2013-02-02 15:58:02 - New Transportation market report from Business Monitor International: "United Kingdom Freight Transport Report 2013"

BMI View

In terms of freight mode, the picture is mixed for 2013 as the UK contends with circling global economic headwinds, particularly in the eurozone where the country is heavily reliant on trade. Whereas rail freight is expected to perform relatively well in 2012 and over the forecast period to 2017, the road freight sector is set for a poor 12 months.

In light of the unfolding global economic slowdown, we have been stressing in our monthly Global Macro Updates that a fresh round of monetary and fiscal stimulus is in the offing. The US Federal Reserve has pulled the trigger on additional quantitative easing following the annual Jackson Hole symposium, with the central bank now committed to an open-ended programme

of monthly mortgage backed security purchases.

The European Central Bank has also upped the ante by pledging to buy unlimited amounts of government debt in the eurozone periphery, conditional on member states first signing up to a macroeconomic structural adjustment programme. We expect the Bank of England to follow suit by raising the ceiling of the asset purchase programme, while also exploring new initiatives to boost credit flow to the economy (we see scope for private sector asset purchases and even direct lending to the corporate sector over the medium term). This will provide much needed short-term relief for the UK economy.


Full Report Details at
- www.fastmr.com/prod/529342_united_kingdom_freight_transport_repo ..


Headline Industry Data

* UK air freight volume to grow by 1.82% to 2.40mnt in 2013, following a 2.45% contraction in 2012.
* Tonnage handled at Port of Grimsby and Immingham will grow by 3.30% in 2013 to 60.45mnt, after 2.31% growth the preceding year.
* 2013 tonnage growth at the Port of London will be 1.24% to 49.87mnt.
* Rail freight will grow by 4.20% to 109.24mnt, slightly below the 4.40% growth in 2012.
* Road haulage will be one of the slowest growing transport modes in 2013, rising 1.27% to 1.79bnt.
* The real value of UK foreign trade will expand by 6.0% in 2013.

Key Industry Trends

Hauliers Affected By New Plans

A raft of new laws came into force during 2012, affecting hauliers. The UK Freight Transport Association (FTA) issued a reminder to road hauliers of its new Low Emission Zone (LEZ) standards for London, effective from January 3 2012, reported the Handy Shipping Guide. Also, in September 2012, the Road Haulage Association (RHA) in the UK has granted approval to the government's plan regarding introducing a charging system for foreign truckers using UK roads.

Baltic Interest Continues To Increase

British rail freight operator Freightliner is reported to be interested in expanding into Latvia's rail freight sector. We believe that rail freight operators' interest in the Baltic States and Latvia is understandable and forms part of our larger bullish outlook for freight and shipping in the Baltic Sea region.

Heathrow To Slip Down Cargo Rankings

The UK's busiest airport, Heathrow, was in the news throughout June 2012. BMI believes that the airport will face increasingly tough competition for its cargo-handling business in the coming years from both European competitors and airport facilities in the Middle East. The decision not to proceed with plans for a third runway leaves the facility with little room for expansion, and strikes planned by cargo handlers for June 2012 and July 2012 will only exacerbate the issue.

Key Risks To Outlook

The UK government has cancelled the West Coast rail franchise awarded to UK-based transport company, FirstGroup, according to The Telegraph in October 2012. UK firm, Virgin Trains, lost the franchise to FirstGroup and challenged the process that Transport Secretary Patrick McLoughlin now says contained significant flaws. The cancellation vindicates Virgin Rail's protest and may end up costing taxpayers around GBP40mn (US$64.5mn).

Also in the rail freight sphere, the UK's Department of Transport is planning to invest an additional GBP200mn (US$312.7mn) in the Strategic Rail Network. The investment is aimed at creating core rail routes that will allow the operation of longer, quicker and more regular freight trains. It also plans to electrify the Great Western and Midland Main Lines, significantly reducing carbon emissions.

In the air freight sphere, BAA, the operator of five British airports, reported a 2.4% year-on-year (y-o-y) drop in freight traffic across its airports in the UK during May 2012, including a 3.8% decline at Heathrow Airport. CEO Colin Matthews said the fall in cargo volumes is a reflection of the continued eurozone crisis.

Upside risk presents itself in the form of a new multi-billion pound London road contract. Contractors CVU, Ringway Jacobs, Conway Aecom JV and EnterpriseMouchel have won four new London-based road contracts, Roadtraffic-Technology reports. The contracts, worth close to GBP2.6bn (US$4.13bn), include road maintenance, design and construction of new projects, lighting, winter maintenance and safety inspections. Each framework will run from April 2013 through to the end of March 2021.

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