Development trends in road freight transport in the Republic of Moldova

Journal of Social Sciences Vol. VIII, no. 2 (2025), pp. 46 - 56 Fascicle Social Science ISSN 2587-3490 Topic Marketing and Logistics eISSN 2587-3504 Journal of Social Sciences June, 2025, Vol. 8 https://doi.org/10.52326/jss.utm.2025.8(2).04 UDC 656.135(478)”2018/2023” DEVELOPMENT TRENDS IN ROAD FREIGHT TRANSPORT IN THE REPUBLIC OF MOLDOVA Maria Gheorghita, ORCID: 0000-0002-2177-3497, Natalia Sestenco-Diacek *, ORCID: 0000-0002-0726-600X Technical University of Moldova, 168 Ștefan cel Mare Blvd., MD-2004, Chișinău, Republic of Moldova * Corresponding author: Natalia Șestenco-Diacek, natalia.sest[email protected]tm.md Received: 04.18.2025 Accepted: 06.05.2025 Abstract. The article deals with the development trends of the road freight transport sector in the Republic of Moldova with a particular focus on road haulage for hire and reward. The importance of the sector for the national economy in terms of its contribution to the country's Gross Domestic Product (GDP) and employment was emphasised. The evaluation of the development trends of the sector was facilitated by the presentation and interpretation of statistical data reflecting the road haulage industry's situation for a period of five years (20182023). The given period reflected the situation before the pandemic, the influence of the pandemic on the situation in the sector, and the trends of recovery and development after the pandemic. The efficiency of enterprises in the sector was appraised through the utilisation of indicators encompassing sales revenue, inventory, profit, profitability, and labour productivity. The study also considered an evaluation of the state of the vehicle fleet, its technical condition, and the level of staffing. The analysis also identified the fundamental challenges confronting the sector, which impeded progress. Keywords: road haulage, transport operators, fleet, freight routing, profit, profitability, productivity. Abstract: În articol au fost reflectate tendințele de dezvoltare a sectorului de transport rutier de mărfuri din Republica Moldova, accentul fiind pus pe transportul rutier de mărfuri contra cost. S-a subliniat importanța sectorului pentru economia națională din punct de vedere a aportului la Produsul Intern Brut al țării și oferire de locuri de muncă. Pentru evaluarea tendințelor de dezvoltare a sectorului, în articol au fost prezentate și interpretate date statistice care reflectă situația din industria transportul auto de mărfuri pentru o perioadă de cinci ani (2018-2023). Anume această perioadă reflectă situația înainte de pandemie, influența pandemiei de Covid-19 asupra situației din sectorul dat și tendințele de recuperare și dezvoltare după pandemie. Nivelul de eficiență al activității întreprinderilor din sector a fost evaluat cu ajutorul indicatorilor care reflectă venitul din vânzări, parcursul mărfurilor, profitul, rentabilitatea și productivitate a muncii. De asemenea s-a reflectat situația privind parcul auto, starea lui tehnică și nivelul de asigurare cu personal. S-au evidențiat și problemele de bază ale sectorului care afectează negativ dezvoltarea de mai departe. Cuvinte cheie: transport rutier de mărfuri, operatori de transport, parc auto, parcursul mărfurilor, profit, rentabilitate, productivitate. M. Gheorghita, N. Sestenco-Diacek 47 Journal of Social Sciences June, 2025, Vol. 8 1. Introduction In today's world, transport is a strategic sector of any economy, essential for economic and social activity. There is a relationship of interdependence and mutual influence between transport and other sectors of the national economy. Transport facilitates links between the sectors of the national economy and is an important factor in economic and social development and progress. Thanks to the activity of the transport sector, goods or people are moved through space in order to satisfy the material and spiritual needs of society. There is no activity of material production that is not more or less connected and/or conditioned by transport [1, 2]. Transport is considered to be one of the primary pillars of European integration, playing a pivotal role in facilitating the free movement of people and goods. The significance of the transport industry is underscored by its substantial contribution to the European economy, accounting for approximately 6% of the European Union (EU) Gross Domestic Product (GDP), over 6% of the workforce, and 40% of the investments of the EU Member States. The sector has been growing steadily over the last two decades, at 2.3% per year for freight and 3.1% for passenger transport [3]. The relationship between transportation and economic development is difficult to establish formally and has been debated for many years. In some circumstances, transport investments appear to catalyze economic growth, while in others, economic growth puts pressure on existing transport infrastructures and incites additional investments [4]. In the Republic of Moldova, the transportation sector has reached a share of approximately 5.0% in GDP, and about 10% of the total number of employees in the national economy. The increase in the exchange of goods and other activities, both nationally and internationally, due to the direct contribution of transport, highlights several economic advantages of transport, such as: - Contribution to increased trade activity locally and internationally. The development and enhancement of transportation infrastructure has resulted in the expansion of the market on both a national and international scale, thereby augmenting its absorptive capacity. - Facilitating the exchange between supply and demand. Transportation has facilitated, and continues to facilitate, a more efficient exchange between supply and demand for various goods nationally and internationally. The existence of surpluses in certain regions has enabled the more efficient allocation of goods to areas where demand is high. - The advent of transportation has also engendered conditions conducive to healthy competition. As the geographical areas offering similar products expand, competition among suppliers of similar goods increases, keeping prices at reasonable levels. The increased number of potential suppliers competing with each other has also been identified as a factor contributing to the reduced likelihood of high price arrangements [5]. Transport infrastructure is of pivotal significance in ensuring the sustainability of the economy, particularly during periods of crisis. Reliable transport networks facilitate the economy's capacity to adapt expeditiously to fluctuations in supply and demand, thereby ensuring the flexibility and adaptability of economic systems. The transport sector is widely regarded as a catalyst for scientific and technological advancement. Investments in new transport technologies, including high-speed rail, autonomous vehicles and novel fuels, have been demonstrated to stimulate the development of associated industries, thereby contributing to productivity growth and the advancement of the national economy as a whole. 48 Development trends in road freight transport in the Republic of Moldova Journal of Social Sciences June, 2025, Vol. 8 2. Methodology of the research To achieve the research objectives, a range of empirical and scientific research tools and methods were employed, including: abstraction, analysis and synthesis, observation, grouping, comparison, explanation, quantitative and qualitative analysis, deductive method, numerical and graphical method of data presentation. The method of analysis and synthesis was used to study the role and importance of the transport industry for the development of the national economy and the contribution of the sector in macroeconomic indicators. The employment of the synthesis method facilitated the identification of interconnections between the phenomena under investigation, while the utilisation of the graphical method enabled the presentation of statistical data in the form of figures and graphs, thereby reflecting the dynamics of the transport industry's development. The application of both quantitative and qualitative analysis methods was undertaken to assess economic indicators, thereby providing a comprehensive characterisation of the transport industry's dynamic development. The informational and statistical support has been provided from different scientific publications related to the research field and from statistical data sources provided by the National Bureau of Statistics of the Republic of Moldova. 3. Assessment of development trends in road freight transport in the Republic of Moldova 3.1 General characteristics of road freight transport in the Republic of Moldova According to the Classifier of Activities of the Moldovan Economy - 2 (CAEM-2), approved by order of the National Bureau of Statistics No. 28 of May 7, 2019, the Transport branch in the Republic of Moldova includes the following types of transport: - land transportation and pipeline transportation; - water transportation; - air transportation [6]. The significance of diverse transportation modes is predominantly influenced by the geographical characteristics of the nation. For instance, in island countries such as Japan, maritime transport is pivotal to freight transportation. Conversely, in countries with vast territories, such as the USA, Canada, and Russia, rail transport plays a significant role. Conversely, in countries with a compact territory (especially landlocked) and developed infrastructure, such as in Western Europe, road transport is the most prevalent [7-9]. In the Republic of Moldova, the transportation sector is divided into two categories: 1) passenger transportation, accounting for 25%; 2) goods transportation, which accounts for 75% [1]. The geographical conditions of the republic are such that land and road freight transport account for the largest share (Figure 1). In 2023, road freight transport accounted for 91% of total transported goods. The organisation and performance of road transport of goods in the Republic of Moldova is regulated by the Road Transport Code no.150 of 17-07-2014 [11]. The Road Code of the Republic of Moldova is currently being revised to align national transport legislation with EU standards. An assessment of the current regulations is planned, followed by the implementation of updated legal acts based on European norms [12]. According to the stipulated code, road transportation is classified according to the commercial qualification of the activity as follows: M. Gheorghita, N. Sestenco-Diacek 49 Journal of Social Sciences June, 2025, Vol. 8 Figure 1. Road freight transport structure of the Republic of Moldova. Source: Own calculations based on [10]. • road transportation against payment; • road transportation for own account; • road transportation for personal use. Road hauliers in the Republic of Moldova engaged in road haulage for a fee are divided into four categories of enterprises: large, medium, small and micro enterprises. Quantitative data for these categories of enterprises for the period 2015-2022 is presented in Table 1, demonstrating the dynamics of their development. Each category of enterprise plays a specific role in the transport industry, reflecting the diversity and scale of activity in the given sector. Table 1 Dynamics of the number of road haulage operators and their size structure 2015 2016 2017 2018 2019 2020 2021 2022 Total, units 1105 1132 1174 1274 1339 1431 1543 1746 Share % 100 100 100 100 100 100 100 100 Large enterprises, units 4 8 8 4 7 8 4 3 Share % 0,4 0,7 0,7 0,3 0,5 0,6 0,3 0,2 Medium enterprises, units 20 23 33 36 37 37 24 23 Share % 1,8 2,0 2,8 2,8 2,8 2,6 1,6 1,3 Small enterprises, units 228 223 234 258 262 263 295 259 Share % 20,6 19,7 19,9 20,3 19,7 18,4 19,1 14,8 Micro enterprises,units 853 878 899 976 1033 1123 1210 1461 Share % 77,2 77,6 76,6 76,6 77,0 78,5 78,4 83,7 Source: Own calculations based on data obtained from the National Bureau of Statistics of the RM 8,7 91 0,3 1,2 Rail transport, % Road transport, % River transport, % Air transport, % 50 Development trends in road freight transport in the Republic of Moldova Journal of Social Sciences June, 2025, Vol. 8 Over the last analyzed years, the number of road transport operators has increased from 1105 units in 2015 to 1746 units in 2022, representing an increase of 58% over the period analysed. Even in 2020, a Covid-19 pandemic year, the number of road transport enterprises increased by 92 units, demonstrating the importance of the sector to the national economy. The number of large companies remains fairly stable but small, accounting for only 0.2% in 2022. The largest share, over 99.5%, is accounted for by micro, small and medium-sized enterprises. And the main contribution to the overall quantitative growth of the road transport sector is made by micro enterprises, whose quantitative share increases from 77.2% in 2015 to 83.7% in 2022, accounting for the largest share of the market and indicating an important role in commercial transport. One of the most important factors influencing the efficiency of road transport companies is the vehicle fleet. It determines the company's ability to meet market requirements and is a key factor in its competitiveness in the field of transport services. Both the quality of the transport process and the economic benefits depend on the fleet structure. The fleet of road transport companies in the Republic of Moldova is characterised by a variety of types and models of vehicles used for the transport of different types of goods. Over the last six years, road hauliers have invested in increasing the number of vehicles. If before the pandemic (in 2018) the number of vehicles was 7545 units, in 2023 the number of vehicles increased to 10096 units, which is an increase of 2551 units or about 34% (Figure 2). Figure 2. Characteristic of the vehicle fleet in terms of technical readiness Source: Own calculations based on [13]. The technical readiness coefficient of the fleet is one of the key factors in the competitiveness of a road transport company. A high technical availability ratio helps to increase efficiency, reduce costs and improve service reliability. No less importantly, it ensures a good image for the operator. These aspects make the company more attractive to customers and allow it to compete successfully in the freight transport market. The technical readiness coefficient (the proportion of vehicles in good technical condition) of operators in the Republic has been around 96% in recent years. This is also ensured by the purchase of new vehicles, especially in the post-pandemic period. In the last two years, road hauliers have invested in 233 transport units. However, the substandard quality of road infrastructure 0 5000 10000 15000 20000 25000 2018 2019 2020 2021 2022 2023 6575 7545 8336 8780 9650 10550 6865 7867 8632 9129 10096 10976 Number of lorries, units Year Number of lorries carrying out transport for hire or reward Number of lorries in good technical condition M. Gheorghita, N. Sestenco-Diacek 51 Journal of Social Sciences June, 2025, Vol. 8 discourages road freight operators from investing in modern vehicles. Elevated maintenance costs, resulting from frequent wear and damage, significantly reduce the economic viability of such investments [14]. The authors agree with the opinion of the representative of the Association of International Road Carriers of Moldova that the renewal of freight vehicles is hindered by a number of economic issues: • The lack of sufficient internal financial resources within transport companies to upgrade their vehicle fleets. • High interest rates on loans. • The non-reimbursement of Value-added tax on the purchase of transport vehicles, unlike in other sectors. • Competition from foreign companies and the re-registration of Moldovan transport operators abroad (e.g., in Romania). • The absence of government support in the form of subsidies and equal economic conditions [15]. Current approaches to business management highlight the importance of personnel as the main driver of resource efficiency [16]. An important indicator characterising the sector is staffing and job creation. At present, the road transport industry employs more than 30 thousand people, which is about 7.5% of the total number of employees in the national economy (Figure 3). Figure 3. Dynamics of the number of employees in the road transport sector and their share in the total number of employees in the national economy of the Republic of Moldova. Source: Own calculations based on [17]. The period of the Covid-19 pandemic influenced the reduction of the number of employees in the road transport sector from 30332 persons in 2019 to 29126 persons in 2020, or by about 4%. In the post-pandemic period, the number of persons employed in the sector increased, but unevenly. 29154 30332 29126 30834 30129 7,5 7,6 7,5 7,7 7,5 7,4 7,45 7,5 7,55 7,6 7,65 7,7 7,75 28000 28500 29000 29500 30000 30500 31000 2018 2019 2020 2021 2022 The share of the total number of employees in the national economy, % The number of employees in the road transport sector, people Year The number of employees in the road transport sector, people The share of the total number of employees in the national economy, % 52 Development trends in road freight transport in the Republic of Moldova Journal of Social Sciences June, 2025, Vol. 8 Despite the stable share of land transport workers in the total number of persons employed in the country's economic activities, a decrease in the number of workers in this sector is observed in 2022, while the number of enterprises has increased significantly. It should be noted that with a relatively high share of employees in the economic activities of the national economy, the transport sector ranks 3rd in the republic in terms of labour shortage. The shortage of labour in this sector is caused by a constant outflow of qualified drivers. Several factors have contributed to this situation, the main ones being low wages and less favourable working conditions compared to European countries. 3.2 Assessment of the efficiency of the operation of road haulage companies The efficient operation of a road haulage company depends to a large extent on its ability to make optimum use of its fleet. The main indicators characterising the activity of the fleet are the volume of freight transported and the freight journey, which represents the total amount of freight transported over a given distance in a given period of time and is defined as the product of the volume and the distance (tonne-km) [18]. The trends of these indicators for road freight transport conducted at cost over the past six years are illustrated in Table 2. Table 2 Dynamics of the volume of goods transported by road hauliers on a cost basis and of the number of goods journeys 2018 2019 2020 2021 2022 2023 Volume of goods transported by road transport operators, thousand tons 16947 17592.5 17391.3 19496.6 20175 18777.2 Thousand tons/per vehicle 2.5 2.2 2.0 2.1 2.0 1.7 Freight flows of freight transport operators, thousands tonne-km 4145.7 4343.7 4370.5 5110.9 5386.6 5548.2 Thousands tonnekm/per vehicle 603.9 552.1 506.3 559.9 533.5 505.5 Source: Own calculations based on [13]. Analysing the total volume of goods transported by road hauliers on a cost basis in 2018-2023, a slight fluctuation can be observed. In 2020 there was a decrease due to the pandemic. However, the decrease was insignificant, less than 2% compared to 2019. The next two years show a continuous growth compared to the previous year, with 12.1% in 2021 and 3.5% in 2022. In 2023, the total volume of goods transported fell to 18777 thousand tonnes, a decrease of 6.9% compared to 2022. This decrease was significantly influenced by the drought, which reduced the volume of agricultural products transported. The decline in fleet productivity in tonnes per vehicle is also evident. During the period analysed, the volume of transported goods per vehicle decreased from 2.5 thousand tonnes in 2018 to 1.7 thousand tonnes in 2023, i.e. by 30.7%. This indicates a decrease in the vehicle load factor due to the decrease in the volume of transported goods and the change in the structure of goods. M. Gheorghita, N. Sestenco-Diacek 53 Journal of Social Sciences June, 2025, Vol. 8 The dynamics of the freight path of hauliers in the period 2018-2023 shows a steady growth. In 2018, the freight path amounted to 4.145 million tonne-kilometres, after which it increased every year, reaching a maximum value of 5.548 million tonne-kilometres in 2023, representing an increase of 33.8%. The jump between 2020 and 2021 is particularly noticeable, when the volume of goods transported increases by 16%, indicating an increased demand for transport services during this period. Despite the general increase in the total distance travelled by for-hire road transport operators, a negative productivity dynamic can be observed in terms of tonne-kilometres per vehicle. In 2018, this indicator was 603.9 thousand ton-km per vehicle, but by 2023 it had fallen to 505.5 thousand ton-km, or by 16.3%. The negative dynamics of this indicator indicates a decrease in the efficiency of the use of transport vehicles in long-distance freight transport, caused by a number of factors, including changes in demand, the technical condition of vehicles or the use of vehicles on less optimal routes. The factor of bypassing the territory of Ukraine, which became necessary to ensure the safety of road transport operations, had a significant impact on freight transport. The efficiency of a business can be assessed by looking at the levels and trends of key indicators such as revenue and profit. Turnover reflects the ability of the company to generate cash flow, while profit reflects the level of efficient cost management and the ability of the company to create value and thus ensure its long-term sustainable growth. The dynamics of motor transport operators' turnover and net profit on a cost basis are shown in Figure 4. Figure 4. Dynamics of revenue and net profit of road transport operators on a cost basis Source: Own calculations based on data obtained from the National Bureau of Statistics of the RM During the last six years, the turnover of road hauliers on a cost basis showed a positive upward trend from 6320.3 million lei in 2018 to 12605.2 million lei in 2022, which was about two times higher than before the Covid-19 pandemic.Only in 2020 was there a decrease of 5.2% due to the pandemic. Net profit in 2022 is also more than 2.5 times higher than in the previous year. Another important indicator that characterises the efficiency of business activity is the return on sales. This indicator reflects the company's ability to generate profit based on the volume of services provided and makes it possible to assess the efficiency with which the company manages its costs [19]. Given the wide range of companies of different sizes operating in the road transport sector, it is interesting to assess the level of profit and profitability of different operators (Table 3). 6320,3 7349,6 6965,9 8783,1 12605,2 221,1 380,5 402,5 532,9 1377,8 0 5000 10000 15000 2018 2019 2020 2021 2022 Millions lei Year Income from sales, millions lei Net profit, millions lei 54 Development trends in road freight transport in the Republic of Moldova Journal of Social Sciences June, 2025, Vol. 8 Table 3 Dynamics of profit and profitability of a road haulage operator depending on the size of the undertaking Year Profit net per operator, mil lei Sales profitability, % Large enterprises Medium enterprises Small enterprise s Micro enterprises Large enterprises Medium enterprises Small enterprises Micro enterprises 2018 22.6 73.5 87.4 18.6 4.22 4.23 3.1 3.05 2019 61.8 110.0 139.4 102.4 5.84 5.62 4.96 4.55 2020 51.0 94.0 189.4 262.6 4.45 6.26 6.71 4.54 2021 18.6 102.4 262.6 149.3 2.19 5.99 6.27 7.30 2022 37.5 269.5 650.9 419.8 3.37 12.16 12.16 10.47 Source: Own calculations based on data obtained from the National Bureau of Statistics of the RM. The most noticeable increase in profits between 2018 and 2022 was observed for small and micro enterprises. For small enterprises, net profit increased more than 7.4 times (from 87.4 million to 650.96 million lei), and for micro enterprises, profit increased more than 22.5 times (from 18.6 million to 419.8 million lei). The highest profitability in 2022 was also achieved by medium and small enterprises, which exceeded 12%, and the profitability of micro enterprises was about 10.5%. Practically the lowest profitability was achieved by large enterprises, ranging from 2.2% to 5.8%. In order to assess the operational efficiency of road transport enterprises, labour productivity, calculated as the level of turnover per employee, was determined [20] (Figure 5). Figure 5. Labor productivity dynamics (2018-2022) Source: Own calculations based on data obtained from the National Bureau of Statistics of the RM. In recent years, road transport companies on a cost basis have recorded a positive trend of increase in labor productivity from 657.3 thousand lei per employee in 2018, before the pandemic, to 1093.6 thousand lei per person in 2022, which was an increase of about 1.7 times. Only in 2020, the pandemic year of Covid -19, there was a decrease in labour productivity of 11.2%, which was recovered in 2021. The labour productivity indicator shows an increase in the efficiency of the use of personnel by road hauliers on a cost basis. 0 200 400 600 800 1000 1200 2018 2019 2020 2021 2022 657,3 728,1 646,5 785,5 1093,6 Labor productivity dynamics, thousand lei Year