Philippines Shipping Report Q2 2012 - New Study Released
2012-05-04 08:11:21 - New Transportation market report from Business Monitor International: "Philippines Shipping Report Q2 2012"
The Philippine economy grew at a disappointing rate of 3.2% year-on-year (y-o-y) in Q311, falling well below the government's estimate of 3.8-4.8% on stubbornly low government spending and falling exports, and marking the second consecutive quarter of largely disappointing data. We expect the trend of sluggish growth to continue through 2012, as increased government spending will struggle to offset
softening demand from top export partners the US, China, and Japan. It is this softening demand that will worry the Philippine shipping sector over the short term, relying as it does on the larger economies of the US and Japan in particular. Following an estimated 3.7% performance in 2011, we continue to be below consensus on our growth outlook for 2012, penciling in a forecast of 3.9%.
Full Report Details at
- www.fastmr.com/prod/359558_philippines_shipping_report_q2_2012.a ..
Having said that, both of the Philippines' main ports are set to enjoy very healthy growth in 2012, with the Port of Cebu leading the way in terms of tonnage throughput y-o-y growth (8.43%), slightly ahead of the country's main port, the Manila International Container Terminal (MICT), which we predict will enjoy healthy y-o-y growth of 7.40%.
On the horizon, however, we do caution that the twin forces of overcapacity and weakening demand could pose problems on the major routes of Asia-Europe and the transpacific, although these routes have enjoyed a resurgence at the beginning of 2012, as BMI predicted. Our attention has also been drawn to increase in rates, according to data from the Shanghai Containerised Freight Index (SCFI), rates on the Asia-Europe and transpacific have ticked up to US$737 per twenty-foot equivalent unit (TEU) and US$1,825 per forty-foot equivalent unit (FEU) respectively.
Headline Industry Data
* 2012 tonnage throughput at MICT forecast to grow 7.40% to 20.08mn tonnes.
* 2012 tonnage throughput at the Port of Cebu forecast to increase 8.43% to 29.87mn tonnes.
* 2012 tonnage throughput at the Port of Davao forecast to rise by 5.82% to 11.46mn tonnes.
* 2012 tonnage throughput at the Port of Cagayan de Oro forecast to increase 7.36% to 7.08mn tonnes.
* The real value of the Philippines' total trade will rise by 3.85% this year, with exports totalling US$75.06bn, ahead of imports at US$86.90bn.
Key Industry Trends
Austal Acquires Philippine Shipyard For US$7mn
Australian shipping firm Austal acquired a shipyard in November 2011 in the Philippines for US$7mn as part of a wider move to regionalise its manufacturing base for commercial vessels. A further US$5mn is being spent by the firm to enhance the shipyard's current facilities, and construction is scheduled to begin in Q211.
Government To Privatise Davao Port In 2013
It was reported in December 2011 that the Philippine government is to privatise the Port of Davao's entire operations in 2013. The facility is currently operated by the Philippine Ports Authority (PFA), a subsidiary of International Container Terminal Services (ICTSI). The move is aimed at matching the pace of fast-growing cargo volume at the port.
MICT To Get New Gantries
The MICT is to see the arrival of eight new rubber tired gantries (RTGs) at its new Berth 6 operation at a cost of US$10.7mn. The RTGs will arrive at the terminal in two batches, the first in June 2012. The launch of Berth 6 will increase MICT's annual capacity of 1.9mn TEUs to 2.5mn TEUs. An order has also been placed for two new ZPMC super post-Panamax quay cranes.
Key Risks To Outlook
Although poor export performance will persist through H112, the government looks set to continue to boost its direct participation in the economy as the world struggles against the triple headwinds of the eurozone debt crisis, a possible US recession, and a hard landing in China. All of these three factors represent downside risks in the immediate term. In view of our recent downgrade of our global growth outlook for 2012, we do not expect increased government spending to enable the Philippine economy to meet Manila's ambitious 4.5-5.5% growth target for 2012. Instead, we see the economy expanding at a more moderate pace of 3.9%. This will have a knock on effect on key industries in the country, and the shipping sector is no different.
On the upside, in terms of long-term risk, BMI also sees strong potential in the Philippines' demographics. With the archipelago set to add almost 14mn to its population by the end of the decade, and per capita GDP to more than double, vast opportunity lies in the shipping sector.
However, we caution that increased investment is imperative, bearing in mind that the World Economic Forum's latest Global Competitiveness Index, which ranks each country's infrastructure, places the Philippines in an unenviable position, propping up the Asia region in 13th (and last) place and ranking 123rd in global terms. This situation must be addressed if the Philippines' shipping sector is to live up to its potential.
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