Savings versus investment – how to find the golden mean in transportation?

Finance
Savings versus investment – how to find the golden mean in transportation?
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The situation of the transportation industry that occurred as a result of the Covid-19 coronavirus is still far from good. The slump that occurred in March and April has begun to subside since June, but the future is still highly uncertain. How should industry players behave in this situation: save or invest?

Slump in April and March

Analysis of the Polish Economic Institute concerning transport sector in Poland is not optimistic in any aspect. It has been estimated that transport sector has found itself in even more difficult situation than warehousing and only courier companies can count on development in times of crisis economy. The ”PIE Weekly” unequivocally stated:

”Now, in addition to the usual tasks of harmonious delivery of products carried out by these companies, new challenges have been added to ensure the sanitary safety of employees and customers and to protect endangered jobs

PIE Weekly

The place of a fairly high willingness to invest has been taken by concern about whether the company can cope with the new costs that the pandemic situation has imposed on the transport industry. It also turned out that entities that had reserves were in a better situation. The worst situation is among the representatives of passenger transport. 3 thousand carriers employing 15 thousand drivers quite suddenly lost 80-90% of revenues. Instead of temptation to invest, so characteristic for the period before the pandemic, the spectre of bankruptcy appeared.

The courier industry is booming

A dynamic growth of traffic took place in the segment of the transport market that concerns courier shipments. Authors of the report of the Polish Economic Institute noted that sometimes the increase in the number of deliveries of products such as food oscillated even around 100%. The Poles like the option of using parcel machines more and more. In some cities, e.g. in Cracow, special official parcel machines appeared, where one can collect e.g. a driver’s license. All in order to minimize the risk of infection. In the worst period of the pandemic, when recruitment announcements were rare, there were still offers for couriers. Investment in new employees and equipment in the case of this industry seems to be justified. Even if there is no second wave of infections, distrust and habits will remain for a long time.

A rebound in June. When will the situation normalize?

June’s rebound in the transport sector has helped to kick-start the overall economy, but there is still little reason for great optimism – at least over the next few months. The European international transport market could contract by up to 17% and the situation should return to relative normality in the first months of 2021

However, it is worth noting that even before the pandemic, the transport sector was struggling with:

  • driver shortages,
  • liquidity problems,
  • increased legal restrictions.

It was suggested to increase rates and invest in modern technologies.

Savings through investment in modern technologies?

The pandemic has shown that the winners in the market are not only those with reserves of resources, but also companies that focus on diversification (especially in the case of small and medium-sized entities) and above all automation. The idea is that a shortage of employees or their temporary exclusion from the ability to perform work, e.g. due to a pandemic, should not be tantamount to a complete shutdown of the company

In the long run, investments in automation are expected to save logistics and transport as much as PLN 2.4 billion annually

The first step to gaining funds for investments can be saving e.g. on systems used by drivers (unification), rational choice of systems, optimization of order processing or well thought out investment loan.

(photo: pixabay.com)

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