Transportation and storage industry in Latvia contributes significant part of total GDP and employs more than 9% of economically active inhabitants. Despite this, there is relatively low productivity in this sector that might inhibit further development of branch and economy in total. During last 5 years, Latvian companies specializing in road transportation services have reviewed their activities and switched from transit to into-European services. The aim of this study is to develop guidelines that would help transportation companies to switch from core to knowledge-based innovative services and hence, improve marginality and productivity. In frames of this study, a literature review was conducted that included contemporary researches of services and innovations in logistics, as well as quantitative research of economic indicators related to transportation and storage industry in Latvia.