2013-02-25 09:50:13 - New Transportation market report from Business Monitor International: "Australia Freight Transport Report Q2 2013"
Although iron ore prices have risen on the back of optimism that stimulus from China will support demand, we remain a little sceptical of the Chinese recovery as the structural problems still exist, and do not expect the rebound to last beyond H113. As such, we maintain our expectations for the federal government to miss its surplus goal for the fiscal year 2012/13 (July-June). With China now taking its place at the top of Australia's export partner list, the fortunes of the country's freight industry are very much entwined with the Asian powerhouse.
While we expect domestic woes to weigh on import consumption and consumer sentiment, the recent improvement in the Chinese economy is likely to at least provide some reprieve
to iron ore and coal exports. The increasing reliance on Australian iron ore exports as a result of further mine closures in India could also provide a boost to exports. Moreover, the lack of progress in Japan's restart of nuclear plants further suggests that demand for Australian coal is unlikely to wane as quickly. We expect the trade account to return to surplus in 2013 of 0.2% of GDP, from a forecasted deficit of 0.5% of GDP in 2012.
Full Report Details at
- www.fastmr.com/prod/541140_australia_freight_transport_report_q2 ..
Moving into the second quarter of 2013, the air freight sector is set to take its place as the outperformer in the freight mix, with annual growth in tonnage handled coming in at 3.37%. This contrasts sharply with the dire outlook for the rail freight sector, which we expect to grow by just 0.09% in 2013. Also suffering this year will be the road freight sector, penciled in for year-on-year (y-o-y) growth of just 0.20%. Meanwhile, in the maritime sector, the The Port of Sydney is also set for a torrid 12 months in terms of tonnage throughput in 2013 (contracting by 0.04%), while the Port of Melbourne will see a 3.0% annual increase, trailing slightly the country's tonnage outperformer Brisbane (3.92%).
Headline Industry Data
* 2013 air freight tonnage is expected to grow by 3.37%.
* 2013 rail freight tonnage is forecast to grow by 0.09%.
* 2013 Port of Melbourne tonnage throughput is forecast to increase by 3.00%.
* 2013 Port of Sydney tonnage throughput is forecast to contract by 0.04%.
* 2013 road freight is forecast to increase by 0.20%.
* 2013 total real trade growth is forecast to contract by 0.08%.
Key Industry Trends
Mitsubishi Cuts Oakajee Spending: Another Nail In The Coffin
Japan-based conglomerate Mitsubishi Corporation has announced that its budget and headcount have been reduced for the AUD5.9bn (US$5.7bn) Oakajee Deepwater port and railway project in Western Australia. We believe that this decision by Mitsubishi on the long-delayed project supports our initial view that further delays could be in store for the Oakajee project. BMI feels that there is scope for additional delays given the doubt still surrounding the project's economic feasibility.
Rail Freight Sector Sees Investment
New South Wales (NSW) in Australia is for the first time carrying out a review process for its rail freight access regime, which was introduced in 1996. Transport for New South Wales intends to secure industry feedback on the regulatory framework, which allows the utilisation of the state's rail network by third party freight operators. The department announced that the rail network must be managed effectively as the ultimate aim is to increase the proportion of container freight movements by rail via New South Wales ports twofold by 2020.
Cathay Pacific Airways To Pay US$12.28mn Fine
Hong Kong airline Cathay Pacific Airways was fined US$12.28mn in order to resolve an air cargo pricefixing case in December 2012. The fine has been imposed for its involvement in international air cargo price fixing between 2000 and 2006. The case was started by the Australian Competition and Consumer Commission in 2009.
Risks To Outlook
Construction activity in the first quarter of 2012 (January-March) surprised on the upside, with engineering construction activity registering a record high. However, we do not believe that engineering construction activity for the rest of 2012 will have surpassed the highs seen in Q112, primarily due to the reduction in capital expenditure for mining and infrastructure projects, brought on by a Chinese economic slowdown. That said, the Australian freight industry is set to benefit from a range of infrastructure projects in the coming years.
A joint venture has been awarded an AUD450mn (US$467mn) contract to upgrade a section of the Pacific Highway in Australia, reports Road Traffic Technology. The joint venture comprises Australian construction company McMahon Holdings and Australian engineering company Thiess. The companies will construct a new 25.8km dual carriageway between the Frederickton Interchange and Eungai, as well as build a major new interchange at Stuarts Point Road. The project is expected to commence in mid-2013 with a scheduled completion date of 2016.
Aside from this, a preliminary draft plan for a new six-lane road to Melbourne Airport in Australia was released on December 3 2012. The proposed AUD80mn (US$84.3mn) extension of the Airport Drive will help ease congestion and provide alternative access to the airport from Melbourne's west. Commuters would be able to reach the airport directly from the Western Ring Road, rather than taking the Tullamarine freeway. The draft plan will be available for public comment until March 2013. The project, which requires the approval of the federal government, is expected to start by mid-2013 and take at least 21 months to complete.
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