Freight forwarding companies operating in the Balkans face a unique set of challenges, including infrastructure limitations, complex regulatory environments, and the need for specialized local expertise. These factors can significantly impact the efficiency and cost-effectiveness of transporting goods in the region.

Despite these challenges, the Balkans offers significant opportunities for businesses due to its growing economies and investment potential. Understanding the specific dynamics of the region and developing strategies to mitigate these obstacles is essential for successful operations in the Balkan market.

Commenting on the market conditions, Benjamin Herman, Regional BD Manager at Comark said, “The truth is, moving goods efficiently through this region isn’t a walk in the park. The terrain is challenging, cross-border procedures can be cumbersome, and infrastructure often lags. But here’s the exciting part, these challenges present a unique opportunity and I believe this is something businesses always look for.”

Grappling with infrastructure

The Balkan region faces significant infrastructure limitations that hinder the efficient transportation of goods. While major roads linking major cities are generally well-maintained, many medium-sized and rural areas suffer from poor connectivity, leading to delays and increased costs.

Ports and terminals in the region, while undergoing improvements, cannot often handle growing cargo volumes. Additionally, outdated and underutilized railways contribute to the region’s infrastructure challenges. These limitations can hinder the competitiveness of businesses operating in the Balkans and limit the region’s economic potential.

For Herman, it is a mixed bag of good and bad with outdated railways, slow speeds and limited capacity making railfreight a less attractive option. There is, however, a bright spot with governments across the region stepping up with their investment in new infrastructure. “The region has seen major improvements in recent years, and there is growing recognition of the need for better infrastructure,” Herman said.

His opinion is shared by Marin Skufca, CEO and partner at Liburnia Group, who noted that the infrastructure available in the region is lagging behind Central and North European counterparts.

“Even though Croatia is a maritime country and there are three ports in a radius of 100 kilometres, we are facing challenges in terms of road, rail and river transportation,” Skufca adds.

He noted that Liburnia Group made a significant investment in its fleet to overcome the shortcomings of the infrastructure. On a positive note, he says that there is a huge investment cycle in Croatia in terms of transport infrastructure. “We are positive that soon we will increase our competitive position for more central European regions in terms of port facilities and ocean transport,” he said.

Complex regulatory environment

Freight forwarders operating in the Balkans must navigate a complex regulatory landscape that can pose significant challenges. The region is characterized by diverse and often overlapping regulations across different countries, making compliance a complex task.

Customs procedures, permits, and other regulatory requirements can vary significantly between countries, leading to administrative burdens and delays. Additionally, the ongoing process of European Union integration has introduced new layers of regulations and standards that businesses must adhere to. These complexities can increase operational costs and create uncertainties for freight forwarders operating in the region.

As Skufca points out, a specific issue is the mix of EU and non-EU member countries. Croatia itself borders mostly with non-EU members. “Our closest ports like Rijeka and Koper cover over 80 per cent of project cargo from Serbia and Bosnia & Herzegovina so we are facing difficulties in terms of border crossing congestion, differences in legal terms and customs and tax issues,” Skufca said.

“We’ve seen the highest demand for our services in rapidly developing countries like Serbia, Albania, and Bosnia and Hercegovina. These nations are investing in infrastructure, energy, mining and manufacturing, which require our specialized transportation and logistics skills,” notes Herman.

Red tape in the region is a harsh reality. Each country and sometimes even cities have their own rules and regulations. However, Herman does not see it as a roadblock. “It can slow down projects and test your patience, but with the right planning, it’s manageable, and trust me here it will be tested, if not done properly,” he said.

As Jure Ravnik, CEO of Tanta Transport and Logistics, a Liburnia Group company adds, “if there is a problem, we sort it the Balkan way.”

Investing for the future

Players in the regional market are not resting on their laurels, but are actively investing in infrastructure. Currently, a new container terminal in the port of Rijeka is under construction with the first vessel expected in May 2025.

“This new addition to Adriatic ports will for sure place us on a higher position on the European logistics map,” Skufca adds.

There is an additional €300 million investment in road and rail infrastructure that will shorten the transit time and increase the capacity towards Hungary, Austria, Northern Italy and Southern Germany.

“Therefore we see these investments as a benefit not only to our current regional exporters but a significant increase in our region with port access to customers that were historically paying higher inland freight costs to reach north European ports,” concludes Skufca.

Back in 2021, Libunia invested in its acquisition of an out-of-gauge (OOG) transport company Velebit-Promet with over 70 OOG trucks and mobile cranes. The acquisition was recently boosted with investment in Tanta Agency from Koper, Slovenia, strengthening its position in the market.