Freight forwarders brace for margin pressure despite US-Iran deal
Dhaka: Freight forwarders are expected to face continued profitability pressure even after the United States and Iran reached a peace agreement, according to Oliver Gritz, Founder and Chief Executive of forwarder profitability platform OntegosCloud.
Gritz said the forwarding market hopes the deal will reduce supply chain disruption and bring a more stable operating environment. However, some of the toughest margin pressure tends to surface during the shift from volatility back to stability, not during the disruption itself.
He explained that customers often expect freight costs to drop quickly once geopolitical tensions ease, but forwarders may still carry elevated insurance premiums, higher fuel costs, and contractual commitments made during the volatile period.
When customer expectations shift faster than actual operating costs, the result tends to be margin compression rather than the margin recovery many anticipate, he added.
Gritz said procurement teams are likely to push for lower transportation rates, while temporary surcharges face closer scrutiny and competitive pricing pressure grows.
He described customer confidence as typically the first thing to recover, with profitability lagging well behind, which is where the real margin pressure builds.
According to Gritz, commercial discipline, margin protection, consistent revenue recovery, and converting operational stability into financial performance could prove to be bigger differentiators than many in the industry expect.
He said the freight industry has grown skilled at managing disruption, but the current challenge is different, since stability is expected to return even though profitability will not automatically follow.
Companies that recognize this early, Gritz said, will be best positioned as the market progresses through the second half of the year. He added that stability could return within weeks, while profitability and cost conversion may take quarters longer.
The remarks come after US President Donald Trump signed a 14-point agreement with Iran this week, which is set to result in the reopening of the Strait of Hormuz.
The strait, a key route for global oil transport, has been closed since the conflict began in February.
The closure sharply pushed up jet fuel prices, while the conflict pushed supply chains away from the Middle East, though operations have gradually resumed since regional airspace reopened.
Higher fuel costs have also weighed on consumer spending in recent months.
The US Airforwarders Association cautiously welcomed the agreement earlier this week, saying it could ease pressure on consumers, businesses, and the broader global economy.
The association said the airfreight industry now needs clarity on how the Strait of Hormuz will reopen and how free passage will be enforced going forward.
Logistics UK also welcomed the development but cautioned that returning to pre-conflict operations could take considerable time.
Logistics UK Chief Executive Ben Fletcher said news of a possible end to the conflict will be welcomed worldwide, though he expects it to be months before supply chains return to pre-conflict conditions.
