Forwarder profitability faces pressure despite US-Iran peace deal

Freight forwarders are expected to see profitability remain under pressure despite a peace deal being reached by the US and Iran. The founder and chief executive of forwarder profitability platform OntegosCloud Oliver Gritz said that the forwarding market will be hoping the peace deal will lead to a period of reduced supply chain disruption and a more stable operating environment. However, he added that many challenges actually emerge during recovery periods. "There's a common assumption that when disruption declines, profitability improves," said Gritz. "In reality, some of the greatest pressure on margins can emerge during the transition from volatility to stability. "For example, a customer may expect freight costs to fall as soon as geopolitical tensions ease and insurance markets begin to stabilise. "However, the forwarder may still be operating with elevated insurance premiums, higher fuel prices, disruption-related contingencies, repositioning costs and contractual commitments negotiated during a more volatile period. "When customer expectations adjust faster than operating costs, the result is often margin compression rather than margin recovery." He added that procurement teams are likely to seek lower transportation costs, while temporary surcharges come under greater scrutiny and competitive pricing pressure intensifies. "The first thing that recovers is customer confidence," said Gritz. "The last thing that recovers is often profitability. That's where margin pressure emerges." Gritz added that maintaining commercial discipline, protecting margins, recovering revenue consistently and converting operational recovery into financial performance may become a much more important differentiator than many expect. "The freight industry has become highly effective at navigating disruption," said Gritz. "The challenge facing forwarders now is different. Stability is expected to return, but profitability does not automatically follow. "The companies that recognise that early will be in the strongest position as the market moves through the second half of the year." "Stability may return in weeks but profitability and specifically cost conversion may take quarters." This week, US president Donald Trump signed a 14-point agreement with Iran that will result in the opening of the Strait of Hormuz, an essential artery for the transport of oil that has been closed since the start of fighting in February. The closure has massively pushed up jet fuel prices while the fighting itself has resulted in supply chains shifting away from the Middle East, although operations have been returning since airspace reopened. The higher cost of fuel also put consumer spending under pressure. Responding to the news that a deal was likely to be signed, the US Airforwarders Association (AfA) earlier this week cautiously welcomed the agreement, which it said could help ease pressure on consumers and businesses in the US, and the wider global economy. "The airfreight industry now needs clarity on how the Strait of Hormuz will reopen and free passage will be enforced," the AfA said. The news was also welcomed by Logistics UK, although the organisation warned that a return to pre-conflict operations could take time. "Reports that the conflict could soon be over will be welcomed across the globe, but it will be months before supply chains are operating as they were pre-conflict," said Logistics UK chief executive Ben Fletcher.

WFS awarded five-year handling contract by Geodis in Brussels

Geodis has signed a five-year contract for Worldwide Flight Services' (WFS) E-commerce & Freight Forwarder Handling (EFFH) services at Brussels Airport. SATS-owned WFS now offers its EFFH solutions at Amsterdam, Brussels, Dublin, Frankfurt, Liege, Madrid, and Stockholm airports, as well as at 12 airports across France, including Paris CDG. These solutions include making freight ready-for-carriage, capturing weight and cargo measurements, and providing crating, repacking, security screening, consolidation, shipment labelling and transportation between forwarders and handling agents. Import deconsolidation, sorting, preparing shipments for customs clearance, and onward transportation by road is also covered. This latest contract extends WFS' working partnership with Geodis, which has been a customer of WFS for import and export cargo handling services at Paris CDG since 2021. Geodis has transferred all its freight consolidation and deconsolidation requirements to WFS at Brussels Airport, benefiting from a 24/7 operation for its customers, and greater flexibility in its cost and labour force structure, said WFS. The ground handler's GDP (Good Distribution Practice) certified facility for pharmaceutical shipments, offering two cool rooms with 300m² of dedicated temperature-controlled handling capabilities, is another key reason for partnering with WFS in Brussels, supporting Geodis' own strong position in the Belgian pharma logistics market. "We welcome this opportunity to extend our partnership with GEODIS to another major European cargo airport in the WFS network," said Philippe Torry, managing director Belgium at WFS. "As well as our proven handling expertise, modern facilities, and ability to support specialised products, WFS will provide GEODIS with real-time visibility and information exchange, including all operational documentation, timestamps, and images to demonstrate its high service standards are being consistently delivered, and to provide further growth opportunities with existing and new customers." Jean-Baptiste Elslander, deputy managing director at Geodis in Belgium, added: "Both teams took a hands-on approach during the implementation phase, driving a seamless and efficient transition. "WFS is offering flexible solutions and outstanding quality that meet the demands of a highly volatile and competitive market. We look forward to strengthening this partnership and achieving continued success together." In April, Kuehne+Nagel selected WFS to provide EFFH services at Frankfurt Airport.

AI adoption in supply chains hampered by change management, not technology

A growing gap between executive enthusiasm and frontline confidence is emerging as one of the biggest obstacles to AI adoption across the supply chain industry, according to a new survey from The Loadstar and Raft. The State of AI in Supply Chain report, based on responses from more than 200 supply chain executives and practitioners worldwide, found that while AI is delivering measurable gains in areas such as document processing and productivity, most organisations remain far from achieving large-scale deployment. Only 22.2% of respondents said AI had been deployed at scale across multiple teams or had become core to operations, while 43.2% remained in experimentation phases or had not yet started adoption. The research suggests the biggest barriers are organisational rather than technical. More than half of respondents (53.8%) cited a lack of in-house AI expertise and change-management capability as the main obstacle to scaling deployments, while 48.7% pointed to difficulties integrating AI with existing systems. Perhaps the most striking finding was the divide between senior leadership and frontline employees. Among vice presidents and executives, 77.5% described themselves as optimistic or enthusiastic about AI's impact on their careers. That figure dropped to just 37.5% among analysts, specialists and other individual contributors. James Coombes, chief executive of logistics AI provider Raft, said the findings highlighted a confidence gap rather than widespread fear of automation. "The biggest eye-opener for me was the massive sentiment gap between the boardroom and the front lines," he said. "While 77.5% of VPs are highly optimistic about AI, that enthusiasm plummets to just 37.5% among the individual contributors actually doing the work - yet, fascinatingly, only 9% of those frontline workers feel threatened by it. "This tells us the issue isn't frontline fear, but rather leadership selling a grand vision that their execution teams simply haven't seen delivered in reality yet." According to the report, document extraction and processing remains AI's clearest success story, with 79.7% of respondents identifying it as the area where the technology had generated the most tangible operational impact. Speed and productivity gains were cited by 89.5% of organisations already seeing measurable value. However, measuring that value remains a challenge. Nearly two-thirds (62.8%) of respondents said they had either not measured the return on investment from AI initiatives or were unsure how to do so. Mr Coombes argued that the industry was experiencing an execution gap rather than an AI hype cycle. "I'd push back on the word 'hype'. Hype implies the value isn't real, and across more than 100 deployments with Raft the value is undeniable," he said. "The people actually using AI are getting genuinely faster output. What the survey exposes is something more interesting: a measurement and execution gap. Most firms still can't put a number on what AI is doing for them, and far fewer have deployed at scale than are talking about it." The survey also revealed significant regional differences. North America recorded the highest proportion of companies yet to begin AI adoption, with 25.6% reporting no meaningful implementation efforts. Mr Coombes suggested the region's lag reflected operational complexity rather than a lack of ambition. "North America doesn't have an ambition problem. The leaders I speak with are some of the most bullish in the world. It does, however, have a complexity problem," he said. He pointed to the breadth of services managed by many US-based logistics providers, the legacy of extensive offshoring, and deeply embedded operating processes as factors making change more difficult than in other markets. Looking ahead, the report argues that competitive advantage will depend less on access to AI technology and more on organisational readiness, including data quality, integration and change management. Some 65.8% of respondents said data quality and integration would be the key differentiator between AI leaders and laggards over the next two to three years. Mr Coombes believes the next major shift will come in back-office operations. "Within three years, the high-volume document triage and actioning that has bottlenecked the logistics back office for decades will be gone," he said. "Reconciling an invoice against an accrual, making a customer booking, chasing a missing field - all of it automated by default, handled before a human ever sees it. "What will be left will be high-stakes data that needs human review, mission-critical exception management, and relationship management with both customers and service providers," he said.