Government inaction will lead to a wave of bankruptcies in the road transport sector

ESC is supporting IRU in its call for action to governments worldwide. The transport sector will collapse without targeted action as government financial packages are failing road transport. Road transport losses – goods and passenger – are now set to exceed USD 1 trillion globally in 2020. The very high default and insolvency risk identified in the sector will lead to mass bankruptcies.

New IRU research reveals the continuing catastrophic impact of COVID-19 on the commercial road transport industry. Insolvency indicators assessed include fixed asset turnover, forecast cash flow and real revenue turning point. Ranked on a risk scale from one to ten, all regions of the world are standing at the highest levels, nine or ten. This 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 update is particularly disastrous for Europe, where forecast losses for goods transport operators have soared by two thirds since the summer to USD 125 billion, and stand at USD 94 billion for passenger transport companies. If no immediate action is taken, these losses are expected to spiral further during the second wave of the pandemic.

On the 12th of November, IRU’s General Assembly backed an urgent call for action to governments worldwide. Help is particularly crucial in three areas: cash grants to address liquidity, insurance premium flexibility, and waiving taxes and charges.

“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,” warned Mr de Pretto.

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