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EU state aid crisis framework on Ukraine not enough to stop road transport bankruptcies
Europe | Brussels

EU state aid crisis framework on Ukraine not enough to stop road transport bankruptcies

24 Mar 2022 · Prosperity

The European Commission announced yesterday a temporary crisis framework for state aid economic support measures in relation to the war in Ukraine. It does not go far enough to support commercial road transport operators overwhelmed by escalating fuel costs.

“IRU welcomes the temporary measures to support economic activity and jobs across the EU, but they fall short,” said Raluca Marian, IRU’s Director of EU Advocacy. “The exemptions on state aid are limited and not specific to transport, and escalating fuel prices are not even mentioned. The plan needs specific measures to support road transport operators struggling with out of control fuel prices and facing a cash flow crunch.” 

Fuel prices have increased by up to 80% since January 2021, spiking by more than 25% in the past month alone. Fuel represents 30% of a commercial road transport operator’s costs but passing on cost hikes to their customers is often impossible. 

With thin margins and restrictive commercial terms, many of the one million road transport companies in the EU are on the verge of financial collapse, especially the more than 80% that are small firms with less than ten vehicles. 

“Unless supported by public funds, many road transport firms will go bankrupt in the coming weeks and months, creating significant gaps in EU supply chains and mobility networks,” added Raluca Marian. 

The Commission’s plan recognises that high energy prices, supply chain disruptions and increased uncertainty have impacted key sectors, including transport and tourism, which have also been hit by the pandemic. The plans helps with liquidity shortages, in general terms, with subsidised loans of up to EUR 400,000 per impacted firm allowed. 

However, unlike other sectors such as manufacturing, the transport sector is not mentioned in the Commission’s plan, despite being a fundamental pillar that allows all other sectors to operate. While addressing severe increases in natural gas and electricity prices, it also does not address fuel prices. 

“EU Member States need to put in place initiatives that prevent the collapse of a significant part of their commercial road transport sectors and the resulting harm to their communities and economies. The EU’s temporary crisis framework on state aid needs to enable this to happen.”

Raluca Marian
IRU Director of EU Advocacy