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Hungary Freight Transport Report Q3 2010
Business Monitor International, May 2010, Pages: 30
Business Monitor International's Hungary 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 Hungary's freight transportation industry.
Given the traditional delay in releasing freight transport data, the full extent of the slump in Hungary's rail business last year only became evident during Q210. The National Transportation Office (NTO) said that cross-border rail cargo deliveries slumped by 25.7% to 30mn tonnes in 2009, while freight traffic carried (volume x distance) was down by 24.6% to 6.4bntkm (billion tonne-km). The downturn at home was slightly less severe, with domestic volume down 11.2% to 12.45mn tonnes. and traffic down 3.4% to 1.3bntkm. Lower volumes and traffic levels meant greater financial pain. NTO said the combined revenues of Hungarian railfreight operators fell 19.7% to HUF83.7bn (US$386.9mn).
If there is any consolation for local freight operators it is that the operating environment is set to improve, even though the recession is lingering on and recovery will be a long-drawn out affair. The advent of a new centre-right Fidesz government has been interpreted as positive by the markets; it is expected to seek a new agreement with the IMF and to steer the country back onto the path of more sustainable growth. However, BMI believes there will be no 'quick wins'. After a 6.3% GDP contraction in 2009, the economy will be at a standstill in 2010, with growth only returning in 2011. Average annual GDP growth to 2014 will be a muted 2.6%.
In these circumstances, Hungary's freight operators will get relatively little joy from the domestic market and will need to look to a foreign trade revival for their better opportunities. Apart from inland waterways freight, which will grow strongly from a very low base, road haulage will be one of the best performers, with volumes up by an annual average of 5.3% in the five years to 2014, and traffic up a much stronger 13.9%, suggesting longer trip distances associated with pan-European business. Hungary's overland trade with Germany, and in particular the trade in autos and components will be a factor here. Both railfreight, despite the severity of the recession in 2009, and airfreight will also enjoy greater-than-GDP growth rates over the medium term.
Export demand will be critical for freight operators as this is the likeliest sphere for them to find new orders. The value of imports in 2009 fell by 15.4% in real terms; we foresee growth of 5.0% this year and an annual average of 5.7% foreign trade expansion to 2014. Exports will grow by an annual average of 5.9.
Although the outlook for Hungary is quite gloomy, as it is for large portions of the eurozone, we believe, possibly in a contrarian fashion, that the risks are actually on the upside. This is fundamentally a political question: with the new ruling party having won a 'supermajority' it may be able to move faster than many have expected to tackle the country's fiscal imbalances; coupled with returning investor confidence the recovery in freight demand may take shape earlier than we are currently predicting.
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