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Egypt Freight Transport Report Q1 2012
Business Monitor International, Nov 2011, Pages: 40
Business Monitor International's 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.
Political uncertainty in the run-up to Egypt's November 2012 elections, coupled with concerns over the nature of the incoming administration and future economic policy, have made 2012 a difficult year to predict for the country. While BMI expects continuing short-term volatility, BMI remains more bullish as to Egypt's medium to longer-term future.
Looking specifically at the freight transport sector, increasing militancy by workers has been an important short-term issue. Strikes by port workers and air traffic controllers in late 2011 could spread to other transport modes as we go into Q112. On the upside, with GDP growth in FY2011/12 expected to rise to 2.6% from 0.5% in 2010/11, BMI expects to see some growth in cargo turnover. Once political uncertainties begin to subside BMI also expects to see much needed investment in the freight industry.
Headline Industry Data:
- Air freight handled at Cairo International Airport is set to grow by 3.4% year-on-year in 2012 to reach 297,040 tonnes (compared to a 2.1% growth in 2011).
- Cargo carried by rail will remain sluggish, with expansion of just under 1% to 11.99mn tonnes.
- Total tonnage throughput at the port of Damietta is forecast to grow by a subdued 1.4% to 29.73mn tonnes in 2012, and to average 1.7% per annum to 2016.
- Real growth in total trade is forecast at 8.4% in 2012 and to average 9.1% over the mid term.
Key Industry Trends:
Trouble On The Docks 1
El Dekheila Egypt's Mediterranean Port of El Dekheila, near Alexandria, was hit by work stoppages, sit-ins and hunger strikes in early October 2011 as workers and trade unions protested over wage levels and reductions in profit sharing. Although a resumption of work was agreed, BMI notes that the ports sector is being caught up in the general wave of labour militancy sweeping the country.
Trouble On The Docks 2
Sokhna After a five-day strike in September 2011, DP World, the operator of the Port of Sokhna, resolved the dispute with the offer of hardship payments. Workers had suspended operations in protest over low pay and mistreatment of employees. According to the port's monthly throughput data, container throughput for the first four months of 2011 declined by 21% year on year (y-o-y). BMI expects volumes to have picked up since then.
Trouble In The Tunnels?
Press reports have highlighted the significant logistical operation at Rafah, the Egyptian town on the frontier with the Gaza Strip, where cargo is moved through a network of hidden tunnels. One report described the neighbourhood of Salah Eddin in Rafah, as 'unquestionably one of the largest clandestine cargo ports in the world'. The article noted that despite attempts by the Egyptian security forces to close down the tunnels - by flooding and even bombing them - new ones tend to spring up very quickly.
Key Risks To Outlook:
Egypt continues to be very volatile and it is still hard to say what form of government will emerge once the transition period is over, providing upside and downside risk to BMI's freight volume forecasts. In the short term BMI believes the balance of risk is definitely on the downside. The two major threats are further political upheavals: strikes and demonstrations which disrupt normal port activities, and the possibility of a sharp downturn in economic activity if the government fails to control the deteriorating fiscal and financial situation. Both of these scenarios pose serious downside risk for the country's ports.
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