Asia, and North and South America. As this younger cohort is insufficient to replace retiring drivers, the shortage is expected to worsen in the near future.

To address shortages, forwarders can adopt strategies such as offering sign-on bonuses to attract new drivers and introducing retention rewards to encourage long-term commitment. Additionally, instead of relying solely on fixed hourly pay, forwarders can align compensation with actual output. Metrics such as fuel efficiency, on-time pickup rates, cargo damage incidents, and vehicle maintenance compliance can be used to reward drivers.

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Limited Technological Infrastructure: Problem and Potential

In a world where immediacy is the norm, advanced technological tools such as real-time tracking and automated booking systems have emerged as essential assets. Yet, due to financial constraints, small and medium-sized forwarders might still hinge on conventional methods, which places them at a disadvantage. For instance, while a larger entity can offer instantaneous cargo tracking from Lyon to Copenhagen, a smaller outfit in Madrid might struggle to provide the same seamless experience.

However, there is a silver lining. By partnering with tech start-ups or investing in modular software, these companies can gradually level the playing field. Integrating select digital tools such as cloud-based inventory management or AI-driven route optimization allows them to remain competitive without breaking the bank. Collaborative platforms also present an opportunity for these businesses to pool resources and share tech infrastructure.

Vulnerability to Market Fluctuations: A Delicate Balance

With typically tighter margins, smaller freight forwarders feel the pinch of market shifts more acutely. A sudden spike in fuel costs or a downturn in demand can disrupt their financial stability. This vulnerability was highlighted during the COVID-19 pandemic when disrupted shipping patterns placed significant economic strain on many mid-sized forwarders.

Yet, adversity often breeds innovation. Diversifying service offerings such as cross-docking services or consultancy on supply chain optimization can act as protective buffers against such market unpredictability. Establishing contingency plans and building stronger relationships with clients can offer a stable foundation during volatile times. Additionally, investing in risk management tools such as insurance coverage for specific market disruptions or hedging against fuel price spikes can provide a safeguard even amidst unfavorable global trends.

Limited Access to Global Networks: Beyond Borders

Having a robust global presence is invaluable in freight forwarding. While the industry’s giants boast expansive partners from Amsterdam to Zurich, smaller firms can encounter bottlenecks when venturing into unfamiliar territories. A client’s request to ship goods to a distant location like Belarus might become a logistical challenge for a forwarder primarily rooted in Western Europe.

However, limitations can be pathways to strategic alliances. Building bonds with other small and medium-sized forwarders can effectively amplify reach. Mutual collaborations allow firms to leverage each other’s strengths and networks. Additionally, active participation in international trade fairs and global freight forwarding associations can open doors and provide smaller entities with essential contacts and insights.

The journey of small and medium-sized freight forwarders in Europe, though strewn with challenges, holds promise. By adopting strategic measures, fostering collaborative ties, and embracing innovation, these firms can chart a course to success in the intricate European logistics landscape.

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The Surge in Ship Orders: A Response to Demand and Efficiency

The container shipping sector appears to be spearheading the transition to alternative fuels. Approximately 50% of the overall new ship orders are accounted for by vessels that are equipped for or prepared to accommodate dual-fuel functionality, notably methanol or LNG. Currently, LNG commands the lion’s share of orders for alternative vessel fuels, with methanol coming in second, and ammonia also in the running despite its hazardous properties.

Alternative Fuels and Challenges Ahead

Dual capacity introduces an element of adaptability but a potential storm is brewing. This is due to the considerable influx of new capacity meeting with decelerating trade growth. This situation could trigger a downward spiral in freight rates as the surplus capacity might not be matched by an uptick in demand. The focus now shifts to capacity management. Yet, the predicament lies in whether container liners, as key players in the freight forwarders network, will seek to capture more market share or choose an alternative route. Decreasing occupancy rates (reducing to 75% in Q1), coupled with precarious freight rates, might set the stage for intense price competition, given the robust financial standing of container liners.

Strategies to Overcome Capacity

Container liners have three tactics at their disposal to control overcapacity and curtail excess supply. The first is scrapping, which involves dismantling older ships on the verge of exhausting their useful life. While shipping lines might opt for this method to shrink capacity, they are equally inclined to sidestep potential capital losses.

The second approach involves slow steaming, a deliberate lowering of the ship’s speed to brace for the influx of new vessels. Indeed, there was a noticeable deceleration in average speed during the first quarter, marking a 4% slowdown compared to the same period last year. Although this method might offset approximately 5 – 7% of the surplus capacity, it won’t eliminate it entirely.

Lastly, carriers could cancel or blank sailings, a strategy learned during the pandemic to level the short-term supply-demand equilibrium. Despite the effectiveness of this strategy, it does compromise the reliability factor for clients. However, with about 65% of costs being mutable, it makes sense to cancel sailings, especially in light of dwindling occupation rates. The challenge lies in whether carriers will adhere to this plan amidst escalating competitive tension.

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Data-Driven Decision-Making

One effective approach to addressing traffic congestion is the implementation of data-driven decision-making. By harnessing the power of data analytics and predictive modelling, freight forwarders can discern traffic patterns and peak congestion hours and identify high-risk areas. These insights can help them optimize routes, tweak schedules, and make operational choices that lead to streamlined transportation and reduced traffic congestion.

Off-Peak Delivery

This is another potential venue that can help increase productivity for carriers. When the roads are quieter and less choked with traffic, such as during the early hours of the morning or late at night, it might be optimal to schedule deliveries.

One potential hurdle in implementing off-peak deliveries is the concern around noise pollution, often raised by residents in the vicinity. However, research conducted by scholars from the KTH Royal Institute of Technology in Stockholm provides a nuanced perspective. Their study, conducted in central Stockholm, found that the predominant cause of noise was not the operation of the vehicles, but rather the process of unloading the trucks. Furthermore, they discovered that noise complaints were typically limited to the more serene neighbourhoods, indicating that this issue is not universally problematic.

Dynamic Pricing and Incentives

Rewarding customers for choosing less congested delivery slots also has the potential to mitigate traffic congestion. This approach can take a number of forms, including discounted pricing, loyalty points, coupons or vouchers, and access to premium services like enhanced tracking options or priority booking during peak seasons. Implementing these techniques can balance delivery demand throughout the day and alleviate congestion during peak periods.

Urban Consolidation Centers

The establishment of freight consolidation centres could play a key role in mitigating traffic congestion. These centres serve as aggregation points where freight from multiple suppliers or carriers can be combined for distribution to various city destinations. This strategy reduces the number of vehicles on the road and curtails traffic congestion caused by multiple individual deliveries. By pooling resources in this way, freight forwarders can contribute to a more streamlined and efficient urban transport system.

Freight Demand Management

Freight demand management is also a promising strategy to alleviate congestion. By fostering collaboration with shippers, customers, and supply chain partners, freight forwarders can implement strategies such as optimizing order patterns, smoothing out peak demand periods, and improving coordination. These can help reduce freight volume during high-traffic times, resulting in a more efficient, congestion-resistant system.

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In 2022, the value of the digital freight forwarding sector was a smidgen below $7 billion, and it’s projected to almost triple by 2027. If the current momentum persists, these digitally-centric approaches could fundamentally alter the trajectory of the European logistics sector.

Let’s look at the most important benefits of Digital Freight Forwarding.

Transparency

Among the major benefits of digital-centric approaches is transparency. IoT tracking offers instant data on the whereabouts of shipments, and sometimes even on their condition. These prompt insights allow for enhanced planning and swift reaction to evolving circumstances so that forwarders avert extensive disruptions.

Likewise, the employment of cloud platforms by digital forwarders provides access to shipment details, including costs and carriers from almost any location. This information can also be exchanged with other parties, promoting more collaborative interactions across supply chains.

Fast Response Times

The use of digital solutions enables logistic companies to respond more rapidly. As these solutions amalgamate current data from shippers into one platform, creating and comparing quotes becomes almost immediate.

Second, by employing a unified cloud platform to oversee cargo, forwarders gain firsthand visibility into many details without needing to solicit information. They can leverage these online resources to access the same details an employee would typically need to gather and dispatch to them.

Cost-Efficiency

Digital freight forwarding also contributes to a reduction in operational expenditure. The capability to instantaneously compare quotes from multiple carriers aids in securing the best rates. Certain technologies employ machine learning for individual shipments. This knowledge guarantees that providers can identify the most financially viable solution for each task.

Similarly, the wide-ranging automation inherent in digital forwarding can contribute to the cost-effectiveness of transportation. Automated platforms save on labor costs and can execute recurrent, data-intensive tasks with greater efficiency than personnel. As a result, freight forwarders with a high degree of automation can offer services equivalent to those of conventional counterparts, yet with diminished operational expenditures and cost savings for the final consumer.

Improved Security

A major advantage of digital systems lies in their robust security, preservation of data integrity, and safeguards against fraud. Protection of freight transport information, recipient data, and transaction details is of utmost importance. The primary answer to system inefficiencies and security challenges is focusing on the power of cloud technology. Information is no longer housed locally but rather in a secure cloud, which helps thwart data interception and unsanctioned access. Enhanced safeguards for validating connections are also embedded, coupled with cryptographic processes. Additionally, developers employ supplementary tools for enhanced data security and resistance against phishing, like secure erasure, methods for data integrity verification, and more. These not only help improve security but data loads with increased speed and turns more reachable.

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Comprehensive Economic and Trade Agreement (CETA)

CETA is a landmark trade agreement between the European Union and Canada, which aims to strengthen economic ties and enhance trade relations. For European freight forwarders, CETA offers preferential access to the Canadian market by reducing tariffs on various goods, including automotive, industrial, and agricultural products. CETA also encompasses trade in services in sectors such as transportation, finance, telecommunication, and professional services.

What is more, the agreement streamlines customs procedures and promotes regulatory cooperation, benefiting freight forwarders through simplified processes and increased trade opportunities.

Transatlantic Trade and Investment Partnership (TTIP)

TTIP, currently under negotiation between the EU and the United States, seeks to establish a comprehensive trade agreement that covers a wide range of sectors. These include textiles, transportation, telecommunications, and finance, among others. If successfully implemented, TTIP could have significant implications for European freight forwarding, including reduced costs and increased market access. The partnership also aims to eliminate tariffs, reduce non-tariff barriers, and enhance regulatory coherence, all of which would facilitate smoother trade operations and promote transatlantic business growth.

European Free Trade Association (EFTA) Agreements

EFTA consists of four member states (Iceland, Liechtenstein, Norway, and Switzerland) and has established free trade agreements with numerous countries and regions around the world.

For European freight forwarders, these agreements provide preferential market access and tariff reductions, enabling them to leverage trade opportunities and expand their business networks. Notable EFTA agreements include those with Canada, Mexico, South Korea, and the European Economic Area (EEA) agreement.

European Union-Japan Economic Partnership Agreement (EU-Japan EPA)

The EU-Japan EPA is one of the world’s largest trade agreements, creating a comprehensive partnership between the EU and Japan. It eliminates tariffs on many products, including food and beverages and automotive and industrial products. This also applies to services such as storage and distribution, transport, financial, and environmental.

Furthermore, the EU-Japan EPA simplifies customs procedures and promotes regulatory cooperation. Among the many benefits for the EU, freight forwarders are also improved market access to Japan, enhanced logistics efficiency, and expanded trade volumes, contributing to increased business growth.

On a Closing Note

Navigating international trade agreements is crucial for European freight forwarders to thrive in an increasingly interconnected global trade environment. By understanding the implications of key agreements such as CETA, TTIP, EFTA, EU-Japan EPA, and the EAEU, freight forwarders can capitalize on trade benefits, optimize their operations, and expand their business networks. Additionally, freight forwarders benefit from more efficient supply chain management, market expansion, and competitive differentiation.

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Access to Local Expertise and Knowledge

A major benefit to working with a local provider is their knowledge of the regulatory environment and market. They are familiar with the intricacies of local compliance requirements, taxes, and customs regulations, which can be challenging and complex to navigate when shipping internationally. They can also offer insights into local language requirements, cultural norms, and business practices, facilitating the shipping process. For example, when working with IFA members based in France, businesses can benefit from their knowledge of business etiquette, including formality in communication and punctuality. This can help businesses navigate cultural nuances that can affect shipping, like communicating with customers and suppliers and negotiating deals.

Personalized Support and Services

Another advantage of working with a local provider is having access to personalized support and services. Local freight forwarders usually have more direct communication channels and smaller teams, making them more likely to provide personalized support.  Additionally, they can offer more tailored solutions to businesses, including modes of transportation, insurance coverage, and warehousing and distribution. This can also include services such as last-mile delivery, inventory management, and pick and pack. In addition, local suppliers can offer businesses more personalized solutions such as customized packaging, flexible scheduling, and tailored delivery solutions. In many cases, they are also willing to find creative solutions, adjust their schedules, and work outside of business hours to assist their customers.

Flexibility and Faster Response Times

A third advantage of using a local logistics provider is their greater flexibility, allowing them to adapt to and navigate unexpected shipping challenges. With local knowledge and expertise, they can provide customers with more flexible solutions. For example, let’s say a business based in Germany is shipping heavy-duty equipment to Finland but the shipment is delayed due to problems at their manufacturing facility. After contacting a local freight forwarder for assistance, their team identifies an alternative route to ship the equipment. Working closely with their network of suppliers and partners, they reroute the shipment and deliver it on time.

Lastly, local logistics providers are able to respond more quickly when unexpected changes or issues occur. This is due to factors such as proximity, local partners and contacts, and familiarity with the local logistics landscape, enabling them to mobilize resources more efficiently and quickly.

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Reasons for Damage

About 11 percent of containers get lost overboard, 14 percent of damages occur due to incorrect temperature, and 25 percent are physical. Also, 8 percent is a shortage and 9 percent is theft-related, respectively.

Common reasons for damage include a poor condition or wrong choice of container, inadequate carriage instructions and container interchange inspection, and bad sealing arrangements. Mixed, worn, and damaged equipment also puts cargo at risk of damage and so does overloading onboard. For temperature-sensitive cargo, claims are made for incorrect use of temperature controls, poor monitoring, and wrong settings. Other reasons include:

• Fragile cargo placed in high-motion areas
• Stack weights exceeded
• Heavier containers stowed on top of lighter ones
• Lack of reefer points
• Incorrect airflow settings
• Condensation and poor ventilation
• Use of inadequate retail packaging or lack of packaging
• Wrongly declared containers
• Unachievable or misleading B/L temperature notations
• Taint or contaminated floors
• Ineffective cleaning
• Infestation
• Organized crime

Rough seas and severe weather also cause cargo damage, as well as collisions, structural failures, and ship groundings. Natural catastrophes such as hurricanes, storm surges, and tsunamis contribute to cargo loss and damage.

Additionally, reports show that up to 70 percent of rail and road vehicles, swap bodies, and packed containers have shortcomings when it comes to securing and packing, which increases the risk of damage. Errors in execution and planning due to inadequate skills and knowledge result in losses when combining intermodal transportation services.

Types of Damages

The main types of claims cover loss, shortage, and visible and concealed damage. Loss is an obvious one, resulting in failed delivery while shortage means that a part of the cargo was not received. Visible damages are ones that are apparent while concealed claims refer to losses due to shifting or moving of cargo in packaging, temperature changes, etc.

Amount of Damages and Claims

In 2021, 6,300 vessels have been reported shipping cargo every day, with an annual volume of 241 million containers. Some 1,382 containers get lost on an annual basis accounting for 0.001 percent of all containers. While losses might seem insignificant at first, insurance claims are not just limited to cargo loss. They cover damages to cargo and containers onboard, recover costs for accidents that occur in environmentally sensitive areas, as well as diversions to unload damaged containers. Claims can also cover the costs incurred to minimize damages, including reconditioning, repair, and appraisal costs to restore value.

Country-specific, there can be certain exemptions from liability for cargo damage or loss. These can include defects in equipment not discoverable by due diligence, civil commotions and strikes, labour restraint, lockouts, strikes, and an act of war.

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