Egypt Freight Transport Report Q1 2011
Business Monitor International, December 2010, Pages: 35
The Egypt 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 Egypt's freight transportation industry.
Private industry is showing signs of wanting to invest in Egypt, as both it, and the Middle East in general, are seen as growth areas with strong links to China. Both DHL Global Forwarding and GB Auto are investing in Egypt.
Egypt may be opening the door to more private sector investment in the freight transport sector. BMI has reported that Egypt is emerging as a highly active public-private partnership (PPP) market in the Middle East. The government has stepped up efforts privately to procure projects in utilities and social infrastructure and transport as well, as demand for basic infrastructure was strong, but cannot be met solely through public funds. Burdensome contract enforceability procedures and persistently high inflation are going to be the main risks and could prevent the implementation of PPPs as envisaged by the government. Encouraged by the successes of recent PPP ventures and the completion of the stimulus plan, the government is reportedly planning transport concessions, mainly for highways, but also ports and the expansion of the Cairo Metro. There is no sign so far that the government will give up its control of the airports.
The Egyptian freight transport sector's operating environment looked more positive in 2010 as the region had a jump in growth from the trough of 2009. Egyptian economic growth largely side-stepped the effects of the global recession in 2009. The pace of growth slowed but did not turn negative. BMI expected some further slowing in 2010, caused by weakening consumption and private investment. After 4.7% GDP growth in 2009, BMI predicts the pace would ease to 4.6% in 2010, before picking up to 4.8% in 2011. The average annual growth rate to 2014 will be 5.1%, clearly marking Egypt out as a regional outperformer. BMI predicts a small recovery in air freight volume moved through Cairo, following a fall in 2009 prompted by the international recession. We project a gain of 1.5% in 2010, following 2009's -3.9% contraction. Over the forecast period, air freight is expected to have an average growth of 3%, which is low compared to the 14% achieved in 2007. Egyptian rail freight performance was hit by the economic recession and is only expect to gradually edge into positive territory over the forecast period. Total rail cargo is expected to fall for the second year running in 2010, by -1.1%, following the -2.1% drop in 2009. Recovery over the forecast period will see a growth of around 0.9% compared with 5% in 2007. The rail system has been starved of investment and has suffered from a poor safety record.
The maritime freight experience was mixed. The Port of Damietta which is the busiest in Egypt benefited from the recession with a growth rate of 10% in 2009 which continued with a 5.9% growth in 2010. However, the expectation is that average growth over the forecast period for this port will fall back to 1.5%. Other ports, some of which were very small in comparison such as the Port of Abu Ghosoun, lost business in the recession but is expected to go back into the black in the forecast period. The Port of Safaga is now in long term decline with an expected average negative growth of -7% over the forecast period. The largest ports are expected to have average growth rates varying between 1-6% over the forecast period.
BMI's expects exports to remain quite strong over the medium term, thanks to high energy prices and a revival in Suez Canal traffic and tourism revenues. In 2009, during the global recession, Egyptian trade (imports plus exports) fell by -15.5% in real terms. We predict that it will fall by a further -0.9% in 2010 before returning to growth with a 3% expansion in 2011. Across the five-year forecast period to 2014, foreign trade will grow by an annual average of 2.9%, trailing GDP. Over the same five years, exports will grow by an annual average of 3.3% ahead of imports with growth of 2.6%.
BMI believe the main downside risk to our freight forecasts for Egypt is political and concerns the run-up to the presidential elections. The main political risk is the vexed issue of the succession to 82-year-old Hosni Mubarak, in power for almost three decades. Parliamentary elections are due at the end of 2010 with the presidential contest looming in 2011. The BMI view is that the opposition remains too divided to win the elections. But the desire for change, the government's selective use of repression, potential divisions in the ruling party over succession, and long-standing allegations of electoral fraud could come together to generate protests and disruption, which would have a destabilising effect on the economy. However, this is unlikely to happen until Mubarak dies.
Executive Summary
SWOT Analysis
Egypt Freight Transport Industry SWOT
Egypt Political SWOT
Egypt Economic SWOT
Egypt Business Environment SWOT
Market Overview
Industry Trends And Developments
Multi-Modal/Logistics
Road
Rail
Air
Maritime
Oil Pipeline
Global Oil Products Price Outlook
Table: Oil Product Price Assumptions 2010 (US$/bbl)
Table: Oil Product Price Forecasts (US$/bbl), 2008-2015
Industry Forecast
Air Freight
Table: Air Freight, 2007-2014
Table: Maritime Freight, 2007-2014
Rail Freight
Table: Rail Freight
Trade Overview
Table: Trade Overview, 2007-2014
Table: Key Trade Indicators
Table: Main Import Partners (US$mn), 2002-2008
Table: Main Export Partners (US$mn), 2002-2008
Company Profiles
Egytrans
EgyptAir
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
Sources
- Egytrans
- EgyptAir
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