2013-02-26 01:30:14 - New Transportation market report from Business Monitor International: "Australia Shipping Report Q2 2013"

With the three-pronged effect of falling demand for mineral exports, and exhaustion in the domestic housing market and foreign credit sources, Australia's economy is set for a testing 2013, with the knock-on effect set to be felt in the country's shipping sector.

Although economic data out of China has improved slightly in Q412, we believe that this is a temporary phenomenon and expect the downturn for Australia's largest trading partner to resume in 2013. The impact of falling export demand from China in 2012 hinted at the devastating impact that further weakness in the Chinese economy will have on the Australian mining sector, as companies fire workers to keep operations profitable and postpone or cancel investment plans.

We believe that exports will

fare slightly better than imports in 2013, and have forecast export growth to come in at around 2.0% in 2013. On aggregate, we expect trends in both export and import growth to lift the growth contribution from net exports to a positive 0.7pp in 2013, from negative 0.4pp in 2012.


Full Report Details at
- www.fastmr.com/prod/541143_australia_shipping_report_q2_2013.asp ..


Headline Industry Data

* 2013 Port of Melbourne tonnage throughput forecast to grow 3.00%.
* 2013 Port of Melbourne container throughput forecast to rise 1.30%.
* 2013 Port of Sydney tonnage throughput forecast to increase 0.43%.
* 2013 Port of Sydney container throughput forecast to increase 3.20%.
* 2013 total trade growth forecast to contract by -4.12%.

Key Industry Trends

Mitsubishi Cuts Oakajee Spending: Another Nail In The Coffin

Japan-based conglomerate Mitsubishi Corporation has decided to cut its budget and headcount for the AUD5.9bn (US$5.7bn) Oakajee Deepwater port and railway project in Western Australia and we believe that this decision taken by Mitsubishi on the project supports BMI's initial view that further delays could be in store for the Oakajee project. Going forward, we believe that there is scope for additional delays given the doubt still surrounding the long-delayed project's economic feasibility.

Queensland Will Not Build Any New Ports By 2022

There are to be no new ports built in Queensland in the period up to 2022, according to the state government and reported by Port Strategy at the end of November 2012. The state government is currently undertaking its Great Barrier Reef ports strategy. This involves the expansion of major ports within the vicinity of the Great Barrier Reef Heritage Area.

Port Of Melbourne Tenders Sought

Port of Melbourne Corporation (PoMC) CEO Stephen Bradford has invited expressions of interest (EOI) for the redevelopment of the Port of Melbourne. The US$1.6bn Port Capacity Project includes the construction of roads and landside infrastructure along with wharves, marine works and dredging inside Webb Dock. Expressions of interest were being encouraged as of November 1 2012 for the project's two components (maritime and road connections), which were described by Bradford as 'significant, large scale packages'.

Risks To Outlook

With commodity-rich Australia boasting China as its main export partner, any slowdown in the latter's growth outlook will lead to a slackening in demand for Australian coal and iron ore and this is not set to change any time soon. The detrimental impact of this reliance can be seen with the news that the AUD9bn (US$8.75bn) Abbot Point extension project has been shelved. Australia's construction activity in 2013 is also expected to remain heavily driven by the energy commodities sector, where construction works for mining, oil and gas projects (as well as ancillary infrastructure such as railways, ports) will provide work for the industry.

In terms of risk to the upside over the medium term, expansions are always the lifeblood of a thriving port and we believe that the development of Webb Dock at the Port of Melbourne is no different. The facility is expected to be able to handle the same number of containers as that of Swanson Dock once expansion work has been completed by late 2016. Increasing Asia and intra-Asia trade is expected to be the next big market for box shipping in the coming years and Australia is in a good position to be able to reap the benefits.

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