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High diesel prices: Cash flow in freight forwarding and logistics under pressure
Rising diesel prices are hitting the haulage and logistics industry hard. However, the real problem often does not lie in the costs themselves – but in the timing of payment flows. Many companies are working at full capacity and are still under financial pressure. The reason lies in a mechanism that is often underestimated.
The most important at a glance
- High diesel prices massively increase costs in the logistics sector in the short term
- Revenue often only flows weeks or months later
- This creates a growing liquidity gap
- The real problem lies in working capital timing
- Many companies have full order books – but too little available liquidity
- Classical financing instruments are increasingly reaching their limits
- Factoring can help to secure liquidity in freight forwarding and logistics at short notice
High diesel prices directly affect the logistics sector
Diesel prices of over 2 CHF per litre are no longer an exception for many transport companies, but part of everyday life. The effects are immediately noticeable: costs are rising, margins are coming under pressure and economic decisions are becoming more difficult.
In the transport and logistics sector in particular, fuel costs account for a significant proportion of total costs. Even small price increases have a direct impact on profitability and often cannot be passed on to customers immediately.
However, as obvious as the burden of high diesel prices is, one decisive factor is often underestimated.
The real problem: Liquidity in freight forwarding and logistics
Many companies focus on rising costs and overlook the real challenge: the time difference between expenditure and revenue. In practice, this means that central cost blocks such as diesel, tolls or wages have to be paid immediately, while customers often only pay their invoices after 30, 60 or even 90 days. This time gap must be bridged financially. This is precisely where the pressure on liquidity in freight forwarding and logistics arises.
In stable market phases, this imbalance can often still be compensated for. Companies then draw on existing credit lines, for example, utilise reserves or benefit from relatively constant cost structures that enable better planning. Well-established customer relationships with reliable payment terms also help to keep liquidity predictable.
However, as soon as several factors start to move at the same time – such as rising diesel prices, volatile demand or uncertain geopolitical developments – this balance begins to falter. Costs rise in the short term, sometimes sharply, while income continues to flow with a delay. The result is a growing financing gap that can no longer be compensated for by traditional means alone. What was previously a controllable operational issue develops into a structural risk to financial stability in such phases.
Working Capital: The underestimated risk in the transport business
The central concept behind this development is working capital. It describes the ratio between current assets (e.g. receivables) and current liabilities. This ratio is particularly critical in the logistics sector, as the cash flows diverge greatly in terms of timing.
Typical scenario:
- Order is executed
- Costs are incurred immediately
- Payment is delayed
With rising diesel prices, this problem is further exacerbated because:
- pre-financing becomes more expensive
- the liquidity gap grows
- the dependence on external sources of financing increases
The result
Companies come under pressure despite a good order situation. Liquidity becomes a bottleneck – not because there are no orders, but because financing the interim period becomes increasingly difficult. It is precisely at this point that a company’s ability to act in a volatile market environment is decided.
Marc Meier
Managing Director at A.B.S. Factoring AG
Full order books, but declining liquidity
Many conversations with companies in the transport and logistics sector are currently revealing an apparent contradiction: demand is there, the order situation is stable and capacity utilisation is high. Yet liquidity is becoming increasingly scarce.
This phenomenon cannot be explained by a weak business model, but rather by the changed framework conditions under which this business model operates. While orders are being processed as usual, the financial burdens are increasingly shifting forwards. Costs have to be borne immediately, while the corresponding income only follows with a time lag.
It becomes particularly critical when several factors occur simultaneously:
- rising diesel prices
- higher personnel costs
- volatile demand
- shorter planning cycles
The result is growing pressure to adapt: Companies have to react ever faster to changes without losing the necessary financial stability. Liquidity is becoming a bottleneck – not because there are too few orders, but because financing ongoing business activities is becoming increasingly challenging.
It is precisely in situations like these that it becomes clear that economic success depends not only on capacity utilisation and turnover, but also to a large extent on how efficiently and flexibly companies can manage their liquidity
.
Why traditional financing methods are reaching their limits
In order to bridge liquidity bottlenecks, many companies initially resort to traditional instruments. These include, in particular, bank loans, price adjustments or internal cost-cutting measures. At first glance, these measures seem obvious, but in practice they quickly reach their limits and have disadvantages.
Bank loans
- often lengthy processes
- additional collateral required
- rising interest rates burden profitability
Price adjustments
- Not always enforceable in the short term
- High competitive pressure
- often have a delayed effect on liquidity
Cost reductions
- only possible to a limited extent
- may impair performance in the long term
There is also a structural problem: These measures usually address the symptoms, not the cause. They reduce costs or postpone financial burdens, but do not solve the fundamental timing problem between expenditure and income.
Particularly in volatile market phases, it is therefore clear that traditional financing methods can have a supportive effect, but are not a sustainable solution for securing liquidity in freight forwarding and logistics. Instead, companies need approaches that focus directly on cash flow and specifically close the time gap between the provision of services and receipt of payment.
Factoring as a solution for stable liquidity in freight forwarding and logistics
One option for specifically closing the liquidity gap is often only considered at a late stage: factoring.
For companies, this means:
- immediate liquidity
- better planning capability
- Less dependence on bank loans
While many traditional measures only have an impact after a delay or entail additional risks, factoring addresses precisely the central challenge: timing. The period between the provision of services and receipt of payment is specifically shortened – and therefore also the phase in which companies have to pre-finance their costs.
This is particularly crucial in an environment in which costs can change significantly within a short period of time. Rising diesel prices, higher operating costs or fluctuating demand can often only be controlled to a limited extent operationally. This makes it all the more important to organise the financial side flexibly.
How factoring helps companies in concrete terms
The biggest factoring advantage lies in the timing. Instead of waiting weeks or months for incoming payments, a large part of the liquidity is available immediately. This makes it possible for companies:
- Reliably cover ongoing costs
- plan investments more flexibly
- better cushion short-term price fluctuations
In addition, companies benefit from:
- Protection against payment defaults
- Relief in receivables management
- Improvement of the balance sheet structure
This makes factoring not just a financing instrument, but a strategic tool.
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Conclusion: Liquidity determines your flexibility
High diesel prices are a visible problem. But the real challenge lies deeper: in the interplay between rising costs and delayed incoming payments.
Anyone who understands the dynamics of working capital quickly realises that liquidity in freight forwarding and logistics is not a secondary factor, but the basis for stability and growth.
Are rising costs also putting pressure on your liquidity?
Feel free to speak with our experts. Together, we’ll find a solution to bridge the gap between service delivery and incoming payments—and help you secure your liquidity in the long term, even in a volatile market environment.
FAQ: Cash flow in freight forwarding and logistics
High diesel prices are a problem for liquidity in freight forwarding and logistics because the costs are incurred immediately, while revenue is often only received weeks or months later. This creates a financing gap that companies have to bridge in the short term. If prices also rise sharply, this gap increases significantly.
Despite a good order situation, haulage companies often have liquidity problems because there are long periods between the provision of services and receipt of payment. While costs have to be paid immediately, revenue often only flows in after 30 to 90 days. This time difference means that capital is tied up and liquidity comes under pressure.
Liquidity in the logistics industry means that a company is able to fulfil its ongoing payment obligations such as diesel, wages or tolls on time at all times. It is therefore a key prerequisite for stable business operations. If liquidity is lacking, a financial bottleneck can arise even if the order situation is good.
Working capital in the logistics industry refers to the difference between current assets, such as outstanding receivables, and current liabilities. It shows how much capital is tied up in the operating business. High working capital means that a lot of money is tied up in receivables or inventories and is not freely available.
Liquidity in freight forwarding and logistics can be improved by companies optimising their payment flows and shortening the time between invoicing and receipt of payment. This includes measures such as active receivables management, customised payment terms or the use of factoring. The aim is to make tied-up capital available more quickly.
The main advantages of factoring in the transport and logistics sector are immediate liquidity, improved cash flow and independence from long payment terms. In addition, companies benefit from protection against payment defaults and relief in receivables management. This significantly increases financial planning security.
Factoring is not a loan, but the sale of outstanding receivables to a financial service provider. Companies receive a large part of the invoice amount immediately without taking on additional debt. This improves liquidity without burdening the balance sheet with new liabilities.
With factoring, companies usually receive a large part of the liquidity within 24 hours of submitting the invoice. This significantly shortens the period between performance and receipt of payment. This enables fast and predictable financing of ongoing business.
