Rising operating costs and various fees, fewer orders, lower rates, unfair competition, and geopolitical turmoil—these are just some of the challenges shaping the recent complex landscape of Poland’s transport sector. What has led to the current dire situation for the Polish transport industry?
A Handful of Alarming Statistics
Statistics from the first quarter of 2024, published by the Central Statistical Office (GUS), are concerning. During this period, 120 carriers declared bankruptcy, compared to 105 a year earlier and 90 two years ago. Additionally, over 1,400 transport companies are currently undergoing restructuring, indicating deepening financial problems in the sector.
According to the latest data from Transporeon, the European road transport capacity index has decreased by 7% for the fifth consecutive month. Growth rates have been gradually declining since March 2023, suggesting a reduced surplus of transport capacity.
Not-so-optimistic information also comes from the International Road Transport Union (IRU) “Driver Shortage” report. It shows that the European Union is currently facing a shortage of about 400,000 drivers. Additionally, 34% of carriers cite staff shortages as a key problem in conducting business.
– “Difficult working conditions, coupled with the lack of adequate programs and wages to encourage young people to choose this profession, mean that fewer and fewer people are deciding to work in transport. From our perspective, these are highly worrying trends. It is worth remembering that we have been the transport leaders of the European Union for many years, performing over 20% of transport services. Additionally, according to the Polish Alternative Fuels Association, we also have the largest fleet of trucks—about 1.2 million vehicles. The transport industry also accounts for as much as 7% of Poland’s GDP and over 6% of employment,” says Maciej Maroszyk, COO of TC Legal Services.
Slowdown, Pandemic, and Unfavorable Changes
The current difficulties in the transport industry are closely linked to the economic situation in Europe. This is evident, for example, in Germany, where deflation is currently occurring. The decline in production and demand there directly affects Poland’s TSL sector.
Transport is also struggling with a domestic slowdown in production and trade, fewer orders, and falling rates. According to Transport Intelligence data, due to rising costs and weakened demand, about 84% of transport companies are feeling greater pressure on margins. Additionally, transport companies have to face increasing competition, lowering market rates.
– “The issue of supply chains is also problematic, especially in the context of changing factory locations and production. An example is the automotive industry, adapting production to the requirements of electromobility. Component suppliers are being changed to those operating outside the areas serviced by previous carriers. They are therefore forced to build the entire supply chain network from scratch,” explains the COO of TC Legal Services, and continues:
– “It is worth remembering that the transport industry has also not recovered from the pandemic. During the previous transport boom, many companies went into debt, investing in vehicle leasing. Now, with high inflation and interest rates, carriers are struggling with significant financial problems and the need to repay received subsidies. This leads to mass layoffs and bankruptcies of transport companies.”
Rising Costs
The more challenging situation in the transport industry in the first half of 2024 was also caused by the increase in road tolls. According to information on the website of the National Tax Administration’s Electronic Toll Collection System (eTOLL), in Poland, this increase ranged from 13.2% to 15%. The reasons for these changes were the introduction of CO2 emission classes (EU Directive 2022/362), violation notifications, and the maximum toll option. Other European countries, such as France, Italy, Austria, Hungary, Belgium, and especially Germany, which saw the largest increase, were also affected by rising prices.
– “The increase in the minimum wage and inflation-related wage hike expectations are also significant. Of course, wage increases are understandable from an employee’s perspective. However, for employers, it means finding additional funds to cover rising employment costs. The Polish Economic Institute’s Monthly Economic Index from May indicates that over one-third of surveyed companies had reduced operational costs by the end of April 2024, and 44% plan to do so this year. This means that wages have gone up, but at the same time, costs have been cut,” says Maciej Maroszyk, COO of TC Legal Services, and adds:
– “We remember that rising wages are also accompanied by constantly increasing fuel prices, highway tolls, and insurance costs. All these factors together have led to a drastic drop in the profitability of transport companies. Hence, as many as 60% of Polish carriers signal the intention to reduce their fleet and employment in the coming months, and 13% are on the verge of insolvency and are not meeting their obligations promptly.”
Problems in the East
The war in Ukraine has also worsened the situation in the transport industry. For Polish carriers, the most problematic issue has been conducting transport operations in the context of unfair competition from companies across the eastern border. This includes lower operating costs, entering Poland with large fuel reserves, and being exempt from obtaining permits.
Industry Protest
Growing problems in the transport industry have led to numerous protests. Key demands of Polish carriers include opposition to rising operating costs and the European Union’s climate policy.
– “One of the main points of protest for carriers is the growing inequality, especially in the context of third-country carriers. The effects of the EU Mobility Package are also strongly felt. In light of complex regulations, entrepreneurs are calling for changes to facilitate business operations and ensure fairer competition conditions,” explains the COO of TC Legal Services.
Carriers demand the reinstatement of permits for bilateral transport between Poland and Ukraine and combating unfair competition. They oppose the consequences of the EU’s climate policy, including Fit for 55 and the Green Deal. Additional demands include changing the regulations for training professional drivers, postponing the mandatory installation of intelligent tachographs, and subsidizing their purchase to reduce financial burdens for transport companies.
The industry also calls for the opening of an additional border crossing with Belarus. The situation at the Koroszczyn border crossing, where some vehicles attempt to bypass queues, also needs addressing. Carriers are also advocating for increased road inspections of foreign carriers by the Road Transport Inspection. They are requesting the introduction of a minimum freight rate similar to the one in Hungary and limiting the number of intermediaries in the industry to facilitate business operations and increase market transparency. Among the demands are also proposals to shorten payment terms in the transport industry to 30 days and reduce the cost of employing drivers, which has significantly increased due to last year’s amendment to the law.
– “The proposed changes include further work on the Mobility Package, introducing inspections of forwarding companies, and supporting vocational training through subsidizing courses. The demands also include modifying driver wage rates and reinstating per diems for bilateral transport. Carriers are also requesting subsidies for road and fuel charges, similar to those in Germany. Among the proposals is the introduction of a uniform road tax rate or its complete abolition,” says Maciej Maroszyk, COO of TC Legal Services.
Future Outlook for Polish Transport
The forecasts for the coming months for the transport industry largely depend on the global trade dynamics, the development of the geopolitical situation, and the general economic condition—especially in key countries for Polish exports, such as Germany. At the same time, carriers will have to deal with ongoing problems related to climate packages.
– “Companies will be forced to maximize cost-cutting and halt potential investments. Small businesses may gradually withdraw from the transport market, leading to market consolidation and impacting transport rates,” predicts the COO of TC Legal Services, and adds: Carriers will also be seeking new sources of orders to ensure business continuity and minimize losses. However, I fear that an increase in debt and bankruptcy proceedings for transport companies is inevitable.
What Does the Ministry of Infrastructure Say?
Regarding future plans, the Ministry of Infrastructure has presented a controversial legislative proposal. It involves a two-year ban on establishing new transport companies in Poland, which has received positive feedback from carriers.
– “The new regulations are intended to respond to the industry crisis and competition from third-country carriers. The ministry also plans to reduce social burdens for transport companies by lowering the base for calculating social security contributions for drivers. However, the project must go through the legislative process, requiring approval from the Sejm, Senate, and President,” states Maciej Maroszyk from TC Legal Services.
The transport industry in Poland is currently in a difficult position, as confirmed by both the companies themselves and suppliers of products and services to the TSL sector. The result is a sharp increase in the number of restructuring processes for TSL sector companies. However, is the restructuring process of transport companies indeed the best possible path in the current situation?
