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Infrastructure: Analysis: Infrastructure limits goods transport business
Romania could become a significant player in the transport of goods in the area if road and railway infrastructure followed the growing trend of business in this sector, when business grew last year by 8% to 53.8 billion lei (11.78 billion euro), say experts from KeysFin, in an analysis made for the Unions of Expedition Societies in Romania.
Business in the transport of goods sector grew last year by 8% compared to 2016 and by 50% against 2013. The over 32,000 companies in this sector reported a net profit of 2.9 billion lei, on the rise by 14.2% compared to the previous year and about double against 2013.
According to KeysFin analysts, poor infrastructure slowed down business significantly.
“Romania’s geo-strategic position at the border between east and west, with Constanta port in the foreground, indicates a significant potential for goods transport in Romania. Bad roads and old railway infrastructure affect the goods transport sector and the whole Romanian economy. For 2018 we estimate a temperate business increase of 8.2% in this sector, to 58.1 billion lei,” says Marius Cae, the president of the Union of Expedition Societies in Romania.
According to KeysFin data, the biggest business in the goods transport sector are operated by companies from Bucharest and Ilfov.
Bucharest companies reported businesses of 8.69 billion lei last year, which represents 16% of overall business at national level. The counties of Cluj (8.8%), Bihor (6.8%), Arges (6.5%), and Timis (6.2%) are in the top of the most active business areas. Together, the first 5 counties concentrated 44% of total in 2017.
15 big companies, 381 middle companies, 2,452 small companies and 29,835 micro companies activate at present in the goods transport industry. The largest share in the business figure was generated by medium companies (32% of total).
“The number of transporters dropped by 6.5% against 2016, but in the last ten years, it marks an increase of 10%. In 2018, on the background of better economic conditions, we estimate a slight return to 33,400 companies,” KeysFin analysts say.
Aquila Part Prod company was market leader in 2017, with a business figure of 906.7 million (1.7% of total).
The top of goods transporters is completed by Carrion Expedition, with business of 823 million lei, Grup Feroviar Roman (724 million lei), CFR Marfa (569 million lei), Schenker Logistics (569 million lei), Vos Logistics, Transmec, Duvenbeck Logistik, TTS and Gefco, all with businesses under 300 million lei.
The largest ten players generates businesses of 3.75 billion lei, that is 10% of total in 2017.
Data show, at the same time, that Transpeco was the most profitable goods transporter in 2017, with 32.7 million lei, followed by North Star Shipping, with 26.6 million lei and Somesul Cald Productie, with a profit of 25.9 million lei.
The most profitable five players obtained a cumulated profit of over 128.8 million lei, that is 4.5% of total in 2017.
The biggest employer is CFR Marfa, which had 6,000 employees in 2017 (3.5% of total). The first five companies, according to the number of employees, employed only 9% of the labour force in that industry.
According to the type of companies, micro companies were the biggest employers with 32% of labour force in 2017.
“In 2018, labour force of the two industries will grow by7.6% (expedition houses) and 1.4% (goods transport) and on middle term we expect a consolidation of the number of employees on the background of migration and technology,” KeysFin analysts estimate.
They say it is not easy to do business in the the transport sector. Beyond the problem of road and railway infrastructure, many companies face financial blocking.
According to KeysFin data, the number of companies dealing with the transport of goods in insolvency grew in 2017 to 405, and the trend may continue.
“Delayed payments grew by 3% compared to 2016 and by 5.1% against 2013, to 2.56 billion lei in 2017. About 70% of them represented delayed payments to suppliers. More alarming is the fact that the share of bills unpaid for more than a year, to 58% of total, in 2017. Moreover, commercial debts grew by 3.6% compared to 2016, being about a quarter higher than in 2013, to 8.7 billion lei in 2017 (they represented 33.5% of total debts)” analysts say.
The capacity to pay current obligations by using active stock grew by 4.7% against 2016 and by 12% against 2013, to 1.04 in 2017.
“Next to the average period of receiving and paying debts, the indicator shows an improvement of the cash position in the last 5 years, and the estimate is to continue the tendency on a short term,”experts say.
Bad roads, inoperable railways, busy traffic. These are the main problems faced by transporters, who also claim excessive taxation.
“Romania ranks third in Europe for fuel prices. Cumulated, all these problems make the sector go down. Thus there is a real negative performance at European level. Over 2006-2016, transport of goods in EU grew slower than the evolution of GDP. The ratio of the two indicators was minus 43% in Romania’s case, lower than the European average of minus 10%. According to Eurostat data, in 2016 Romania transported 62 million tons of goods, while Poland transported 341 millions. We have a better situation than Bulgaria, Greece and Hungary, but reported to western countries, France, Germany or Spain, we transport 3-4 times fewer goods,” said Marius Cae.
The KeysFin analysis shows that investments in infrastructure are a priority.
“We need good transport ways both for roads and railways. Even though Romanian companies have invested significantly in logistics, without insuring rapid transport ways, commercial relations will continue to suffer, despite the excellent business potential in this sector,” is the conclusion of KeysFin analysis.