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Argentina Freight Transport Report Q1 2011
Business Monitor International, Nov 2010, Pages: 32
The Argentina 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 Argentina's freight transportation industry.
Argentina’s continued economic development, especially of its agricultural sector, requires investment in rail which is a cheaper form of transport that would make the economy more efficient.
The government announcement in July that it had secured a US$20bn credit agreement with the China Development Bank to carry out much-needed repair and modernisation work on the country's much maligned railway network after a state visit paid by President Cristina Kirchner to Beijing. This has kicked started the required reform of the railways. The money will be spent on improving the two main rail lines dissecting Argentina's north and central regions, which comprise the country's main areas of agricultural and mineral production. Other recent rail projects include developing the Belgrano railway, which links Buenos Aires with the country's northern provinces and reaches as far as the Bolivian border. The Corporacion America (CASA)-led consortium is expected to begin feasibility studies for a railway tunnel linking Argentina and Chile.
BMI believes investment in Argentina's rail freight sector will help iron out the kinks in the country's supply chain and increase its competitiveness as a major exporter of grains and other raw materials. According to the Rosario grain exchange, the freight tonne-km cost of transporting grain by road is US$0.7 per dollar, about twice the price of transporting by rail or four times the cost of maritime freight. A cheaper, more efficient supply chain should put Argentine producers on a more even footing with other major suppliers, such as the US and Canada.
With a brighter long-term outlook assured, the immediate forecast for Argentine rail freight is also positive. In 2010, the total tonnage carried by rail will increase by 4.56% to 20.5mn tonnes. We expect a CAGR growth in rail tonnage of 1.9% over the forecast period as the immediate recovery spurt ends and it will take considerable time for the major rail projects to be completed.
Argentina's major ports meanwhile remain on course to complete a moderate recovery in 2010 as forecast by BMI at the beginning of the year. At the Port of Buenos Aires (POBA), we are sticking with our forecast of a modest 3.7% rebound in total tonnage throughput rebound in 2010 with cargo volumes set to reach 8.92mn tonnes. We expect the rate of growth to accelerate slightly in 2011 when throughput should grow by 4.7% to 9.34mn tonnes. The Port of Bahía Blanca (POBB)'s total tonnage is expected to grow by 2.9% to 11.3mn tonnes in 2010 before accelerating to 3% next year when the facility is projected to handle 11.65mn tonnes.
Although relations between the government and Argentina's agricultural producers have appeared more stable in 2010 relative to the turmoil of 2008 and 2009, ongoing disputes between the two parties, including port blockades by the URGARA farmers union in June continue to place a downside risk to our trade forecasts. Added to this has been a Chinese ban on Argentine soy oil which has dragged on since March, following the escalation of a trade dispute between the two countries.
Total trade in real terms is expected to grow 3.6% in 2010. Imports in current terms are expected to grow 11.9% in value in 2010 to US$54.7bn, while exports will gain 14.8% to US$74.9bn. In real terms, import growth will be a much more modest increase of 2%, with exports doing significantly more at 5%. Looking to 2011, we expected the country's trade volumes to accelerate slightly with imports and exports growing by 4% and 4.5% respectively in real terms.
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