Research reveals the continuing catastrophic impact of Covid-19 on the commercial road transport industry, with a very high default and insolvency risk across the sector worldwide, according to the International Road Transport Union (IRU).
Insolvency indicators assessed include fixed asset turnover, forecast cash flow and real revenue turning point.
Ranked on a risk scale from one to 10, all regions of the world are standing at the highest levels, nine or ten. This, IRU claims, points to a looming wave of bankruptcies in road transport, which will have a devastating effect on the global economy and its ability to recover from the pandemic.
“The vast majority of the over 3.5 million road transport companies that we represent are small and medium sized firms, and they are the glue that holds global supply chains and mobility networks together,” said IRU Secretary General, Umberto de Pretto. “Most of them are struggling to pay their bills. This is a huge threat to the global economy.”
IRU’s research also shows that global losses have escalated to $679 billion USD (approx. €572.7 billion) for goods transport and at least 500 billion USD (approx. €421.7 billion) for passenger transport.
The update is particularly disastrous for Europe, according to the IRU, where forecast losses for goods transport operators have soared by two thirds since the summer to $125 billion USD (approx. €105.4 billion), and stand at $94 billion USD (approx. €79.3 billion) for passenger transport companies.
If no immediate action is taken, the IRU said these losses are expected to spiral further during the second wave of the pandemic.
“Without immediate government action, a shocking number of road transport operators will go bankrupt in the coming months, causing irrevocable damage to supply chains and mobility networks, and therefore devastating the global economy,” said de Pretto.