In 2019, Poland was the EU leader in transport services. 

The sector’s development slowed down due to covid-19 – cargo tonnage transported by Polish carriers dropped by 8.3% YoY between January and July 2020.

However, the outlook for the sector is optimistic. According to Santander Bank Polska analysts, the demand for services of Polish carriers can rebound to the pre-pandemic level  already in 2021.

Central and Eastern Europe strengthens its position in the TSL sector

Warsaw, 28 Sep 2020
In 2019, Polish carriers have become the EU leader in terms of transport, outpacing Germany. During that time, Poland increased its transport performance by 14%, thus raising its share in the cross-border shipping in the EU to 32% (by 2 p.p.). Spain is ranked second. Spanish carriers account for 12% of international shipments. 

The data for 2019 show the growing importance of the CEE in the transport and logistics sector. New EU member states have increased their share in the EU market by 11 p.p. since 2008 (22% in 2008 vs. 33% in 2019). Western European carriers still have not regained the international shipment volume from 2008.

The pandemic slowed down the transport

Covid-19 pandemic affected the road transport. The cargo tonnage transported by Polish carriers dropped by 8.3% YoY between January and July 2020. This fall results from lower production and trade activity in Poland and the EU. In Q2 2019, domestic demand, industrial production and exports in Poland decreased (by -9.5%, -13.6% and -15.6% YoY, respectively).

Despite the pessimistic data, the impact of the pandemic on the transport, shipping and logistics sector seems relatively moderate. In fact, between January and May 2019, the international trade between the EU member states decreased by 13.9% compared to the same period  last year. However, the situation of transport and logistics companies differed depending on the business sectors of their customers as well as their business size and model”, said Martyna Dziubak, Head of automotive and TSL sectors in Santander Bank Polska. She also added that: “In the first half of 2020 the pandemic boosted the e-commerce sector. According to Santander Bank Polska’s estimates, during that time, B2C sales increased in Poland by ca. 140%, which generated additional demand for transport of goods to logistic centres and final off-takers.”

E-commerce and warehousing businesses save Polish carriers

The lockdown made the retail and industrial sector turn to e-commerce. As a result, the estimated growth in B2C sales in the first half of 2020 was 140%, however, it is difficult to assume that this trend will continue throughout the year. It is also worth noting that this was also a record-high period in terms of the warehousing space supply in Poland. New agreements and extensions accounted for 74% of the total demand, while contract renegotiations represented only 26% (acc. to Cushman&Wakefield report). Following the development of modern warehousing space, many retailers place their logistic centres in Poland to service also the neighbouring markets, mainly Germany and Scandinavia.

Uncertainty does not improve the moods of transport operators

The economic situation survey conducted by the Statistics Poland (GUS) shows that even though the sentiments improve when it comes to the current situation , they do not change so quickly when it comes to the future. According to the Statistics Poland, the percentage of businesses that experienced insufficient demand doubled when compared to the period before the pandemic (44.6% in August vs. 19.6% in January 2020). The percentage of businesses that are uncertain about the general economic situation also increased twice (71% in August vs. 31.1 in February 2020).

“In August 2020 we could observe a slight adjustment in the economic situation survey by the Statistics Poland. This shows that businesses are highly concerned about the future. That is why for now the priority for TSL businesses is to keep liquidity, – unfortunately, the best recipe for that is cutting down on new investments”, said Radosław Pelc, sectoral analyst of Santander Bank Polska. “The data show that carriers put their vehicle fleet replacement on hold. The number of new trucks over 6 tonnes registered in Poland between January and July decreased by 47% YoY.  It is worth noting that this downward trend has continued since July 2019”, he added.

Cost and price pressure, squeezing margins 

An increasing pressure on costs due to new regulations, growing remuneration and price war do not improve the sentiment either. 

Margins in theTSL sector that are to cover fixed costs decreased along with falling shipment volumes. This concerned mainly operators with a higher level of fixed costs, with own vehicles and drivers prevailing in their resource structure.  At the same time, according to the Statistics Poland, the employment in the sector grew by 2.3% YoY between January and July 2020, while the average gross remuneration in the land cargo transport sector did not decrease YoY. In July, the European Parliament finally adopted the Mobility Package that will increase the cost of running business in the sector and limit its activity.

New EU regulations will affect mainly businesses specialised in cross-trade and cabotage transport services. The new regulations can impact the pace of recovery of the sector’s recovery to the pre-crisis level. 

Outlook for 2021

The outlook for the domestic transport sector depends mainly on the economic situation in Europe which is driven to a large extent by the pandemic. The International Monetary Fund expects the Eurozone economy to shrink by 10% in 2020 and recover at the pace of 6% in 2021. 

In the baseline scenario for large companies from the TSL sector,  Santander Bank Polska assumed that the income will rebound to the level from 2019 in 2021. In the long-term perspective, the sector’s development may be supported by a good situation on the warehousing and e-commerce market and potential development of regional supply chains. Another important factor is development of road and railway infrastructure and sea ports, which provides more opportunities for intermodal transport in the CEE, transport between Eastern and Western Europe as well as for the industrial production in Poland. On the other hand, regulatory changes, Brexit and potential trade wars will remain key challenges for the sector”, summarised Radosław Pelc from Santander Bank Polska.