Russia Freight Transport Report Q4 2011
Business Monitor International, October 2011, Pages: 60
The Russia 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 Russia's freight transportation industry.
Privatisation in both Russia's rail freight and maritime sectors continues to dominate the country's freight transport sector. In Q411 BMI expects the acquisition of a controlling stake in Russian Railways (RZD)'s Freight One (PGK) unit. The winner of the stake will become Russia's largest rail freight operator, thereby offering the potential for massive changes in the rail freight sector. One of the major issues that is hoped will be addressed by the new operator of PGK is the effect of bottlenecks on Russia's freight railways, which are causing delays and costing shippers money. A recent example was in September 2011, when grain deliveries to the port of Novorossiysk were halted due to a massive backlog of grain wagons, congesting links between farms and the port.
BMI notes that the problems in Russia's rail freight sector are only partly the operators fault and it is hoped that more investment will flow into the sector following PGK's acquisition by a private company. The other major issue that must be addressed is the poor quality of Russia's rail freight network, which is maintained by RZD. BMI hopes that the funds received by RZD from the privatisation of some of its freight units will be channelled into improving the national rail infrastructure.
BMI also hopes privatisation in Russia's port sector will lead to investment. However, demand for stakes in the port sector has not been as strong as demand for privatised rail freight units. Currently, only the port of Vanino has been successfully auctioned. The port of Murmansk is due to be put up for sale again, after the first bidder pulled out. The Murmansk Shipping Company (MSC) fared even worse, attracting no bidders. BMI is surprised by the lack of interest shown in both the port and shipping company, due to their exposure to the Northern Sea Route (NSR) and the major role they play in its development.
Headline Industry Data
- Air freight tonnage is expected to grow by 4.1% in 2011.
- Rail freight is forecast to grow by 1.9% in 2011.
- Throughput at the port of Novorossiysk is forecast to grow by 25.5% in 2011.
- Road freight is forecast to grow by 0.7% in 2011.
- Real growth in total trade is forecast at 12% in 2011.
Key Industry Trends
Freight One Privatisation Takes Centre Stage
The major developments in Russia's rail freight sector focus on RZD's drive to privatise some of its freight assets, with the auction for a controlling stake in PGK scheduled for October 28 2011.
Poor Safety Record At Home Leads To Grounded Planes
Poor safety standards in Russia's air transport sector have been highlighted by the number of fatal crashes in 2011. This has led the country to pay closer attention to its aging aircraft. The government temporarily suspended the operations of approximately 100 Antonov-12 cargo planes on August 10 2011, following the crash of an Antonov-12 in Russia's north eastern Kolyma region that killed all 11 people on board.
Privatisation Sails Forward
Russia's port of Murmansk is up for sale, with a US$700mn price tag. The port's two largest shareholders, Specialised Project Investments and Laterium Commercial, are preparing to auction their 47.65% stake in the port on October 11 2011. The Russian government plans to sell its 25.5% stake in the port later in 2011.
Risks To Outlook
- Upside risk is likely with grain exports resuming in July 1 2011 after a 10-month ban. The freight modes expected to benefit are Russia's ports, mainly Novorossiysk, as well as the country's rail freight sector.
- A medium term upside risk to the outlook is the Sochi 2014 Winter Olympics. BMI expects an uptick in volumes at the port of Novorossiysk in the build up to the games.
- A longer term upside risk is the development of the Asia-Europe landbridge. While BMI is sceptical of its ability to rival the ocean shipping sector, proposals to link Asia and Europe by rail have the backing of a number of heavyweights in the freight transport sector, such as DB Schenker. Russian rail freight operators stand to benefit the project takes off.
Executive Summary
SWOT Analysis
Russia Freight Transport Industry SWOT
Russia Political SWOT
Russia Economic SWOT
Russia Business Environment SWOT
Industry Trends And Developments
Rail
Air
Maritime
Market Overview
Road
Rail
Air
Maritime And Inland Waterways
Global Oil Products Price Outlook
Table: Oil Product Price Assumptions, 2011 (US$/bbl)
Table: Oil Product Price Forecasts, 2011-2015 (US$/bbl)
Industry Forecast
Road Freight
Table: Road Freight, 2008-2015
Rail
Table: Rail Freight, 2008-2015
Inland Waterways
Table: Inland Waterway Freight, 2008-2015
Air
Table: Air Freight, 2008-2015
Maritime
Table: Maritime Freight - Throughput, 2008-2015 ('000 tonnes)
Trade
Table: Trade Overview, 2008-2015
Table: Key Trade Indicators, 2008-2015 (US$mn and % change y-o-y)
Table: Russia's Main Import Partners, 2002-2009 (US$mn)
Table: Russia's Main Export Partners, 2002-2009 (US$mn)
Political Outlook
Domestic Politics
Long-Term Political Outlook
Macroeconomic Outlook
Russia - Economic Activity
Company Profiles
AirBridgeCargo (ABC)
Aeroflot Cargo
Globaltrans
TransContainer
Freight One (PGK)
Second Freight Company (VGK)
Murmansk Shipping Company (MSC)
Primorsk Shipping Corporation (PRISCO)
Sovcomflot (SCF Group)
FESCO Transportation Group (FESCO)
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
Sources
- AirBridgeCargo (ABC)
- Aeroflot Cargo
- Globaltrans
- TransContainer
- Freight One (PGK)
- Second Freight Company (VGK)
- Murmansk Shipping Company (MSC)
- Primorsk Shipping Corporation (PRISCO)
- Sovcomflot (SCF Group)
- FESCO Transportation Group (FESCO)
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