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Major Slowdown in the TSL Sector: PLN 1.3 Billion Due in Payments, PLN 500 Million to Be Recovered

TSLMajor Slowdown in the TSL Sector: PLN 1.3 Billion Due in Payments, PLN 500 Million to Be Recovered

According to the National Debt Register, the transport, shipping, and logistics (TSL) sector has over PLN 1.3 billion in overdue financial liabilities. It needs to recover PLN 561 million from its debtors. Additionally, funds are tied up in invoices with extended payment terms, as no other industry waits as long for payments. However, there are many more barriers hindering the growth of the TSL sector. The rate of insolvency appears to be accelerating.

According to data from the Central Economic Information Center, 527 TSL companies declared bankruptcy or restructuring last year. By the end of the first quarter of this year, 183 such insolvencies were recorded. This is the result of growing problems: fewer transport orders, increased labor costs, and overall wage pressure in the sector. Sector representatives also highlight current barriers, such as the difficult situation at the Polish-Ukrainian border, regulations regarding carbon footprint reduction, and a shortage of workers—not only drivers but also warehouse staff.

All of this leads to a negative outlook for the transport and warehousing economy. According to data from the Central Statistical Office (GUS) in April of this year, the general business climate indicator (NSA) was at -3.2 (compared to -4.7 in March). Business owners believe that the biggest factors affecting operational costs in the next quarter will be energy and fuel prices, as indicated by 92.6% of transport companies, the highest percentage among all sectors. The second most significant factor will be employment costs (75.1%), followed by the costs of components and services (52.6%). This situation will not help transport companies that are already struggling to meet their financial obligations.

Poor Business Conditions Coupled with Debt

According to the National Debt Register, the sector’s debt currently stands at PLN 1.3 billion, affecting 29,300 businesses, over 20,000 of which are sole proprietorships. Over PLN 1 billion of the total debt is attributed to road freight transport. Companies involved in other land passenger transport, including city and suburban carriers and taxi services, owe approximately PLN 136.5 million. Additionally, companies supporting carriers owe PLN 85.7 million, and postal and courier companies owe PLN 37.5 million. On average, a debtor in the TSL sector owes nearly PLN 46,000.

The highest number of indebted transport, shipping, and logistics companies operates in the Mazowieckie voivodeship, with 5,658 companies owing over PLN 274 million. The Śląskie voivodeship follows with 3,613 companies owing PLN 168 million, and the Wielkopolskie voivodeship ranks third with 3,192 companies owing nearly PLN 154 million in overdue financial liabilities.

Secondary creditors, such as securitization funds and debt collection companies, are waiting for nearly PLN 400 million from carriers. Leasing companies are owed PLN 288 million. Other financial institutions, including banks and insurers, are owed PLN 211 million, the fuel sector is owed PLN 187 million, and energy suppliers are owed PLN 22 million. A notable case involves a transport entrepreneur from the Łódź voivodeship, who owes nearly PLN 10 million to an energy company.

13% of Companies at High Risk

“According to the payment reliability analysis conducted by the National Debt Register for all companies in the TSL sector, 13% of them are characterized by high transaction risk. These are businesses that are either already listed as debtors in the National Debt Register or are very likely to be listed in the coming months,” says Adam Łącki, President of the National Debt Register Economic Information Bureau. “Additionally, in March 2024, compared to March 2023, we observed slight changes in the group of companies rated A-C, which are the most financially reliable; a decline in the D-E categories, which are of average reliability; and a significant increase in the percentage of companies rated F and H, which are the least reliable. This indicates a deterioration in the financial condition of TSL companies over the past year,” adds the President.

Currently, according to the National Debt Register’s payment reliability analysis, only 67% of transport companies exhibit high payment reliability, and one in five companies shows average payment reliability. The average credit limit for sole proprietorships in this sector is PLN 17,587, while for companies, it is PLN 263,288.

Gaining 60 Days

However, transport and logistics companies also have their own debtors. Consumers and businesses owe them over half a billion zlotys, of which PLN 448 million is owed by individuals traveling without valid tickets. Other debts are owed by clients and contractors from other sectors, such as trade (PLN 40 million) and industry (PLN 15.5 million). Additionally, PLN 31.8 million is mutual debt within the sector.

In many cases, the financial problems of carriers result from payment gridlocks. To minimize the risk of dealing with dishonest contractors, transport and warehousing companies have obtained over 1.3 million business reports on clients from the National Debt Register over the past five years. A significant issue, especially for the smallest entities, is the long payment terms on invoices, which can severely disrupt a company’s financial liquidity. In such situations, companies turn to external financing.

“A recent report by Transcash.eu, ‘What Financing Does the TSL Sector Choose,’ shows that carriers most often choose leasing, followed by factoring, and thirdly, working capital loans. It is worth noting that for micro and small enterprises, which have limited access to traditional forms of financing, such as bank loans, and do not have significant investment needs to warrant leasing, factoring becomes the most favorable financial solution. These companies often have small margins and lack funds for operations, fuel, or driver wages. Factoring allows for one-time funding without the need to sign long-term and complex agreements,” explains Emanuel Nowak, an expert at factoring company NFG, adding, “If we also consider that the average waiting time for invoice payments in the transport sector is 45 or even 60 days, factoring allows a micro-transport company to gain these 60 days to settle liabilities or cover current expenses.”

One in five micro-companies that received financing from NFG last year was from the TSL sector. These entities financed invoices worth over PLN 57.6 million. In addition to the obvious benefit of immediate cash from issued invoices, factoring is also a strategic solution for micro-transport companies that can significantly impact their operations, growth, and competitiveness in the market. It enables entrepreneurs to better manage their financial liquidity, avoid problems with late payments, and invest in the company’s development.

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