Guðni Th. Jóhannesson, the President of Iceland, recently completed an official visit to Georgia, where he visited, among other things, the office of Creditinfo in Georgia.
The visit was intended to strengthen the relationship between Iceland and Georgia, among other things through increased cooperation in the field of climate issues and green solutions. The president was accompanied by Guðlaugur Þór Þórðarson, Minister of Environment, Energy and Climate, Nótt Thorberg, director of Grænvang, and a delegation of representatives from the business community, among whom was Hrefna Ösp Sigfinnsdóttir, managing director of Creditinfo in Iceland.
During the visit, Alexander Gomiashvili, Managing Director of Creditinfo in Georgia, welcomed the group and talked about Creditinfo’s activities in Georgia together with Hrefna Ösp, who educated those present about Creditinfo’s activities internationally.
Creditinfo Group has operations in over 30 countries around the world and over 400 employees.
Guðni Th. Jóhannesson, President of Iceland together with Alexander Gomiashvili, Managing Director of Creditinfo in GeorgiaAlexander Gomiashvili, Managing Director of Creditinfo in Georgia addresses the delegation of the President of Iceland.
Creditinfo Estonia’s Payment Default Register was established in 2001 by Estonian banks, being the largest and oldest register in Estonia that gathers consistent and high-quality debt information. The register of payment defaults helps Estonian entrepreneurs make the right credit decisions and enables the application of the principle of responsible lending.
The largest contributors of payment defaults continue to be from the financial sector
In 2023, a total of over 700 companies entered payment defaults in the register. The TOP entrants by activity were:
Credit institutions
Financial service providers
Collection service providers
Telecom companies
During the entire year, more than 100,000 new payment defaults were added to the register by companies, of which 91% were private payment defaults. Payment defaults of legal entities were published in a total of nearly 9,200 cases.
There are tens of thousands of people with payment defaults in Estonia
As of the end of 2023, there were nearly 57,000 individuals with active payment defaults.
During the liquidation of the debt, the current default is marked as closed – in 2023, there were 111,000 private individuals with a closed payment default. A closed payment default indicates that the debt has been paid, but at the same time it warns the creditor that the person has had problems paying bills in the past and this allows for a more accurate assessment of his creditworthiness. NB! In the case of private individuals, closed payment defaults are published for up to 5 years after the payment default has ended.
As of the end of 2023, there were almost 20,000 legal entities or companies-institutions with active payment defaults.
There were nearly 33,000 legal entities with closed payment defaults. NB! In the case of companies, the information provided will be published for another 7 years after the end of the default.
There are more than 150 thousand active payment defaults in the register
By the end of 2023, there were nearly 130,000 active payment defaults in the Payment Default Register by individuals with payment defaults. The average payment default amount, or debt, of a private person is €2,514. There were almost 363,000 private individuals with payment defaults that were closed.
At the end of 2023, there were approximately 40,000 active defaults of legal entities. There were almost 65,000 closed defaults of legal entities.
The number of valid payment defaults has increased
In total, there were nearly 171,000 active payment defaults published in the Payment Default Register. If we add to this the information on payment defaults in the closed and disputed status, the total number of payment defaults in the Payment Default Register is 600,697, which has increased by approx. 9% compared to 2022.
At the same time, the effectiveness of the Payment Failure Register is maintained. Of all payment defaults that have reached publication, one in four, or 26%, is paid immediately within the first month, and half (47%) within the first three months after publication.
The disclosure has the greatest impact on the debts of the financial sector – 36% of all defaults disclosed by banks and leasing companies are paid already within the first month and almost 63% within the first three months.
Dar Es Salaam, 24th January 2024 – Creditinfo Tanzania, provider of credit information and risk management solutions, and ICRA (International Credit Rating Agency) have partnered to launch the ICRA Rating Agency, the first credit rating agency locally based in Tanzania.
The joint venture will provide credit rating and evaluation services to Tanzanian financial institutions, creating for the financial industry. Combined, ICRA and Creditinfo’s Tanzania team bring decades of experience and practical knowledge in credit risk management and analysis to support and improve credit assessment in Tanzania.
Adv Hassan Mansur, Local Director of ICRA Rating Agency Limited said: “We are delighted to launch Tanzania’s first credit rating agency that is fully geared towards strengthening the economy through providing credit rating services that are tailored to the African market. Our partnership with Creditinfo will provide ample opportunities and offer a competitive edge for various institutions, most especially the Tanzanian institutions in the International Market.”
Edwin Urasa, CEO of CreditInfo Tanzania said: “At Creditinfo, we are committed to sustainably growing our business and identifying ideal opportunities to build strong and profitable credit rating agencies, while helping more local citizens and businesses access finance. Our partnership with ICRA marks an important milestone for us and gives us the opportunity to improve the standards of credit assessment. Tanzania is an optimal market for us to introduce this service because of its tremendous promise for inclusive financial services. This venture will set a new standard in credit rating and promote financial health and empowerment across Tanzania.”
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About Creditinfo
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest-growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and decision analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the most considerable global presence in this field of credit risk management, with a significantly greater footprint than competitors. For decades it has provided business information, risk management and credit bureau solutions to some of the largest lenders, governments and central banks globally to increase financial inclusion and generate economic growth by allowing credit access for SMEs and individuals.
ICRA Rating Agency Limited has been accredited for being the First Ever Credit Rating Agency approved by Bank of Tanzania (Central Bank of Tanzania) to which we are the only regional central bank approved credit rating agency offering credit rating services. Our organisation also gets the special status of ecai (external credit assessment institution).
ICRA has an expert team with a combined experience of more than 25 years in Audit, Inspection, Financial Analysis, Credit Research, Banking, Compliance, AML and Certification. Our ratings significantly influence corporate and financial institutions to achieve better market standing. ICRA ratings aim to help various corporations and institutions demonstrate their financial capability.
With the ongoing aggression initiated by the Russian Federation in Ukraine, the need to implement international sanctions has to be embedded in the daily business activities of our companies.
We know that companies – operating in the fields of activity subject to such a special obligation – must do more due diligence to mitigate the risks associated with implementing sanctions, but the processes should be somewhat similar to all of the companies operating in Estonia.
Such companies, whose daily economic activities do not deal with continuous customer background research or transaction monitoring, can sometimes be in a difficult situation where they do not have enough know-how or manpower resources to assess the risk of whether one of their customers or partners falls under the established restrictions or not.
Finding such a necessary workforce is always possible, but as you know, making such a fixed cost can sometimes be impossible according to the company’s business model. In this case, one of the options is to delegate the control of said risks outside the company or to use convenient and straightforward, but at the same time reliable services to help with this task, which are available on the market.
For these cases, Creditinfo is offering small businesses the opportunity to mitigate their risks in two ways – by delegating the checking of compliance with sanction lists for their customers and partners entirely to us or by using a straightforward and convenient solution on our e-Krediidiinfo portal – WebScreening.
The web-based service WebScreening allows you to request the entry of a person of interest to you through a convenient and comprehensive user interface, both on international sanctions (European Union and the United Nations) and watch lists (so-called local sanctions and “black lists” of various countries, in some instances, for example, wanted persons) as well as persons with a national background ( PEP) from the lists.
With additional functions, it is possible to perform user management in the portal (if the company has more than one user) or view the archive of requests made. At this point, it is good to note that the archive of performed requests is convenient to use, for example, to check the performance of the employee’s duties and prove the requests made to the supervisory authority, if necessary.
NEW YORK – January 17, 2024 – Nova Credit, the leading cross-border and alternative credit analytics company, has announced a strategic collaboration with Creditinfo, a global service provider for credit information and risk management solutions, to help Ukrainians gain access to the necessary financial services needed to effectively rebuild their lives abroad. The partnership is powered by Nova Credit’s Credit Passport®, the only cross-border credit solution enabling newcomers to access their foreign credit history when applying for financial products in their new home country.
Bridging this critical data gap, Nova Credit and Creditinfo are providing Ukrainian expats and refugees with the tools they need to get started on the right financial footing upon arrival.Since March 2022, the U.S., U.K., and Canada – Nova Credit’s largest partner markets – have seen a combined 840,000 Ukrainians move*, and that number is expected to grow as the Russia-Ukraine War continues. As many will seek permanent residency in these new countries, a lack of credit history will introduce an obstacle to accessing financial services as, historically, new-to-country individuals have had no way to carry over their credit history and financial identity. This presents a challenge for both new arrivals who are looking to re-establish their lives, in addition to lenders who lack the credit data needed to provide their financial services and products to this newcomer population.
With this partnership, credit data from International Bureau of Credit Histories (IBCH) Ukraine (a Creditinfo credit bureau) – one of the three main credit bureaus in Ukraine – can be instantly translated into a local-equivalent credit report and score so that lenders who use the Credit Passport® solution can assess the credit risk of new-to-country Ukrainian applicants. Nova Credit’s partners using the Credit Passport® today include American Express, HSBC, Scotiabank, and Verizon.
“Of the many credit-excluded migrant populations around the world, few are in more dire need of support than the Ukrainian people,” said Misha Esipov, co-founder and CEO of Nova Credit. “Credit access isn’t just a piece of the puzzle; it’s a lifeline for the countless Ukrainians uprooted by the chaos of war. We set out to build this partnership with Creditinfo and IBCH Ukraine from the onset of the war, and our teams have worked hard to enable this integration. Together, we’re using data to bridge a world where everyone, regardless of where they come from, has a fair shot at building a brighter future.”
“We are delighted to partner with Nova Credit to help Ukrainians arriving in the U.S. gain access to financial services and credit checks as they look to settle and rebuild their lives,” said Satrajit Saha, Global CEO of Creditinfo Group. “Among the many challenges facing Ukrainians, is finding ways to access finance. Having a positive credit history is vital to doing many things in the U.S. such as renting a property and securing a job. This is why the information we can provide through our partnership with Nova Credit is so important – it offers the data financial institutions, employers and landlords need to provide basic services to Ukrainians wanting to rebuild their lives.”
The Credit Passport® Ukraine data integration is available for deployment into any credit risk or underwriting process across the U.S., U.K., Canada, U.A.E, and Singapore. To learn more about how to get started with Credit Passport®, visit: www.novacredit.com/business/credit-passport
*Source: 380,000 into the U.S. according to the U.S. Department of Homeland Security, 250,000 into the U.K. according to UNHCR, and 210,000 into Canada under the CUAET program.
Ends.
ABOUT CREDITINFO
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest-growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and decision analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the most considerable global presence in this field of credit risk management, with a significantly greater footprint than competitors. For decades it has provided business information, risk management and credit bureau solutions to some of the largest lenders, governments and central banks globally to increase financial inclusion and generate economic growth by allowing credit access for SMEs and individuals.
Nova Credit is a credit infrastructure and analytics company that enables businesses to grow responsibly by harnessing consumer credit data. The company leverages its unique set of data sources, bank-grade infrastructure and compliance framework, and proprietary credit expertise to help lenders fill the gaps that exist in traditional credit analytics. Nova Credit serves as the bridge between data and credit excellence, providing a comprehensive suite of solutions designed to give lenders across various industries – including finance, fintech, property management, telecom, and automotive – a competitive edge in the open finance era. Its cross-border credit product, Credit Passport®, cash flow underwriting product, Cash Atlas®, and income verification product, Verification of Income, are used by leading organizations like American Express, Verizon, HSBC, SoFi, Scotiabank, and Yardi. Nova Credit is backed by investors including Canapi Ventures, Kleiner Perkins, General Catalyst, and Index Ventures as well as executives from Goldman Sachs, JP Morgan, and Citi. Learn more at https://www.novacredit.com or reach out to connect@novacredit.com.
In 2021, Creditinfo Estonia received permission from the Financial Supervision Authority to start offering account information services in Estonia, which later expanded to the markets of Latvia and Lithuania. Today, they have been offering the account information service on the market for almost two years. The PSD2 directive regulates the account information service, that grants account information service provider (Creditinfo) access to the transaction data of end-customers of banks and financial institutions, using a secure data transmission channel and customer consent.
Intelligent business decisions can only be made when decision-makers have enough information when making the decision. Decisions made without comprehensive information may remain superficial or rely too much on intuition. A joint decision becomes smart by including relevant, up-to-date, appropriate and verified data for decision-making, analyzing it and drawing conclusions from it.
Companies that want to be competitive in the market and, at the same time, grow faster than the market must act consciously and operatively to take advantage of the exponentially increasing amount of data and to navigate the diverse data landscape. The word “action” means the application of well-thought-out multiple technologies, the careful selection of primary data and adaptation to large, innovative data sets that provide the company with necessary data inquiries and detail-specific analyses. The actions mentioned in the previous sentence are based on the data value chain – a framework for managing data from collection to decision-making.
Access to bank transaction data gives the financial sector and several other sectors an unlimited opportunity to use innovative data sets to improve their business processes. Data (including account data) collection, analysis, targeted use and data-driven decision-making directly relate to Creditinfo’s core business. Creditinfo has invested a lot of time and knowledge to ensure and support its customers in successfully using the account information data. Remember that the customer does not have to invest resources in implementing the necessary specific technologies and data analysis in addition to their core business to filter and acquire value from bank transaction data.
Creditinfo adds value to account data with information from other sources
Quickly extracting and aggregating data from multiple sources is the first step in delivering value from data. For this purpose, Creditinfo has at its disposal the database of the credit bureau, which by its very nature already contains direct and indirect access to several complex data sources. These are national registers, registers built and managed by Creditinfo, and bank account data.
Bank transaction data helps to make more intelligent and more informed decisions regarding the products, services and conditions offered to the end customer. Figuratively speaking, credit bureau data enlighten one corner of the room of a person’s financial behavior, and the information obtained from account transactions enlightens the other corner of the room of a person’s financial behaviour.
Account information, besides evaluating financial behavior, provides information about a person’s daily habits, experiences, preferences, hobbies and much more.
In summary, access to the data of the end customer’s bank transactions provides a foundation for making business decisions based on an even more extensive and significantly more diverse data set, in other words, making decisions even smarter. As a universal, comprehensive solution provider throughout the Baltics, Creditinfo is the only partner for its customers with access to credit bureau data, global KYC data, and bank account data.
Former CEO of TransUnion Europe – Satrajit Saha – brings his expertise to Creditinfo, planning to drive growth across its credit bureaus globally.
London – 29th November 2023: Creditinfo, a global service provider for credit information and risk management solutions, has today announced the appointment of Satrajit Saha as its Global Chief Executive Officer (CEO). With over 20 years of experience in banking and credit bureau, Satrajit will drive the growth of Creditinfo and the maturity of its credit bureaus globally. He joins the company from TransUnion Europe, where he held the position of CEO for the last five years.
In his role, Satrajit will lead Creditinfo in advancing its strategic initiatives, with a particular focus on promoting financial inclusion worldwide. Drawing on his rich background in the credit information industry, spread across Asia, Africa, and Europe, he will lead the next phase of Creditinfo’s growth on a global level as it strives to become a truly global bureau and the leader for facilitating access to finance in both developed and emerging markets.
As an experienced strategic leader, Satrajit has an impressive reputation in the financial services space. At TransUnion Europe, he led the board of all TransUnion’s European owned entities. Before joining TransUnion Europe, he was Chief Business Officer at TransUnion India, where he was responsible for crafting and executing TransUnion’s CIBIL’s market strategy. He was also Cards Head, Africa Region, at Barclays Bank.
Satrajit Saha, newly appointed Global CEO at Creditinfo said: “I am honored to take on the role of Global CEO at Creditinfo, a company that is at the forefront of promoting financial inclusion. Together with the talented team at Creditinfo, we will continue to leverage innovative data sets and solutions to bridge information gaps and create opportunities to facilitate access to finance for individuals and businesses globally.”
Monty Ismail, Director at Levine Leichtman Capital Partners and Creditinfo Group Board member said: “We are delighted to welcome Satrajit “Satty” Saha as our new Global Chief Executive Officer. He is an accomplished executive with successful leadership experience relevant to our business, including his time as CEO of TransUnion UK. Today marks the beginning of a new chapter for Creditinfo, and we are excited to see Satty, with extensive knowledge of our key markets, take over as CEO. We are looking forward to working with Satty in continuing to expand our global footprint and unlock access to finance for millions of consumers and businesses worldwide. On behalf of the Board of Directors, I would like to thank Paul Randall for his important contribution as CEO. He has been key to our success, and we are all grateful for his leadership and dedication.”
He will begin his new role as Creditinfo CEO on 1st January 2024 and will report directly to the Creditinfo Group Board.
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About Creditinfo
Established in 1997 and headquartered in London, UK, Creditinfo is a provider of credit information and risk management solutions worldwide. As one of the fastest-growing companies in its field, Creditinfo facilitates access to finance, through intelligent information, software and decision analytics solutions.
With more than 30 credit bureaus running today, Creditinfo has the most considerable global presence in this field of credit risk management, with a significantly greater footprint than competitors. For decades it has provided business information, risk management and credit bureau solutions to some of the largest, lenders, governments and central banks globally to increase financial inclusion and generate economic growth by allowing credit access for SMEs and individuals.
Reform of BICs, impact of inflation on solvency, feedback from the Checkinfo service – an overview with Sidimohamed Abouchikhi, Regional Director for Francophone Africa of Creditinfo Group, and Director of the Board of Directors of Checkinfo.
Finance News Hebdo: In this inflationary context, what assessment do you make of individuals’ and businesses’ insolvency risks?
Sidimohamed Abouchikhi: Inflation first impacted the distribution of loans after the successive increases in the critical rate (+150 bps), partially passed on to the interest rates applied by credit institutions (+53 bps). If we compare the first six months of the year 2023, we see a virtual stagnation in requests for the granting of credit, whereas usually, we have an increase between 5 and 8% (minimum), or even more than the part of individuals. For businesses, the decline in demand is mitigated when government support programs are included. To come back to your question, inflation naturally induces a reduction in purchasing power and impacts payment habits. We see this with the increase in non-payments which is undoubtedly significant but less than that observed internationally. The evolution of unpaid debts in number is more marked among individuals, whereas in terms of outstanding, the majority is among companies. All in all, we are on a return to normative levels of due payments. Not at the same level as 2019, but improving in 2020 and 2021.
FNH: After a long wait, the government has finally adopted the bill dedicated to Credit Information Bureaux. What are the main contributions of this reform?
Sidimohamed: The long-awaited reform of the Credit Information Bureaux (BIC) will allow better control of systemic risks and better accessibility to financing. It will also make it possible to take a big step towards financial inclusion and ensure that the BICs collect other sources of information besides traditional data. This so-called alternative data from major billers, such as telecom operators, water and electricity suppliers, insurance companies and others, will compensate for the lack of historical information on unbanked customers. The availability of this information will allow financing institutions to open up, with less apprehension, to new customers (individuals and VSMEs) who do not have a banking history but justify good payment habits. And this while reducing the use of guarantees. I remind you that of the 53% of the population with a bank account, less than 30% have access to credit. Therefore, this reform aims to widen access to financing for this population outside the circuit.
FNH: What are Creditinfo Group’s priorities in Morocco and West Africa in the short to medium term?
Sidimohamed: With more than 30 active credit bureaus, Creditinfo now has the most robust global presence in this sector. For over 25 years, we’ve provided credit bureau and risk management solutions and trusted business information to some of the world’s largest lenders, governments and central banks. The objective is to increase financial inclusion and generate economic growth by allowing access to credit for SMEs and individuals. Creditinfo is the industry leader in Africa, with a presence in 18 countries. The company which continues to be strengthened with two new acquisitions dating back barely a month, in Uganda and Namibia.
FNH: Checkinfo, Bank Al-Maghrib’s delegate for managing the irregular check centralization service, started its activities in April 2021. What is your experience feedback to date?
Sidimohamed: After two years of activity, and according to the feedback from our users, we can say that Checkinfo has a significant positive impact on their cash flow and the hassles associated with collection. Indeed, it should be known that 84% of the checks checked and posted irregularly come from accounts in prohibited banking. Therefore, these people are already in banking irregularity because of bad checks or other, and continue to issue checks which, of course, will be returned unpaid. Today, Checkinfo allows its users to protect themselves against these frauds. Moreover, the efficiency rate of the service is 99.6%. Also, you should know that out of all the checks that are checked, 13% are irregular.
At Creditinfo, we recognize the importance of sustainable business practices. Our commitment to this is reflected in our sustainability policy, which outlines our sustainability focus areas and how we wish to engage them.
To better understand where we‘re at and how we can get closer to achieving these goals, we‘ve worked with Sustainability Consultancy Service, Anthesis, on our ESG Maturity Assessment. We‘re proud to announce that we‘ve achieved a High Overall Maturity Score – the most advanced maturity rating that Anthesis designates.
As a leading provider of credit information and risk management solutions operating in more than 30 countries, we are committed to improving access to finance for individuals and businesses and want to promote sustainable practices in everything we do. It‘s great to see that our hard work is paying off, and we will continue to make improvements to improve our ESG performance.“ says Paul Randall, CEO of Creditinfo Group.
Coface records recovery in air transport, but pre-pandemic figures not yet reached.
The transport sector is the one with the highest improvement in risk scores in the latest Coface Quarterly Survey, although the global macroeconomic outlook remains uncertain. Coface experts note that air transport forecasts and new aircraft orders are providing greater optimism. Transport business is rated higher in Western Europe, the Middle East and Japan, while in Central and Eastern Europe (CEE), including the Baltic states, the transport sector continues to be rated the highest risk. The transport sector in Estonia and Latvia is facing more challenges this year, while in Lithuania the situation has started to improve since Q2, with a decrease in bankruptcies and an increase in the forecasts for businesses.
According to Coface experts, the higher scores in the transport sector are mainly due to the recovery of the Chinese economy and global tourism, as well as to public policy decisions, such as the priority given to rail traffic in Germany. However, overall risks to the transport sector remain very high due to high energy costs and demand still below pre-pandemic levels.
Head of Coface Baltics, Mindaugas Sventickas, points out that it is air transport that has been the activity most affected in the global transport sector, and that it is now recovering rapidly. This is due to the gradual economic recovery from the second half of 2021 onwards, significantly influenced by the opening up of Japan (end of 2022) and China (early 2023), which has facilitated travel conditions for international tourists.
The Coface survey shows that while the number of commercial flights has increased and is now even above pre-pandemic levels, seat occupancy rates remain lower. For example, in the Asia-Pacific region, total passenger traffic in April 2023 increased by 171% compared to April last year, thanks in particular to China. Despite the strong growth, demand in this region remains lower than in 2019 (-18% in April 2023 compared to April 2019).
New orders for Airbus and Boeing aircraft are rising: aiming to fly greener and save fuel
In Western Europe and the United States, Airbus and Boeing have also reported an increase in aircraft orders, reaching 774 Boeing and 820 Airbus aircraft in 2022. At the 2022 Paris Air Show, a number of new orders were announced, with Air IndiGo ordering 500 A320 aircraft and Air India ordering 250 Airbus and 220 Boeing aircraft. According to the experts at Coface, this acceleration in the aerospace industry has prompted the decision to improve the risk assessment of the transport sector in some countries, e.g. France. Many of the production processes of Airbus are carried out in France, with production sites spread over Germany, Spain and the United Kingdom. This has contributed to a better assessment of the transport sector across Western Europe.
“It is also worth noting that the main players in the air transport industry are pursuing a strategy that takes environmental concerns into account. On the one hand, this motivates manufacturers to innovate in order to develop ‘cleaner’ aircraft. On the other hand, it encourages airlines to upgrade their fleets to use less energy,” comments Sventickas.
Cargo transport by sea decreases by almost one third
The situation is different in maritime transport, where activity is slowing down slightly after two exceptional years. Declining sea freight rates, high energy costs and stagflation are adversely affecting the financial performance of sea carriers. The revenues of Maersk and CMA CGM in Q1 2023 decreased by 26% and 30% respectively compared to Q1 last year, although they remain significantly higher than in Q1 2019.
This drop in revenue is primarily due to price effects (a fall in freight rates), while the drop in volumes is smaller, with a 3% annual decrease in the container index for January–April 2023. This drop in volumes is partly passed on to rail and motor transport, which is primarily used for the transport of cargo from ports.
Passenger transport in the Baltic States has not yet reached pre-pandemic levels
When analysing air passenger flows in the Baltic states for the period 2019–2023, the highest passenger traffic is traditionally observed in Q3 of each year. After the pandemic, air passenger traffic in all of the Baltic states, although slowly increasing, has not yet reached the levels recorded in 2019. For example, in Q3 2019, the number of air passengers in Estonia reached 954,000, in Latvia 2,299,000 and in Lithuania 1,821,000. In the same period last year (Q3 2022), the figures were 841,000 (88%), 1,711,000 (71%) and 1,677,000 (92%) respectively. According to Eurostat and Coface, the total number of passengers carried by air in the Baltic states in 2022 was 13,434, compared to 6,094 in 2021, 4,657 in 2020 and 17,548 in 2019.
The situation in rail passenger transport is slightly better. For example, in Q3 2019, the number of passengers in Estonia was 2,105,000, in Latvia 5,256,000 and in Lithuania 1,287,000. In the same period last year, the figures were 1,837,000 (87%), 4,835,000 (92%) and 1,292,000 (100%) respectively. The total number of passengers carried by rail in the Baltic states in 2022 was 27,289, compared to 21,069 in 2021, 22,085 in 2020 and 31,986 in 2019. In Q1 of this year, the figure for the Baltic countries was 6,485.
Sventickas notes that the Lithuanian transport sector is distinguished from other Baltic countries by more optimistic forecasts for 2023: “Although the situation in the Lithuanian transport sector deteriorated in the first quarter of this year, we have seen some positive trends since the second quarter of this year: the transport of freight by sea and water has stabilised and the transport of freight by land has returned to almost pre-pandemic levels. Since February this year, the forecasts of transport companies in Lithuania have become more stable, while previously they had been declining for several months.”
Creditinfo: Optimism of Lithuanian transport companies is good news for almost 200,000 employees in the sector
According to 2022 data, Lithuania’s transport and storage sector generated 11.2% of the country’s GDP, which is 2.6 times more than the average for other EU countries. In total, there are currently 8,568 transport and logistics companies in Lithuania, employing 171,300 people, i.e. a quarter more than in 2019.
Jekaterina Rojaka, Head of Business Development and Strategy at Creditinfo Lietuva, points out that the majority (72%) of companies in the transport sector in Lithuania are involved in road freight transport. According to the data of July this year, even 6,195 out of 8,568 transport companies registered in Lithuania indicate that their main activity is transportation of goods by land. Transport accounts for over 55% of Lithuania’s total exports of services. The number of air and water transport companies is 21 and 37 respectively; 2,233 companies in the sector provide storage and transport-related activities and 82 companies provide postal and courier services.
“During the pandemic, the risk exposure of Lithuanian transport companies increased due to travel restrictions, changes in the demand for goods, and then the rise in fuel prices,” says Rojaka. “In 2022, there was a sharp increase in the number of bankruptcies in the transport sector, which started to stabilise this year. In the first half of this year, bankruptcies in the transport sector accounted for only 6% of all company bankruptcies, compared to 24% in the trade sector and 20% in the construction sector. In total, 35 transport service companies have gone bankrupt since the beginning of the year, compared to 50 companies in the sector that went into bankruptcy in the same period last year.”
Rojaka says that although the number of bankruptcies of transport companies has decreased, the number of new companies has slowed down slightly: last year, despite bankruptcies, new companies were actively registering, while in the first four months of this year that number has contracted by 2%. According to a representative of the credit bureau, transport companies have started to borrow more, and the average debt of a company has increased by approximately 35%. There is also a lower number of companies with a low risk of bankruptcy, that is 58.1%, compared to the overall assessment of Lithuanian business of 69.5%. The share of companies in the transport sector experiencing financial difficulties in 2022 is lower than the national average, and amounts to 13.2% (compared to 17.6% for the economy as a whole).
“With the slowdown in domestic consumption in the EU, transport service providers continue to face challenges this year, with competition in the sector increasing due to limited demand, and service fees shrinking. Waterborne transport has seen a particularly sharp fall: The Baltic Dry index contracted by 57% over the year, and this year similar trends have been observed in road transport,” explains Rojaka. “The best short-term prospects for the sector at the moment are for airlines, which are steadily both increasing the number of flights and trying to rebuild the revenues lost in the pandemic. With inflation gradually slowing and demand stabilising, the situation for land and water transport companies should improve next year.”
