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Greece Freight Transport Report Q1 2011
Business Monitor International, Nov 2010, Pages: 32
The Greece 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 Greece's freight transportation industry.
In early August 2010, Greek Prime Minister George Papandreou said his government would continue with its plan to liberalise the road freight industry despite strikes by truck and tanker drivers. Papandreou said at a cabinet meeting that opening up the sector would boost competition and create the possibility for better and cheaper services, paving the way for growth. The proposed reforms for liberalisation of protected sectors led to strikes and protests. Truck and fuel-tank owners staged an open-ended strike on July 26 2010, with nearly 33,000 hauliers walking off the job.
Greece is part of, and is affected by, wider EU transport trends and developments. Road haulage has been dominated by private sector companies, with the government responsible for building and maintaining the highway network. Road haulage is by far and away the most dominant method of inland freight transport in Greece. There are also indications that demand for road haulage by trucks has been among the fastest growing of all transport modes.
Following the financial crisis in early 2010, the Greek government continues to face major fiscal and political challenges in 2011. It was seeking to reduce public spending by a massive 5% of GDP in 2010 alone, with further significant reductions in subsequent years. The downside for the country's freight transport sector is that the struggling PASOK government may simply crack under the pressure of opposition, public protests and strikes, doing so ahead of the 2013 parliamentary elections, and triggering a new round of political uncertainty while putting the EUR110bn IMF/European Union rescue package in jeopardy. Although perhaps hard to imagine, there is also an upside: that if the radical restructuring of the economy to shrink the bloated public sector is successful, outward-looking and more efficient sectors including parts of the freight industry will have to be in the forefront of the eventual recovery.
In the wake of the EU rescue package and painful fiscal adjustment at home, BMI is estimating that GDP fell by 4.6% in 2010. We see no early relief, with our projections indicating that the economy will contract again in 2011 by 2.4%, the third consecutive year of negative growth. Only in 2012 do we see the faintest of recoveries coming into play. Looking to the medium term - the five years to 2015 - we are predicting average annual GDP growth over the next five years of 0.7%.
We are relatively pessimistic about prospects for the Greek air cargo industry; with weak economic growth and lacking strong local players, we see freight volume gradually contracting on the medium term. That said, we are predicting a small increase in 2011 (+2.8% to 109,200 tons). Cargo carried by rail will fall by 12.5% in 2011 to 2.33mn tons. The freight rail sector has traditionally been small and somewhat neglected in Greece, but some new investment is now being discussed, and despite four years of falling volume up to 2011, we see the trend reverting with a recovery making itself felt from 2012 onwards.
We estimate that 2010 was pretty much a stand-still year for Greece's main ports. At the Port of Thessaloniki, we see no real change in 2011, forecasting that volumes will edge down by 0.1% to 14.97mn tonnes. At the Port of Piraeus, we are estimating 2010's growth at 5.7%. Here too there will be fall-back effect in 2011 (-0.5%), taking volume to 12.556mn tonnes. Box traffic at the country's two key ports was also constrained by the Greek economic crisis. At Thessaloniki, we forecast a weak 2011 with volume falling by 0.3% At Piraeus, which remains the country's largest container terminal, we predict a 1.5% contraction in 2011.
Greece is heavily reliant on its roads as one of its key freight modes, so activity is quite closely correlated to the wider performance of the economy. Road freight performance, however, tends to accentuate the ebbs and flows of the business cycle. In 2011, with Greek GDP falling by 2.4%, we are therefore estimating that cargo hauled by road will drop by a much sharper 11.7% to 314.29mn tonnes. In real terms, the value of Greek trade collapsed by 15.7% in 2009, and our estimated point to it remaining trapped at that low level in 2010 (we are predicting growth of only 0.1%). Contrary to our earlier expectation of marginal recovery in 2011, we now expect it to fall back by 1.6% with growth not resuming until 2012. Across our five-year forecast period to 2015, BMI now believes average annual growth will be a very modest 2.4% (which nevertheless will be ahead of GDP's 0.7% average annual growth rate). We expect exports to be marginally more dynamic in the five-year time horizon, gaining an average of 3.0% each year, against a lower 2.0% for imports.
In nominal terms, imports will drop for the third year running in 2011, down by 9.2% to US$86.2bn. Exports will also continue falling, by 8.3% to US$55.96bn. We see Greece continuing to run a large balance of trade deficit across the entire forecast period.
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