Analysis of logistics challenges and competitive environment for groupage cargo
(1 kg-7 pallets) in Ukraine

Introduction: Overview of the Less-than-Truckload (LTL) Logistics Market in Ukraine

The logistics market in Ukraine, particularly in the segment of Less-than-Truckload (LTL) shipments, is undergoing significant changes driven by both internal economic factors and the current geopolitical situation. Understanding the specifics and challenges of this segment is critically important for all market participants, from small enterprises to large logistics operators.

LTL logistics refers to the transportation of partial truckloads, where shipments from different senders are consolidated into one transport vehicle. This method offers significant advantages, as clients pay only for the space occupied by their cargo, rather than renting the entire truck. For the Ukrainian market, where the volume of individual shipments often ranges from 1–2 kg to 5–7 pallets (equivalent to 70 kg to 10 tons), LTL shipping is an optimal solution that effectively meets the needs of small and medium-sized businesses. In addition to cost savings, LTL transportation provides flexibility in route selection and delivery methods, and also allows for full delegation of logistics responsibilities to specialized companies, reducing the operational burden on shippers.

The purpose of this report is to provide a comprehensive analysis of the Ukrainian LTL logistics market for shipments within the specified range. The study focuses on identifying economic sectors where LTL logistics faces the greatest difficulties, as well as uncovering niches with the lowest competition, excluding weapons transportation. The report is intended to provide strategic insights and recommendations for companies aiming to optimize their logistics operations or enter new, less saturated markets in the context of the current economic and geopolitical environment in Ukraine.

General Challenges Affecting Less-than-Truckload Logistics in Ukraine

The Ukrainian logistics market faces a number of fundamental issues that directly and indirectly affect the efficiency and cost of LTL transportation. These challenges are amplified by the current geopolitical situation, creating unique conditions for the functioning of supply chains.

Impact of the Current Geopolitical Situation on Supply Chains and Risks

The full-scale war in Ukraine has led to radical changes in both global and domestic supply chains, characterizing the situation as “volatile and unstable.” Key problems faced by logistics operators include mass mobilization of the population, which has caused a labor shortage, the breakdown of established logistics chains, significant safety risks for cargo and personnel during wartime, as well as increased delivery tariffs.

The direct impact on infrastructure is also a critical factor. The destruction of major logistics centers such as West Gate Logistic and the ATB distribution center in Kopyliv, with areas of 100,000 and 35,000 square meters respectively, has significantly reduced available warehouse capacity. This directly complicates the consolidation processes that are fundamental to LTL logistics.

Disruptions in large-scale logistics and the destruction of centralized nodes result in traditional large logistics hubs becoming less reliable or entirely inaccessible. At the same time, there has been a significant increase in the participation of smaller and medium-sized companies in Ukraine’s agro-exports, with their share rising from 10% in 2021 to 72.4% in 2023, indicating a substantial decentralization and increased flexibility of the export system. This shift in export structure, where small and medium-sized enterprises play an increasingly important role, naturally generates smaller, more diverse shipments, which are ideally suited for LTL transportation. Thus, the combination of disrupted large-scale logistics and the growth of smaller, decentralized businesses creates an urgent need for flexible, adaptive LTL solutions. This is not merely a contraction of the overall market volume, but a shift in the type of demand, where LTL transportation becomes more in demand as a tool for adapting to the new realities.

Infrastructure Issues and Their Impact on LTL Shipments

Beyond direct destruction, Ukraine’s logistics infrastructure suffers from chronic problems. “Overloaded warehouses” and a “shortage of loaders” are reported, leading to significant delays that can extend up to one or even one and a half months. These issues are exacerbated by difficulties in accessing and passing through checkpoints, especially in frontline areas, where queues can delay transport for up to two hours.

The existing infrastructure for general LTL cargo consolidation is under immense pressure and partially destroyed. This creates a serious “bottleneck” for effective LTL operations, especially for diverse and small-scale shipments that require careful sorting and handling. As a result, there is an increased need either to establish new, resilient, and strategically located consolidation hubs or to develop more efficient last-mile solutions capable of bypassing overloaded central points. This also means that specialized LTL logistics, which can utilize smaller, more flexible consolidation points or direct routes, gains a significant market advantage.

Shortage of Qualified Personnel in the Logistics Sector

The reduction in the number of drivers, couriers, and other workers is a widespread problem noted by virtually every logistics company. This situation is particularly vulnerable for small and medium-sized businesses, which often lack the resources to effectively redistribute workloads among employees or to quickly resolve staffing issues.

The observed large-scale personnel shortage, caused by mobilization and other factors, directly affects the quality and speed of logistics services. At the same time, logistics for complex shipments, such as pharmaceuticals or high-value goods, requires not only available personnel but also highly qualified and responsible staff. In conditions where the existing workforce is heavily overloaded, and finding new, qualified staff is becoming increasingly difficult, companies are forced either to invest heavily in training and retaining current employees or to actively seek technological solutions to maintain service quality, especially in complex niches.

This situation creates a strong incentive to automate logistics processes, including the implementation of warehouse management systems and software for route optimization. These technologies can compensate for the labor shortage and increase overall efficiency. For specialized LTL service providers, this means focusing on retaining and improving the qualifications of their limited but highly skilled personnel. This allows them to offer more premium services that are less susceptible to general market competition, as their value is determined not only by price but also by the reliability and quality of handling complex tasks.

Challenges of Customs Clearance for Small and Consolidated Shipments

Customs clearance of goods in Ukraine is a labor-intensive process that requires all participants to pay maximum attention to documentation. Even the smallest mistake or typo in the paperwork can lead to the inability to import the goods and the imposition of fines for violating the law. Independent clearance of goods requires specialized customs brokerage software (a license for which costs over 200 USD), customs accreditation, an electronic signature key, as well as deep knowledge of legislation, including the Ukrainian Customs Tariff Law, which is a voluminous document. A particularly complex aspect is the correct determination of the UCGFEA code (Ukrainian Classification of Goods for Foreign Economic Activity), as even for seemingly simple goods such as toy cars, there may be several codes, and an error in selection may be considered an attempt to reduce the duty amount, resulting in a protocol on customs violations and fines.

Errors in documentation, such as an incorrect code or undeclared goods, can lead to huge fines reaching the value of the entire shipment, as well as confiscation of goods and long delays. For example, in one case, 50% undeclared goods led to a fine of 5 million UAH and confiscation, while receiving the rest of the goods took three months.

Considering that LTL shipments often include a variety of goods from multiple senders, the complexity of documentation for each item increases manifold. This situation creates a significant barrier to entry into the international LTL transport market for many players. General logistics companies or individual enterprises without deep customs expertise will experience enormous difficulties. Thus, there is a strong but unmet demand for highly specialized customs brokers or 4PL providers who can manage the entire international LTL shipping process “turnkey”, reducing risks and ensuring compliance with all requirements. This niche, despite its complexity, is characterized by lower effective competition due to high specialized requirements.

Niches with the Most Complex Logistics Cases for Consolidated Shipments

Certain sectors of the economy in Ukraine present especially complex cases for LTL logistics due to specific requirements for cargo, the regulatory environment, and operational challenges.

Pharmaceuticals and Healthcare

Logistics in the healthcare sector is one of the most complex niches for LTL transportation in Ukraine. This is due to a number of factors, including strict requirements for quality, safety, temperature control, and a complex regulatory environment.

High Requirements for Quality, Safety, and Temperature Control (“Cold Chain”)

Pharmaceutical logistics is characterized by heightened requirements for quality and safety, time sensitivity, the need for precision and control, as well as the complexity of supply chains. Particular attention is paid to maintaining the “cold chain” for temperature-sensitive medications. This means that cargo must be transported and stored within strictly defined temperature ranges, which can vary from -18°C for deep-frozen products (e.g., frozen fish) to +5°C for fresh products (e.g., fresh fruits and vegetables), and may also require humidity and ventilation control.

To meet these conditions, pharmaceutical warehouses must be equipped with specialized cold rooms capable of accommodating significant cargo volumes, for example, up to 200 pallet spaces. Fulfilling these requirements for any delivery is already a challenging task. However, for LTL shipments, where several small batches may have slightly different temperature requirements or origins, it becomes exponentially more complex. Consolidating such diverse shipments in a single transport unit requires not only specialized equipment but also extremely precise planning and monitoring. Significant investments in specialized equipment, trained personnel, and complex IT systems for managing the cold chain are mandatory. Thus, the “cold chain” requirement acts as a significant multiplier of logistics complexity and a serious barrier to entry, making this niche extremely challenging for general LTL service providers.

Learn more for transporting medical tests abroad.

Complexity of Forecasting and Inventory Management for Small Batches

Another significant challenge in pharmaceutical logistics is the difficulty in forecasting the effectiveness of promotional campaigns and seasonal sales peaks, which often leads to either surplus or, conversely, shortages of goods in warehouses. Insufficient availability of necessary medicines on the market results not only in financial losses from missed sales but also in the loss of loyalty from partners and patients, the restoration of which requires significant reinvestments.

Forecasting and inventory management in conditions of high uncertainty is difficult, leading to problems with product availability. For effective supply chain management, especially for small, diverse batches, real-time monitoring and IT system integration are critically important. In this context, simple LTL shipments become insufficient; customers need end-to-end visibility and comprehensive management of the entire logistics process. That is why 4PL providers, acting as strategic partners coordinating and optimizing the entire supply chain network, are becoming increasingly in demand. This complexity, especially for small and varied batches, requires a higher level of service than traditional 3PL operators can offer. Problems in forecasting and inventory management, combined with the need for real-time data, are driving demand for integrated 4PL solutions capable of efficiently managing complex LTL flows, which further reduces competition for providers offering such comprehensive services.

Perishable Food Products

The logistics of perishable food products is another niche with a high degree of complexity for LTL shipments in Ukraine. The main challenges are related to the need for strict control of transportation conditions and limited shelf life.

Need to Maintain Strict Temperature Conditions (Refrigerated Transport)

The transportation of perishable products requires the use of specialized refrigerated transport, which is one of the most in-demand types of logistics services. These shipments require strict adherence to specific temperature conditions, as well as humidity control and air conditioning throughout the entire journey. For example, fresh fruits and vegetables must be transported at temperatures up to +5°C, meat and fish up to +3°C, cosmetics and household chemicals in the range of 10 to 25°C, and canned goods and beverages up to 20°C, without freezing.

Limited Delivery and Storage Times, Packaging and Sanitary Requirements

In addition to temperature requirements, limited delivery times are critically important. For example, for berries, fruits, and vegetables, the maximum transportation time is 6 hours, and for greens—only 3 hours. This imposes strict constraints on route planning and order fulfillment speed.

Strict compliance with sanitary standards for the vehicle is also required, as well as the use of high-quality packaging that ensures the safety of the cargo, and tight but careful packing of products to prevent movement or damage. It is strictly forbidden to combine different groups of products in one cargo compartment that may negatively affect each other.

The consolidation of various perishable LTL shipments, each of which may have slightly different temperature and humidity requirements, along with strict segregation rules, significantly complicates the loading process and route planning. This requires the use of specialized, often multi-compartment, refrigerated vehicles capable of maintaining different temperature zones, or highly efficient consolidation and cross-docking operations that minimize the time cargo spends outside the controlled environment. Operational complexity and the need for specialized LTL-refrigerated equipment make this niche extremely challenging.

Learn more about how we ensure temperature-controlled cargo delivery.

High-Value and Fragile Shipments

The transportation of high-value and fragile goods, such as precision equipment, electronics, artworks, or antiques, represents a separate class of complexity in LTL logistics.

Requirements for Specialized Packaging, Securing, and Insurance

A key aspect is the need for specialized packaging that must be both strong and soft enough to absorb shocks and vibrations. Depending on the dimensions and properties of the cargo, materials such as bubble wrap, corrugated cardboard, foam plastic, stretch film, polyurethane foam, polystyrene granules, and packing paper are used to fill voids. For LTL shipments, the cargo is usually placed on pallets and securely fixed to prevent deformation, mechanical defects, and breakage.

In addition to packaging, proper securing methods inside the vehicle are critically important to eliminate any movement during transportation. Insurance is a mandatory element for high-value cargo, as the risks of damage or loss can be extremely high.

Increased Risk of Damage and the Need for Special Handling

High-value and fragile cargo is inherently prone to increased risk of damage. This requires not only specialized equipment from the carrier but also highly qualified personnel trained to handle such delicate shipments. Any careless handling, abrupt braking, or sharp turns can lead to irreparable consequences.

For LTL shipments of high-value and fragile goods, there is an added complexity related to consolidation. Placing such cargo alongside other, less sensitive items can increase the risk of damage due to shifting, vibration, or improper stacking. This necessitates very careful load planning, the use of special dividers, and possibly the allocation of separate zones within the transport vehicle. Thus, operational complexity, the need for investment in specialized equipment and personnel training, as well as high financial risks, make this niche one of the most challenging.

E-commerce (Small Shipments)

The e-commerce sector in Ukraine is experiencing active growth, but logistics for small shipments in this niche comes with a number of specific challenges.

High Volume of Small Shipments and the “Last Mile”

E-commerce is characterized by a huge volume of small shipments, often weighing 1–2 kg. This creates a colossal load on the logistics infrastructure, especially at the “last mile” stage—the delivery from the warehouse to the end consumer.

Challenges with Returns, Exchanges, and Inventory Management

A high percentage of returns and exchanges in e-commerce adds complexity to logistics operations. Reverse logistics requires efficient processes for receiving, inspecting, and repackaging goods. Inventory management for a large number of small, often diverse items is also a serious challenge.

Dependence on Courier Services and Their Capacity

E-commerce logistics is heavily dependent on the capacity of courier services such as “Nova Poshta”, “Ukrposhta”, “Delivery”, “Meest Express”. Despite a wide network of branches and fast delivery from market leaders like “Nova Poshta”, the cost of their services remains high. “Ukrposhta” offers lower prices but often suffers from slow delivery and poorer service. A shortage of drivers and couriers, noted in almost every company, is especially acute in e-commerce, where a large number of personnel is needed to process and deliver small shipments. This leads to the need to reconsider supply chains and look for new, more stable routes. Overall, e-commerce logistics for small shipments is complicated due to the scale of operations, speed requirements, high delivery costs, and dependence on the limited resources of courier services.

Agricultural Products (Small and Medium Batches)

The agro-industrial complex of Ukraine is one of the pillars of the economy, and the logistics of agricultural products, especially for small and medium batches, also faces unique challenges.

Seasonality and Dependence on Weather Conditions

The logistics of agricultural products is extremely dependent on seasonality and weather conditions. Harvest periods create peak loads on transport and warehouse infrastructure, while unfavorable weather conditions can lead to delays and spoilage of goods.

Storage and Transportation Requirements (Temperature, Humidity)

Many types of agricultural products, especially fresh fruits, vegetables, and grains, require special storage and transportation conditions, including temperature and humidity control, to prevent spoilage. This may require the use of specialized refrigerated trucks or grain carriers, even for LTL batches.

Expansion of Participation of Small and Medium-Sized Companies in Exports

In 2023, the share of the 20 largest companies in Ukraine’s agricultural exports decreased to 27.6% compared to 90% in 2021. This indicates a significant expansion of participation by smaller and medium-sized companies, making exports more decentralized and flexible. While this shift promotes flexibility, it also increases the complexity of LTL logistics, as it requires coordinating numerous small shipments from different producers. Each of these producers may have its own specifics in cargo preparation, requiring more complex consolidation and routing.

Additionally, after 2022, agricultural producers faced dual challenges: in addition to difficult production and logistics conditions, political barriers were added. These factors intensify the overall complexity of logistics operations for the agricultural sector.

Learn how we can help your business with logistics solutions for the agricultural business.

Humanitarian Cargo

Logistics of humanitarian cargo in Ukraine, especially under ongoing conflict conditions, is one of the most complex and critically important niches.

Urgency of Delivery and Unpredictability of Routes

Humanitarian cargo often requires the fastest possible delivery, as lives depend on it. At the same time, routes may be unpredictable due to hostilities, infrastructure destruction, and changing situations.

Operation Under Increased Danger and Risks

Transportation of humanitarian cargo involves increased risks for personnel and vehicles. This includes the danger of shelling, landmines, and the absence of safe stopping zones.

Coordination with International and Local Organizations

Logistics of humanitarian cargo requires complex coordination between numerous international and local organizations, which can create bureaucratic obstacles and delays.

Customs and Regulatory Features

Despite their humanitarian status, such shipments are still subject to customs clearance, albeit under a simplified procedure. However, any error in documentation or non-compliance with procedures can lead to delays, which are unacceptable for critically important deliveries.

Logistics in Frontline and De-occupied Territories

Logistics in frontline and de-occupied areas of Ukraine is the peak of complexity for LTL shipments.

Destroyed Infrastructure and Lack of Roads

In these regions, infrastructure is often completely destroyed, roads are damaged or absent, making transportation extremely difficult.

Increased Safety Risks (Shelling, Mines)

Working in these zones is associated with the constant threat of shelling, the presence of mines and unexploded ordnance, creating huge risks for drivers and cargo.

Shortage of Personnel and Equipment

Frontline and de-occupied areas face an acute shortage of qualified personnel and specialized equipment ready to operate under such conditions.

Limited Access and Bureaucratic Barriers

Access to these areas is often restricted, and travel requires special permits and coordination with military and civil administrations, creating additional bureaucratic barriers and delays.

Sectors with the Lowest Competition in LTL Logistics (Excluding Arms Transport)

An analysis of the LTL logistics market in Ukraine, taking into account current challenges, allows us to identify several niches where competition is likely the lowest, excluding arms transportation. Low competition in these segments is due to high entry barriers, specialized requirements, and increased risks.

1. Pharmaceuticals and Healthcare (Specialized LTL Logistics)

Although pharmaceutical logistics is one of the most complex niches, this very complexity contributes to low competition among specialized LTL operators.

High Entry Barriers: Infrastructure Investments and GDP Compliance

As previously mentioned, the requirements for the “cold chain”, specialized warehouses (e.g., refrigerated chambers for 200 pallet spaces), and strict GDP compliance create significant financial and operational barriers to entry. Companies must invest in expensive equipment, train personnel, and implement complex IT systems for monitoring and control. These investments are unaffordable for most general logistics companies, cutting off a large portion of potential competitors.

Need for Deep Expertise and Certification

Working in this niche requires not only equipment but also deep expertise in pharmaceutical regulations, as well as appropriate licenses and certifications. Companies that can ensure “import for a hryvnia” and certification of medications for non-residents demonstrate a high level of specialization. This knowledge and experience cannot be acquired quickly, further limiting the number of players.

Demand for Integrated 4PL Solutions

The complexity of forecasting, inventory management, and the need for real-time data push pharmaceutical companies toward integrated 4PL solutions rather than just transportation services. 4PL providers capable of coordinating the entire supply chain, including several 3PL operators, offer comprehensive services that can ensure higher efficiency and reliability. Since there are far fewer such providers on the market than regular carriers, competition in this LTL logistics segment remains low.

2. Transport of High-Value and Fragile Goods (Specialized LTL Logistics)

This niche is also characterized by low competition due to unique requirements and high risks.

Requirements for Specialized Equipment and Personnel

The transport of precision instruments, electronics, and other valuable fragile items requires specialized equipment for packaging, securing, and transporting. This includes the use of cushioning materials, special containers, and vehicles with reinforced suspension or climate control. Moreover, highly qualified personnel trained in delicate cargo handling are required, as well as the ability to respond quickly to any unforeseen situations.

High Risks and Insurance Costs

The risk of damage or loss of high-value and fragile cargo is extremely high, making insurance a mandatory and costly component. Companies without sufficient experience or financial guarantees cannot compete effectively in this niche.

Limited Client Base and Long-Term Relationships

Clients in this niche are typically large manufacturing companies, research institutions, medical centers, or galleries that have high demands for reliability and safety. They tend to establish long-term relationships with trusted and specialized logistics partners, making market entry difficult for new players.

3. Logistics in Frontline and De-occupied Territories (Humanitarian and Critically Important Cargo)

Although this niche is not a “sector” in the traditional sense, it is a segment with extremely low competition due to extreme conditions.

Extremely High Risks and Operational Complexity

Working in frontline and de-occupied areas involves constant threats to the life and health of personnel, and the risk of destruction of transport and cargo. Destroyed infrastructure, lack of roads, and mine contamination make operations extremely complex and slow. Most logistics companies are not willing to take on such risks and lack the experience or resources to operate in such conditions.

Need for Specialized Permits and Coordination

Access to these areas is strictly controlled, and transporting cargo requires special permits from military and civilian administrations. This requires close coordination with government agencies and international organizations, which is an additional entry barrier.

Social Responsibility and Non-commercial Nature

A significant portion of shipments in these regions is humanitarian in nature, meaning financial gain is not the primary motivating factor. This attracts a limited number of operators who either specialize in humanitarian logistics or are willing to operate with minimal profit for the sake of social responsibility.

Conclusions

The analysis of the LTL logistics market in Ukraine reveals a complex and dynamic picture shaped by both general economic trends and the specific consequences of the current geopolitical conflict.

The most complex niches for LTL logistics:

• Pharmaceuticals and Healthcare: This niche is the most complex due to strict cold chain requirements, high GDP quality standards, a complex regulatory environment, and demand forecasting difficulties. The need for significant investments in specialized infrastructure and IT systems, as well as the demand for highly qualified personnel, makes each LTL operation extremely demanding.
• Perishable Food Products: Strict temperature requirements, limited delivery times, specific packaging and sanitary standards create high operational complexity. Consolidation of various perishable LTL batches requires specialized, often multi-zone, refrigerated equipment and highly efficient operations.
• High-Value and Fragile Goods: This category requires specialized packaging, secure fastening, mandatory insurance, and special handling. High damage risks and the need for highly qualified personnel significantly complicate LTL transport in this segment.
• E-commerce (Small Shipments): A high volume of small parcels, last-mile challenges, return and exchange management issues, and dependence on courier capacity create significant operational challenges. A shortage of personnel exacerbates these problems.
• Agricultural Products (Small and Medium Batches): Seasonality, dependence on weather conditions, specific storage and transport requirements, and export decentralization with an increased share of small producers make LTL logistics in this sector complex.
• Humanitarian Cargo and Logistics in Frontline/De-occupied Territories: These segments are characterized by extreme urgency, unpredictable routes, operation under high danger, destroyed infrastructure, resource shortages, and complex coordination. These factors make them among the most complex and risky for LTL shipments.

Sectors with the lowest competition in LTL logistics (excluding arms transport):

• Specialized Pharmaceutical LTL Logistics: Low competition is due to extremely high entry barriers, including significant investments in the cold chain and warehouses, deep expertise in regulatory matters (GDP), certification requirements, and growing demand for comprehensive 4PL solutions. These factors limit the number of players who can meet the strict market requirements.
• Specialized LTL Logistics for High-Value and Fragile Goods: Entry barriers include the need for specialized equipment, highly qualified personnel, high risks, and insurance costs. A limited client base seeking long-term relationships with trusted partners also contributes to low competition.
• Logistics of Humanitarian and Critically Important Cargo in Frontline/De-occupied Territories: Competition is minimal due to extremely high safety risks, destroyed infrastructure, the need for specialized permits and coordination, and often non-commercial nature of shipments. Only a few operators are willing to work under such conditions.

Overall, the Ukrainian LTL logistics market shows a trend toward increased demand for flexible and specialized solutions. General challenges such as geopolitical instability, infrastructure problems, personnel shortages, and customs clearance complexities create high entry barriers and promote market consolidation in the most complex and demanding niches. Companies capable of investing in specialized equipment, technologies (especially automation and IT monitoring systems), developing highly skilled personnel, and offering comprehensive 4PL solutions will have a significant competitive advantage and find less saturated segments for development in the Ukrainian market.