An industry that employs more than a million Poles is at risk of collapse. A central communications outlet could save it.
Polish TSL sector at risk of collapse
Until recently, European logistics companies feared that they would not be able to deal with Polish transport companies. Now, however, it has become clear that the industry that produces up to 6 percent of our GDP is in danger of collapse.
The Polish TSL (transport, freight and logistics) sector, once the undisputed leader in the EU, is facing more serious challenges and is becoming less competitive. According to industry reports, demand for transport services in the EU is declining, and companies’ maintenance costs are increasing, as a result of the already implemented mobility package regulations and fuel prices. It is becoming increasingly difficult for Polish TSL to compete with cheaper transport companies across the eastern border.
Even the summer season did not bring the expected revival. The continued dominance of pessimistic mood among representatives of the TSL industry was confirmed by the monthly index of business conditions of the Polish Economic Institute.
Financial liquidity of companies in the transportation, shipping and logistics sectors is decreasing
In July this year, the proportion of TSL companies with sufficient cash flow for more than 3 months fell from 58% to 49% (month-to-month). The share price of companies also fell as the value of sales and the number of new orders increased. In contrast, almost 1/5 of TSL entrepreneurs believe that the general situation in their company will deteriorate in the next 3 months. The biggest obstacle to running a business in the TSL industry is personnel costs – which can be seen in MIK measurements.
Since the beginning of 2024, the highest percentage of indicators relate to personnel costs, but there is also a high percentage of entrepreneurs who, in addition to economic uncertainty, are bothered by the accumulation of payments and energy costs. The TSL industry is important for the Polish economy as it generates about 6%. GDP and data from the Central Statistical Office show that in February 2024, almost 1 million people worked in the transport and storage sector. What may be worrying is that according to data from the National Debt Register, almost 200 transport-related companies have already declared bankruptcy in the first quarter of 2024 (in the whole of 2023, the number was about 500).
There are many opinions that narrow specialization, consolidation and centralized communication outlet can save TSL companies. Only medium and large carriers can compete with similar European companies. If there are no mergers, another solution may be non-modular transportation, which large companies are reluctant to provide due to high risks. However, the biggest impetus for the development of the TSL industry will come from improving transportation capacity and logistics infrastructure as part of CPK investment.
Optimism in the TSL industry is certainly diminishing.
The first signs that things might be going wrong in the TSL industry were visible a few months ago. Despite the good end to 2023, managers of TSL companies were not satisfied. In the Central Statistical Office’s December surveys, the overall economic climate was again assessed below neutral (-4.9), and even slightly worse than in November (-3.7) and October (-1.4). Only large entrepreneurs, those with 250 or more employees, remained optimistic.
The poor prognosis of the overall economic situation in the sector, which has been ongoing since December 2021, had a significant impact on the forecasts for the first half of 2024, which, as we can see, have come true. The coming months were poorly assessed in all areas studied by the Central Statistical Office, including employment. In December, 11.4% of respondents declared that the indicator would deteriorate at the beginning of the year. – Managers of transport and storage companies only 9% expected improvement. The remaining part, almost 80%. entities decided to watch and wait out the difficult times by suspending hiring and investments.
Tomasz Wiebitsch
Image source: Polish TSL sector at risk of collapse. Pixabay image
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