Customers from which sectors pose particular risks for the transport and logistics industry in terms of impending payment defaults?
Frank Huster Due to the ongoing lockdown of the hotel and catering industry, their logistics service providers are of course just as negatively affected as trade fair and event logistics providers. There is also a slight need to catch up in the automotive sector. This also applies to a limited extent to retail delivery logistics, although this can largely be compensated for by online retail logistics. In the meantime, system and general cargo logistics providers are also increasingly active in the B2C market, without taking market share from the classic CEP service providers. Most forwarding houses have a heterogeneous customer structure across different industries. Having several mainstays has proven to be the right strategy.
According to the payment morale barometer of credit insurer Atradius, average payment periods more than quadrupled across all industries during the Corona pandemic: in Germany from 22 days to 92 days. Does a similar trend apply to the logistics industry?
Frank Huster No. Many freight forwarding companies have adjusted their payment flows on the credit and debit side, and payment behavior in the industry remains good and reliable. Freight forwarders currently generally pay their transport service providers and suppliers after about 20 to 30 days.
According to the Atradius study, companies in the transport industry have to wait an average of 200 days to receive payment after invoicing. Does this threaten liquidity problems?
Frank Huster We can absolutely not confirm this. Basically, however, you have to differentiate between German and foreign customers, for whom there are often longer payment periods. In business relationships with India and the Arab Emirates, payment periods of 120 days are not unusual. However, these are exceptions. Compared to the pre-crisis period, the situation has worsened by 3-4 days if at all, i.e. only slightly. Payment periods of 60 days are also rather exceptions; on average, the period is 20 to 40 days. It should also be mentioned, however, that even in pre-pandemic times, individual large industrial shippers urged their logistics partners to accept payment terms of three months. In contract logistics in particular, it is not uncommon for freight forwarders to make advance payments. But this has nothing to do with the Corona crisis. Rather, it has to do with the market and purchasing power of these large shippers. In view of the high demand for transport services, many of our member companies are currently able to confidently part with defaulting customers. And in the event of non-payment, there is, incidentally, the option under the German Commercial Code of seizing a shipment, i.e. simply not delivering a container.
Short-time work a helpful instrument
Insolvencies in Germany are at a very low level overall. Experts expect a lagging effect once government aid measures such as the suspension of the obligation to file for insolvency, short-time work or KfW loans have expired. There is talk of so-called zombie companies. Is this similar in your industry?
Frank Huster No. Significant corona-related insolvencies are not to be expected in the freight forwarding and logistics sector in view of good sales expectations and high demand for skilled workers. In the road haulage submarket, however, Eastern European competition is putting German companies under severe pressure. However, a wave of insolvencies is not expected here either. In order to protect themselves as creditors against zombie companies, many forwarding companies have systematically optimized their receivables management and in some cases even hired new employees for this purpose.