Panama Freight Transport Report Q1 2012 - new market research report published

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2012-02-03 17:04:00 - Panama Freight Transport Report Q1 2012 - a new market research report on companiesandmarkets.com

Panama´s impressive growth trajectory is set to continue in future and we forecast real GDP growth of 6.8% in 2012. Our current forecasts for the next few years continue to set the country apart, not only as an outperformer in the Central American region, but as one of the fastest growing economies in Latin America.

The economy´s strong growth outlook will,

 

 

in our view, make Panama an increasingly attractive destination for foreign investors seeking to benefit from a strong consumer story and improving business environment. Panama scores 48.9 in our proprietary business environment ratings (above the regional average of 44.6), ranking it sixth in Latin America and we believe long-term fixed asset investment is likely to remain well-anchored in future. The ongoing expansion of the Panama Canal, due for completion in 2014, will in our view continue to boost the strong performance of the country´s freight transport sector.

A Panama Free Trade Agreement (FTA) is has been ratified by the US congress. The agreement will certainly boost trade volumes between the 2 countries.

Key Industry Data

- Air freight tonnes are set to grow by 5.2% in 2012. We forecast average annual growth of 4.6% over the medium term.

- Total tonnage throughput at Balboa is expected to grow by 5.8% in 2012. We forecast average annual growth of 6.9% over the medium term.

- Total tonnage throughput at Manzanillo is forecast to grow by 2.9% in 2012. We forecast average annual growth of 3.5% over the medium term.

Key Trends

Port Of Miami Races Against Time To Prepare For 2014

We believe the port of Miami will be well placed to take advantage of increased volumes on the US east coast when the Panama Canal expansion is completed in 2014. In order to ensure that it is ready for the increase in post-Panamax vessels, the port has developed a three-pronged development plan. A memorandum of understanding (MoU) signed between the Miami port authority and the Panama Canal Authority (ACP) should boost the port´s volumes in 2014, but we believe the port could have difficulty completing the dredging element of its plan in time.

Winners And Losers Of US FTA

We have long highlighted the potential for Panama to capitalise on US plans to substantially boost soy exports, highlighted by the memorandum of understanding (MoU) between the US Soy Transportation Coalition and Panama´s Autoridad del Canal de Panamá (ACP) to promote Panama Canal expansion, and the passage of the FTA should go a long way to boosting similar joint investment projects in the future. In addition to simply acting as a transit point, Panama is also likely to see a surge in agricultural imports (the FTA will mean Panama will now phase out its 20% tariff on soybean oil), which could further boost investment into the country´s port and internal transport facilities.

Risks To Outlook

The main risk to our outlook is on the upside. We believe that when the Panama Canal expansion project is completed in 2014 the canal will see increased throughput from bigger container vessels. This will increase throughput at the country´s ports and possibly have a positive effect on road and rail freight. In the short term, a downside risk presents itself in the form of increasing canal tolls, which are being used to fund the expansion. Several lines have already introduced surcharges passing this extra cost on to customers, but if rates continue to go up, lines could avoid the canal in an effort to cut costs. We believe that rates will level off when the expansion is completed, so this should not have a long-term effect on traffic.

A further downside risk comes from a possibility of a slowdown in the US´ economic recovery. Sluggish consumer demand could result in a drop in demand for imported goods from China, which would have a negative knock on effect on the Panama Canal´s throughput volumes

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