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France Freight Transport Report 2011
Business Monitor International, Jan 2011, Pages: 34
France 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 France's freight transportation industry.
Troubled industrial relations affected the French freight transport sector in 2010, and although there was a return to normality at the end of the year, the possibility of disruptions in 2011 had to be taken seriously.In mid-October BMI commented on the strike that had paralysed the oil terminals at the port of Marseille,which at that point was entering its third week amid fears of a petrol shortage in France. The government had begun transporting fuel by road and rail to avoid shortages as refineries in the region had begun shutting down. Port workers were protesting against government plans to raise the retirement age from 60to 62, as well as a 2008 port reform law to privatise cargo handling and transfer the workers from thepublic to the private sector. A 'work to rule' go-slow had been in place at the port since September 15.
Workers had blocked traffic at the oil terminals of Fos and Lavera at Marseille for more than two weeks,halting all movements of crude oil and oil products into and out of the port. BMI noted that the port of Marseille had experienced several work stoppages in recent years as unions resisted efforts to transfer public-sector jobs to private companies. A 12-day strike at the oil hub in December 2008 cost refineries an estimated EUR26mn (US$36mn), including EUR15mn related to vessel delays and EUR11mn in lost revenue. According to the Union Française des Industries Pétrolières, the 2010 strike had already cost crude processors 'tens of millions of euros'.
The outlook in France is for economic growth to slow in 2011, with an associated knock-on effect for the freight transport sector. In Q410 the administration of President Nicolas Sarkozy successfully resisted a wave of strikes against his pension reforms. However, with his popularity ratings having taken a battering and the presidential elections of 2012 on the horizon, we believe the government's appetite for further reform is now limited. The government will continue on its current course of fiscal austerity, which will weigh on private consumption levels and act as a growth decelerator. As a result of our analysis, BMI estimates 2010 GDP growth of 1.5% (following the 2.6% contraction in 2009). Our outlook for 2011 is for the recovery to lose some of its impetus, with growth cooling to 1.0%, edging up to 2.0% in 2012. In The five years to 2015 we expected growth to average 1.8% a year, implying France will perform solidly but undynamically. The economy will struggle with a de facto 2.0% annual growth 'ceiling'.
In November 2010 the EU imposed a fine of EUR799.4mn (US$1.1bn) on 11 air carriers, including the Air France-KLM Group, for co-ordinating air-cargo fuel and security surcharges. Air France and its subsidiary faced the biggest fine of EUR339.6mn (US$467.3mn), leading to protests by officials and suggestions of a possible legal challenge. After a deep trough in 2009 when French air cargo volume dropped by 13.9%, we saw a weak recovery in 2010 (estimated growth of 2.3%) which we forecast will continue into 2011, with growth of 3.1%, to 1.515mn tonnes.
During much of 2010 CMA-CGM, France's largest shipping company, was searching for investors to inject capital and reduce its debt levels, Debt of US$5.3bn hung over the company, a factor that was widely blamed on CMA CGM overstretching itself with new orders, such as its new mega fleet. Anumber of financial suitors had come forward, but all had been sent on their way following talks.France's main bulk port, at Marseille, suffered during the 2009 recession, experiencing a 13.4% drop in tonnage handled, down to 83.1mn tonnes. BMI estimates this was followed by a partial recovery of 5.3%in 2010, taking total volume handled to 87.503mn tonnes. Against the background of a wobbling trade recovery in Europe, we project marginal growth of 1.6% in 2011 to 88.9mn tonnes.
In terms of cargo volume, France's railway system experienced two years of decline, in 2008 and 2009(with contractions of 0.9% and 21.9% respectively). We estimate a strong recovery in 2010 with growth of 25.0%. But for 2011 we believe the industry will be back on a pattern of slow decline, with volume dropping by 1.3% to 106.215mn tonnes.
In 2011 we expect total tonnage volume carried by road to increase by 1.7% to 1.99bn tonnes, following an 0.9% gain in 2010. Growth over these two years will be insufficient to offset the 12.0% drop in volume experienced during 2009. In fact it is only in 2015 that we expect the total to come back close to pre-2009 levels.
In real terms French trade slumped by a large 11.5% in 2009, had a weak recovery in 2010 (estimated growth of 2.5%) and is set to accelerate a little in 2011 (+3.9%). This means that the country's trade value will still remain below the peak achieved in 2008. In nominal terms we are expecting imports to total US$719.9bn in 2011, with exports lower at US$679bn. France will therefore register a trade deficit. To2015, average import growth in real terms will be 4.8% a year, with exports growing at the higher rate of5.3%.
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