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Australia Freight Transport Report Q3 2010
Business Monitor International, May 2010, Pages: 39
Australia Freight Transport Report provides industry professionals and strategists, corporate analysts, freight transportation associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Australia's freight transportation industry.
Australia's port and rail operator Asciano Group registered an increase in net profit to US$73.72mn in July to December 2009, compared with a loss of US$87mn in the same period a year ago. However, the group's revenue dropped 4.4% year-on-year (y-o-y) to US$1.34bn in the period. Around 80% of Australia's container traffic is handled at Sydney, Melbourne and Brisbane, allowing the ports' terminal operators DP World and Asciano to profit from a steady growth in throughput over the past few years. The macroeconomic environment for freight transport companies operating in Australia is good. The economy is on track for a respectable recovery this year. The authors are predicting GDP growth of 1.9% in 2010, after an estimated 0.3% in 2009. On the political front one of the key issues is whether the incumbent Labour government of Prime Minister Kevin Rudd calls general elections this year or in 2011. In some scenarios, the economy could get difficult again next year as the problem of poor quality private sector debt may force monetary tightening, but for the moment freight demand is reasonably firm. Airfreight volume came in above expectations in December, confirming IATA's scenario of a global recovery in the sector. We see Australia's total air cargo volume recovering by a subdued 1.2% this year to 773.6mn tonnes, after a contraction of 2.2% in 2009. The airfreight market will remain intensely competitive as a variety of carriers focus on the long-haul sector.
We expect Australia's main ports to see rising levels of activity in 2010 as both the local and global economies remain on a recovery path. For the Port of Melbourne (POM) the authors are forecasting 3.6% growth in total tonnage this year, after a 5.6% drop in 2009. By the end of 2010, POM will have handled 30.16mn tonnes. This will be one of the strongest growth rates across the country's major ports, supported by the diverse range of commodity trade it handles, including oil and oil products. At the Port of Sydney (POS) on the other hand, tonnage, which fell by 4.7% in 2009, will recover more weakly with 2.3% growth in 2010, easing back to only 1.2% expansion in 2011.
The Australian rail freight sector remains dynamic as the country continues to vigorously export bulk commodities, particularly metals and minerals to the rest of the world. In the last quarter, some of the bigger mining companies including BHP Billiton and Xstrata have been lining up to express interest in the privatisation of Queensland Rail. We expect rail freight volume to recover 1.1% to 669.9mn tonnes this year, after falling 2.4% in 2009. The pace should pick up further in 2011 with growth of 3.5%. Looking at freight carried (volume times distance), which is perhaps a better measure of activity, the recovery will be a little more pronounced. On this measure we see growth of 1.5% in 2010 to 200.91bntkm, followed by expansion of 5% in 2011 to 210.9bntkm.
In many developed economies road freight traffic tends to lag behind GDP. In Australia, with its wideopen spaces and long distances the inverse remains true. The authors predict road freight volume growing 2.5% this year to 2.273bn tonnes and averaging 3.2% growth in 2010-2014 (vs. GDP growth of 2.5%). Road freight carried will grow by 2.3% this year to 188.5bntkm and average 3.0% growth in 2010-2014. Australia's foreign trade recovery will consolidate as 2010 progresses. The authors see Australian trade volumes, which fell by 4.8% in real terms last year, recovering with a fairly brisk 4.7% expansion rate in 2010, based in part on strong raw material demand from China. However, given continuing fiscal and monetary support for domestic consumption and a relatively strong currency, imports are likely to grow faster than exports in real terms. Imports will expand by 19.8% in nominal terms to US$250.2bn. The strongest growth in value terms will be registered by fuels, followed by iron and steel, and then ores and metals. In real or volume terms overall imports will grow by 6.2% this year, almost but not quite offsetting the 7.7% plunge experienced in 2009. Exports will grow faster than imports in value terms - up by 30.4% to US$260.8bn - but more slowly in real or volume terms, gaining by only 2.3%. The biggest export growth categories, measured in value will be ores and metals, iron and steel, and fuels, in that order.
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