Vehicle logistics operators struggle for investment cash

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Europe’s vehicle logistics sector is struggling for finance because banks are sceptical about the prospects for the wider automotive industry, according the a report by The Association of European Vehicle Logistics (ECG).

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Association president Costantino Baldissara said: “This analysis, the most comprehensive ever conducted of the outbound vehicle logistics sector, makes an overwhelming case for the financial solidity and future prospects of this business.”

“Our sector has had a tough time since the economic crisis hit home in the fourth quarter of 2008. Many companies have had to cut jobs and capacity to survive. It is still a struggle but this is a sector that resists pressure well and reacts nimbly to changing circumstances. We expect to see recovery this year and steady growth in the years ahead.”

However, he said, the crisis has also taken a toll of the sector’s financial strength at exactly the time that it needs to invest for the future.

“We estimate that will have to invest €4bn to €7bn over the short- to medium-term, simply to replace existing assets. Yet when we approach the banks we find them reluctant even to assess our creditworthiness. This is partly because, at a time of tight credit, they are wary of industries, like automotive, that have been hit hard by the crisis, and partly because until now there has been a lack of comprehensive, reliable information on the sector.”

Baldissara said that as vehicle demand picked up, Europe’s manufacturers would need urgent access to new transport equipment to meet surging distribution requirements.

“There are no possible substitutes for our sector’s railway wagons and road transporters, ships and barges. They are custom-built for this industry. Yet they cannot be produced in the blink of an eye. It can take up to three years and tens of millions of euros to build a ship, for instance. That is why access to financing is critical now.

“We believe this report provides a compelling case for this sector as a reliable, credit-worthy partner. We look forward to discussing it with the banks.”

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