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Venezuela Shipping Report Q4 2010
Business Monitor International, Aug 2010, Pages: 75
The Venezuela Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Venezuela's shipping industry.
Rather than part of the solution, central government takeovers, in Venezuela at least, may be a big part of the problem. Reports in late May that Venezuela's largest port, Puerto Cabello, was on the brink of collapse appeared to vindicate BMI's warnings that the nationalisation of the country's port sector would be to the detriment of its efficiency and the overall stability of the country's trade sector. Dockworkers cited by AmericaEconomia (AE), claimed that operations at the port had been stretched to breaking point following a lack of investment in the facility since it was transferred to the federal government.
The workers estimated that only seven of the port's 70 cargo handling machines were functional, forcing vessels to wait up to 10 days to load and unload cargo at the facility. In March 2009 Venezuela's National Assembly voted to hand over control of the country's transport links to federal authorities, which were previously under state control.
The decision saw three ports - Puerto Cabello, Maracaibo and Porlamar - placed under the control of the federal government. All three had been in the hands of states governed by leaders from parties in opposition to President Hugo Chavez's government. At the time of the takeover, BMI cautioned that the nationalisation of Venezuela's freight transport sector, and in particular its port network, would threaten the flow of trade to and from the South American country.
Resistance to Chavez's seizure of the port sector, which had so far been muted, appears to be growing and a report released by the Carabobo regional government (the former operator of Puerto Cabello) in May 2010 suggests that the nationalisation of the port has dramatically reduced its efficiency. More widely, the operating environment for the Venezuelan ports and shipping sector was not encouraging. The economy was stuck in recession, and the government's destructive economic policies, particularly the management of the exchange rate, were pushing up inflation. BMI felt it could not rule out Zimbabwe-style hyperinflation further down the road. Although losing support because of the recession, President Hugo Chávez' ruling Partido Socialista Unido de Venezuela (PSUV) was expected to spend heavily in preparation for congressional elections in September, seen as a key test of strength in advance of presidential elections in 2012.
With the government less popular but the opposition still fragmented, the outcome of the elections looked uncertain. Political risk therefore remained high, underlined by the earlier takeover of key ports by the federal government. BMI was predicting a GDP contraction of 3.8% in 2010, the second consecutive year of recession. We projected a recovery in 2011 with 3.2% growth, but put average annual growth in the five years to 2014 at a disappointing 1.5%.
BMI is projecting another fall in volume at the Port of Puerto Cabello (POPC), down by 10.8%, after the massive 58.9% contraction during 2009. At the Port of La Guaira (POLG) we see this year's volume falling by 3.7%. Puerto Cabello is also expected to see 1.7% container handling contraction, in addition to the 2.4% fall experienced in 2009. The Port of La Guaira will see a fall of 3.4%
In real terms, we expect Venezuela's total trade (imports + exports) to contract again this year, following the steep 17.2% fall in 2009. For 2010 we are projecting that there will be a contraction of 8.0%, driven most dramatically by a fall in imports, which will be 15% down as a result of low demand and foreign currency rationing. It is only in 2011 that we see foreign trade enjoying a weak recovery, with growth of 3.4%.
For the five-year forecast period, annual foreign trade growth in real terms will be 0.5%, lagging a full percentage point behind GDP. In nominal terms, this year's imports will be down a third to US$64.04bn, while exports will suffer a similar drop to US$80.46bn. As an oil exporter, we see Venezuela maintaining its annual trade surplus for the foreseeable future.
The downside risks to our forecasts for the Venezuelan ports throughput this year also threaten to have a knock-on effect on exports, which, in 2010, we expect to grow by 4% year-on-year (y-o-y) in real terms. With export revenues a vital source of Venezuela's economic output, BMI cautions that ongoing obstacles to shipments threaten to drag GDP down further from our forecast 3.8% contraction in 2010.
Vietnam’s consumer electronics devices market, defined as the addressable computing devices, mobile handsets and video, audio and gaming products, is projected to be worth around US$4.5bn in 2010. This is expected to increase to US$6.7bn by 2014, driven by growing affordability of key products. In Q110 Vietnamese retail demand for some consumer electronics products grew less than expected despite aggressive retail promotions, but sales are expected to pick up in the second half of the year. Sales in the 2010 Lunar New Year shopping season suffered in part due to previous aggressive price cutting, which blunted the impact of seasonal promotions. In 2010, the China-ASEAN Free Trade Agreement offers both opportunities and challenges to vendors and will further the penetration of low-cost Chinese brands.
The electronics devices market is forecast to increase at an overall compound annual growth rate (CAGR) of 10% through 2014. The vast and relatively underpenetrated rural market presents a significant growth opportunity as the government rolls out measures to boost rural incomes.
Computers
Computers accounted for around 35% of Vietnam’s consumer electronics spending in 2009. Despite a relatively weak performance in the first quarter of the year, BMI forecasts Vietnamese domestic market computer hardware sales (including notebooks and accessories) of US$1.5bn in 2010, up from US$1.3bn in 2009. Computer hardware CAGR for the 2010-2014 period will be around 14%, with notebooks accounting for above 30% of shipments currently.
AV Devices
AV devices accounted for around 25% of Vietnamese consumer electronics spending in 2009. Vietnam’s domestic audio, video and gaming device market is forecast at US$1.1bn in 2010. The market is expected to grow at a CAGR of 15% between 2010 and 2014 up to a value of US$1.8bn at the end of the forecast period. The government’s plan for digital TV broadcasting migration by 2020 will encourage replacement TV purchases.
Mobile Handsets
Vietnamese mobile handset sales accounted for around 40% of Vietnamese consumer electronics spending in 2009. Total Vietnamese market handset sales are expected to grow at a CAGR of 12% to 23.5mn units in 2014, as mobile subscriber penetration soars towards 292%. The inaugural Vietnamese 3G mobile services launch by VinaPhone will provide a boost, but the market remains dominated by low-priced handsets.
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