The transport sector is bleeding: “The sector is an SME sector where the buffer is not always large enough”

The economy is not doing great, and the transport sector is clearly not doing so. In 2022 alone, 577 companies went bankrupt, this year that number seems to rise towards 600. Isabelle De Maegt, spokesperson for Febetra, the Belgian transport federation, explains.

Listen to the full conversation here.

In the news: The transport sector is groaning.

• “When the economy is slack, fewer goods are bought. And if fewer goods are bought, then of course fewer goods will be produced and less will be transported. So at that moment the demand for transport is smaller than the supply of transport”, De Maegt immediately explains the situation.
• “That of course has a negative pressure on prices,” says the spokesperson. “Moreover, we also have to take rising costs into account in the transport sector: we had a wage indexation of more than 10 percent in January. We are now also coming out of an energy crisis that has caused the diesel price to skyrocket.”
• “If you then have companies that are confronted with higher costs, but those higher costs are not passed on to the customers; then unfortunately bankruptcy follows, especially among smaller companies. The sector is an SME sector where the buffer is not always large enough. If you look at the size of companies, 35 percent have only one motor vehicle, so the boss of the company is also behind the wheel. In fact, more than half of the transport companies have a maximum of five vehicles. So those are really small companies,” says De Maegt

Underlying: In any case, the rise of e-commerce plays a role in the story. Suppliers have packed their warehouses during and after corona, and they are only slowly emptying again.

• “It is true that the warehouses are full. And then of course there is also less need for transport. But we see that the decrease in transport is not only in e-commerce, but also in other transport branches.”

Get well soon: Will the sector recover?

• “If the economy picks up again, the demand for transport will also increase again. And if we look at the forecasts, transport will certainly be on the rise,” says De Maegt. Entrepreneurs in the sector are faced with a new challenge: electrification.
• “The energy transition has also started for the transport sector. Initially, these will be electric vehicles, but hydrogen-powered vehicles will also be used for longer distances. But those vehicles are of course much more expensive than diesel vehicles. At the moment, transport companies will purchase such zero-emission vehicles if the customer is willing to pay the additional costs.”