Financial performance of road freight transport companies bordering Ukraine in Central and Eastern Europe: The impact of the COVID-19 pandemic and the Russia–Ukraine war

Abstract

The COVID-19 pandemic significantly disrupted the road freight sector in Central and Eastern European (CEE) countries. The closure of borders and restrictions on the movement of drivers and equipment disrupted the normal flow of goods. Additionally, Russian aggression against Ukraine affects the dynamics of supply chains, causing a change in transport routes between Ukraine and other countries, which has also had an impact on bordering countries. We analysed the financial condition and liquidity of 500 companies from each bordering country: Poland, Slovakia, Hungary, and Romania, which belong to the road freight transport industry. To detect structural breaks, we identify whether major events such as the COVID-19 outbreak and the war in Ukraine affected the modelled financial situation of transport companies. Furthermore, we verify whether there is a long-term relationship between the financial conditions of enterprises in these countries. We find that the COVID-19 pandemic has affected the financial liquidity of transport companies and mostly their profit margins, whereas the war situation has not significantly affected the financial indicators of transport companies from Central European countries bordering Ukraine, with the exception of the profit margins of Hungarian companies and the net sales revenues of Romanian companies. Moreover, there is a long-run equilibrium positive relationship of profit margins between Polish, Hungarian, and Romanian companies, and there is a long-run negative relationship of profit margins between Slovakian and Romanian companies.