In 2024, U.S.-based international trade managers moved 6.7% more ocean freight and 15% more airfreight than the year before. Net revenue fell 4%. More goods moved. Less money came back. The mix had shifted toward lower-margin freight, and nobody had adjusted the pricing.
That's the prosperity trap. Revenue is up, the team is busy, the P&L tells a growth story. But growth in volume and growth in profit are different things, and when the market is running hot, few companies pause to check which one they're getting.
The pattern across B2B
Logistics is the most extreme version, but the pattern shows up across B2B. During boom years, companies take on customers and orders they'd normally pass on. The freight costs are high, the order sizes are small, the service demands are complicated. But revenue is revenue and the sales team is hitting targets. The costs of serving those orders sit in overhead, unallocated. Invisible.
Then the market turns. Spot rates for dry van fell from over $3.00 per mile in 2021 to $1.96 by April 2025. Operating costs for many carriers stayed around $2.26. The margin was gone but the cost structure, built during the boom, was still there. The industry saw record insolvencies in 2024 and 2025. Profits per mile went from roughly $1.00 to $0.05.
The companies that went under weren't badly run. They'd built their operations around a market that stopped existing.
Growth covered it
Wurth had been growing at nearly 20% a year for decades. In 2025, net income dropped 40%. EUR 1.14 billion to EUR 673 million. Growth had covered the cost structure. When it slowed, the structure showed.
BlueLinx, a building materials distributor, tells a similar story in miniature: gross margins down 240 basis points year-over-year to 14.4%. Specialty products, the higher-margin part of the business, saw gross profit decline 13%. The German electronic component distribution sector lost 21% of prior-year sales in the first half of 2025. Dow Packaging & Specialty Plastics: EBITDA down 44% in nine months.
Different industries, same pattern. Years of growth created habits, order acceptance, service commitments, discount structures, that worked when volume was high and turned into liabilities when it wasn't.
How it works
During a boom, a sales rep takes on a customer who orders in small batches, needs custom handling, and negotiates a discount. Gross margin on paper looks fine. The rep gets paid. The order ships.
What doesn't show up: freight cost per unit on small shipments. Warehouse time for non-standard packaging. Admin hours on frequent small orders. Service calls. All of it lands in overhead. The ERP says 20% gross margin on the account. The actual contribution, after cost to serve, might be 3%. Might be negative.
The hidden subsidy
In a typical B2B company, the top 20% of customers generate 150-300% of total profit. The middle 60% roughly break even. The bottom 20% destroy 50-200%. As long as revenue keeps growing, the profitable half subsidizes the unprofitable half and the subsidy stays invisible.
When growth stops, you see it. The profitable customers are still making money. But there's no more growth to absorb the losses at the bottom of the curve, and the margin erosion starts showing up in the reported numbers. The CEO sees profit declining and can't point to a cause.
Baked into compensation
It gets worse because the habits from the boom get baked into how people are paid. Most B2B companies compensate their sales teams on revenue. During the good years, it worked. Or seemed to. Revenue grew, the team performed, bonuses went out.
But revenue-based comp can't tell the difference between a EUR 500,000 account that costs EUR 30,000 to serve and one that costs EUR 200,000. Both look the same in the ERP. Both count equally toward target. The rep has no reason to know which is which, because that data hasn't been put together.
The eight biggest Danish wholesalers saw an average 37% drop in profit margins. Some were losing 25-35 million DKK a year. A German technical wholesaler found that 30% of revenue was coming from customers with negative contribution margins. The sales team didn't know. Those accounts brought in revenue, and revenue was what they were measured on.
The missing number
The prosperity trap comes down to one thing: during the good years, companies can't tell which customers are actually profitable and which ones are being subsidized by the rest. Gross margin is a correct number. It just doesn't include what it costs to serve each customer. Without that, the CEO can't know whether the growth is building something solid or something that falls apart the moment the market cools.
Most B2B companies find out when the market turns. By then the cost structure is locked in, the customer relationships are established, and fixing the problem requires the same data that was missing all along: what does each customer actually cost to serve, and is the margin worth it?
That data is in the ERP. Freight, returns, order frequency, service costs. It's there, just not assembled at the customer level. Some companies do that work while times are good. Most don't, and find out what their cost structure really looks like at the worst possible moment.
Sources
- SPARXiQ / NAW, pricing override analysis (2025)
- Qymatix, German technical wholesaler case study and Wurth analysis (2025)
- Impact Commerce, analysis of 8 Danish wholesalers
- DAT / Transport Topics, freight rate and fleet margin data (2024-2025)
- B2B industry pain ranking, cross-referenced insolvency and margin data (2024-2026)
- Dow Packaging & Specialty Plastics, Q3 2025 results
- BlueLinx 2025 results
- FBDi, German electronic component distribution (H1 2025)
- Kaplan & Narayanan, HBS, "Customer Profitability Measurement and Management" (2001)
Founder, Precis Flux
20 years across the industrial value chain, from R&D to P&L management. Background in engineering and applied mathematics. Founded Precis Flux after seeing the same pattern in every company he worked in: the data to improve profitability existed, but nobody had the time or tools to use it.