After four months of the Covid-19 pandemic, transport companies still face a sharp decline in demand, billing and credit restrictions.
Transport Companies Still Facing Demand Decline
The transport sector recorded a drop in demand for the fourth consecutive month, according to the CNT (National Confederation of Transport) Transport Impact Survey – Covid-19, released 23rd July. 74.6% of carriers pointed out that there was a decrease in demand in June, with 57.2% evaluating this drop as significant. The survey also revealed that carriers are facing difficult accessing credit, which started at the beginning of the pandemic, with more than a third of companies (34%) having to resort to revolving credit to stay afloat. This type of credit incurs the highest interest rates on the market.
One finding from the survey found that Cargo and passenger companies from all modes of transport between the week of 9th-15th July, suffered greatly, with four-fifths (79.8%) projecting negative figures for at least four consecutive months.
26.4% of transport companies were able to remaining operating independently for a maximum of another month, with 21.3% having to resort to credit applications to maintain cash flow and operations management.
The drop in sales was pointed out by 60.7% of companies consulted for the survey. 41.8% of the carriers admitted that their payment capacity has been compromised – in all major areas, such as payroll, instalment plans, taxes and rent.
Vander Costa, the president of CNT acknowledged that the figures reinforce a drastic decrease in demand as well as the overall revenue of the sector, causing, in turn severe economic difficulties for transporters at present. His solution is to present an immediate bailout plan to carriers in order to offer a more reasonable, exclusive pre-approved credit plan, slashing interest rates and extending grace periods.
“We understand that, after four months of the pandemic, if government initiatives don’t reflect an effective emergency relief to companies, many carriers will cease their activities and whole segments, such as the working urban passenger may collapse, which will compromise the supply and functioning of Brazilian cities, as well as the recovery of economy activity,” he added, warningly.
Accessing credit has certainly been a constant during the crisis, with 52% of companies asking banks for some form of financing, whilst 54.3% of those requests were denied. 59.8% of those say they know of the work of Pronampe (the National Programme supporting Micro and Small Enterprises), a federal government initiative enabling credit directly to small companies. 39.6% requested credit. Currently 90.1% of applications were either rejected or currently still pending an outcome.
Companies surveyed have some crucial ideas, with 50.8% wanting exemption from federal taxes during the pandemic and 50.7% an extended grace period for the provision of credit offered. 39.3% also cited the necessity of maintaining payroll tax relief for the transport sector. These guidelines have been consistently sought by the transporters since the inception of the pandemic.
The outcomes have been immediate. Until mid-July 42.5% of the companies surveyed had adopted temporary suspension of employment contracts as an alternative to give relief direct to their cash flow. 42.7% also resorted to reductions for their staff of hours and wages, whilst 43.6% had to resort to lay-offs as a last resort.
Some other key figures: 41.8% believe that the payment capacity is very compromised, currently, whilst looking to the future, 80.1% of companies expect a future decrease in revenue in July.