The overdue debt of entrepreneurs engaged in road transport of goods has just exceeded PLN 2 billion. It has increased by almost 11 percent over the past year, although it was declining three years ago. Every ninth carrier does not pay its contractors on time. Every fourth transport company experienced financial liquidity problems last year, mainly due to late payment for services rendered – according to an analysis by the Debtors Register BIG InfoMonitor.
Transport is a key element of the entire economy. It determines the availability of goods and their cost. Transport can account for up to 80 percent of the final price of goods. Recent times have not been kind to carriers. Their difficult situation has been influenced by a drastic increase in fuel prices, high-interest rates, rising labor costs, and everything related to the war in Ukraine: closed markets, the outflow of workers, competition from local companies, and protests at the border. All economic and geopolitical problems that have appeared in the country and Europe are reflected in transport. This can be seen in the Debtors Register BIG InfoMonitor and the BIK credit information database, where the total overdue debt of road transport of goods increased over the year (from November 2022 to November 2023) by PLN 196 million (10.7 percent). During this time, the arrears of all companies increased by almost 8 percent. The situation was similar in 2022, and it was a significant change after the arrears of road transport of goods declined in 2021, though the overall economy at that time added overdue obligations by 11 percent.
Unpaid installments of loans and invoices of companies with PKD 484 amounted to almost PLN 2.02 billion at the end of last November. More than 25 thousand operating, suspended, and closed enterprises have debts. On average, more than 80,000 zlotys falls per entity. The problems of road transport of goods make up the vast majority of overdue obligations of the entire transport and warehousing sector, which has over 34 thousand unreliable debtors for the amount of PLN 2.9 billion.
—The percentage of unreliable payers remains high here, close to 11 percent, which means that for suppliers in this industry, the risk of encountering a company in trouble is quite high. Almost every 9th transport company may not pay on time or at all. Therefore, it is worth checking future contractors for their payment credibility and monitoring the situation of permanent partners, indicates Slawomir Grzelczak, president of BIG InfoMonitor, and advises transport companies to do the same as late payments from clients turned out to be one of the main causes of liquidity problems last year, according to SME’s cyclical studies, carried out for BIG InfoMonitor.
Carriers from Podkarpacie have the least trouble
When you look at the distribution of unreliable payers by provinces, it can be seen that carriers from Podkarpacie are doing the best. The share of companies with overdue obligations there is 7 percent with the national average close to 11 percent. At the other extreme are the provinces: Wielkopolskie, Slaskie, Lodzkie and Dolnoslaskie, where 12 percent of carriers have problems.
Problems from the east
The high percentage of companies struggling to repay loan installments and invoices in BIK and BIG InfoMonitor databases is not surprising, the transport business does not hide that it is struggling. In the last “SME Scanner” survey conducted for BIG InfoMonitor, it was representatives of this industry who reported the most that the company had financial liquidity problems last year; over 1/4 of micro, small and medium transport companies admitted this. Reasons? Primarily delayed payments from contractors, and even their absence. Secondly, high inflation, which was followed by an increase in interest rates and thus the cost of servicing loan and leasing installments. Thirdly, an increase in almost all costs of running a business.
In addition, European transport rates, which previously in some cases barely covered costs, have dropped drastically. This happened, among other things, as a result of unfair competition with Ukrainian companies, which started after June 2022, after the European Union decided to facilitate the export of agricultural products for the country attacked by Russia. Thinking about this, the Union abolished the need to obtain permits for transport between Ukraine and individual EU countries. However, some Ukrainian carriers began to bend the rules and provide cabotage services within EU member states, and even between them. They can afford to offer attractive prices, as they do not have to meet EU requirements for remuneration or working time. Polish carriers have been demanding changes for over two months by blocking border crossings with Ukraine. A change of government prompted them to interrupt the border protest until March 1.
Not so optimistic prospects
At the end of 2023, 17 percent of transport companies declared that they were in poor financial condition, and another 5 percent described their situation as very bad – as per the “SME Scanner” survey. Good condition was mentioned by 35 percent of companies, and neither good nor bad by the most, 42 percent of those surveyed. Only 1.5 percent spoke about a very good condition – this is the lowest percentage among the five analyzed industries.
The current year may be just as difficult. The conflict with carriers from the east remains unresolved, and in connection with EU Directive 2022/362, road charges for trucks in some countries, e.g. in Germany by 83 percent, increased in December 2023, and by March all EU countries will have to update them. Every year, the maximum CO2 emission standards are also reduced, which will force some entrepreneurs to expensive fleet modernization.
To improve their situation, 25 percent of the respondents of the “SME Scanner” survey from the transport industry assume that it will be necessary to cut expenses. At the same time, to achieve profit, every fifth surveyed carrier intends to maintain the current margins, and every tenth to increase them. Only a few percent assume that it will be possible to grow by improving efficiency (14 percent) and increasing sales (11 percent).
—Certainly, less tolerance for late-paying clients is also necessary, because, as our database data and cyclical analyses show, it is definitely not a way to cope in hard times, advises Slawomir Grzelczak.
SME Scanner, a quantitative CATI omnibus survey among 500 micro, small and medium-sized companies, carried out by the Keralla Research Institute in October 2023.
