2013-12-29 19:21:34 - New Transportation research report from Business Monitor International is now available from Fast Market Research
We believe that the Spanish economy will return to growth in 2014, although its medium and long-term outlooks remain bleak. We estimate real GDP to have contracted by 1.7% in 2013, and to grow by 0.3% in 2014, stressing that a faster economic recovery will be prevented by weak private consumption, ongoing fiscal consolidation and falling fixed capital formation over the next few quarters. As a result, the freight sector will continue to be weighed down by the macroeconomic picture; falling disposable incomes and high unemployment in particular will mean that import growth is unlikely to rise anytime soon.
However, falling wages, new labour laws and a gradual reorientation of export destinations have made conversely made Spanish exports more competitive. This
is expected to provide the sole boost to the country's freight transport volumes over 2014.
Headline Industry Data
* Air freight volume is set to grow by 1.3% to reach 607,300 tonnes in 2014. Medium-term growth (to 2018) will average 1.8% per annum.
* Tonnage handled at the Port of Algeciras will grow by 2.0% to reach 86.184mn tonnes, with medium-term growth averaging 2.9% per annum.
* Boxes handled at the Port of Valencia will amount to 4.451mn TEUs in 2014, an increase of 1.3% on 2013 levels, while medium-term growth will average 2.3% per annum.
* Rail freight volume will grow by 5.8% to 29.2mn tonnes in 2014, and by an annual average of 6.1% up to 2018.
* Cargo handled by road is set to increase by 1.6% to 1.271bn tonnes, with medium-term growth expected at 2.4% per annum.
* Total Spanish trade (imports + exports) will grow by 1.9% in real terms in 2013.
Full Report Details at
- www.fastmr.com/prod/754522_spain_freight_transport_report_2014.a ..
Key Industry Trends
Unhealthy Reliance On Eurozone To Weigh On Freight Outlook
According to latest data, Spain's intermediate goods exports (which account for 51.2% of total exports) growing by 13.1% year-on-year (y-o-y) in Q113, and by 55.9% from 2008 to 2012. However, it is important to note that weak demand from EU countries will prevent a more significant widening of the current account surplus going forward. Although Spain is gradually reorienting its exports away from the EU and towards emerging markets, with the share of exports destined for EU countries falling from 71.1% in 2006 to 61.2% in April 2013, we believe the still-significant reliance on eurozone demand will ensure that export growth remains below-potential. For the moment Spain's freight sector remains at the mercy of demand from its immediate neighbours - many of which are far from rude health themselves.
Flailing Domestic Demand Gets Respite From Resurgent Export Competitiveness
While we believe Spain's economy should begin improving modestly in 2014, which should prove supportive of imports, the severity of the country's economic downturn and fall in disposable incomes leads us to believe that import growth is unlikely to pick up significantly anytime soon. The country's freight sector is unlikely to benefit from any uptick in domestic demand for foreign goods.
However, although the rebalancing of Spain's merchandise trade deficit has been sub-optimal over the past few years (ie, driven by weak domestic demand rather than strong exports), we now see improving export performance contributing more significantly towards the narrowing current account deficit going forward. A rise in export competitiveness will thus provide a boost to the freight transport sector in 2014, and over the medium term.
Private Investments, Government Reforms To Drive Port Developments
Spain's Minister of Development Ana Pastor estimated that private investments in the country's ports would total EUR1bn over 2013, following on from a figure of EUR700mn in 2012. He echoed the government and private sector's joint view that such levels of investment were required to immediately increase the efficiency of Spain's ports, continue the positive trend line of traffic and reduce costs. Over the past two years, a number of administrative measures have been put in place to continue the development of port infrastructure. These include financial restructuring, the port fee reduction, bonuses amounting to EUR94mn, new evaluations of soil, modification of concessions to adjust to the current situation, a rationalisation of public investment and a development of the Ports Act in relation to the stevedoring industry.
Key Risks To Outlook
The main risk to our Spanish freight forecasts for 2014 is weaker external demand from Spain's main trading partners over the next few quarters. Having factored a modest eurozone recovery into our forecasts for 2013 and 2014, another downturn in regional demand could prompt us to downgrade our projections. Furthermore, such a scenario would undoubtedly weigh on the country's economic recovery, and in our view would make a further year of negative real GDP growth a distinct possibility in 2014.
Our second downside risk is political. BMI is concerned that the rise in regional and separatist sentiment could seriously complicate the recovery and the management of public sector freight services. If Catalonia presses for independence as a separate state, there will clearly have to be major negotiations over the 'apportionment' of public sector debt, as well as the way all sorts of national transport services are run. The risk is that this could tip over from being an orderly transition into a disorderly one, leading to the temporary interruption of some key services.
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Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010
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