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Argentina Freight Transport Report Q1 2009
Market |
Logistics |
Report Type |
Market Research |
Country |
Argentina |
Published |
8 January 2009 |
Number of Pages |
56 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
In Q308, political turmoil in Bolivia looked set to have a negative impact on Argentina’s natural gas pipeline and energy plans. Speaking in Buenos Aires in late September as the government launched a new plan to restructure US$20bn in defaulted foreign bond debts, Planning Minister Julio de Vido emphasised that the Argentina economy had grown at an average of 8% over the preceding six years, and said that Argentina’s energy transportation infrastructure capacity would expand by over 60% over the next five.
However, when asked by reporters about the planned expansion of the natural gas pipeline from Bolivia to Argentina, he conceded that ‘we are going to proceed at a slower pace than expected.’ Under a 2006 agreement, the two governments settled to build a new 20mn cubic metre per day pipeline to pump natural gas from Bolivia to Argentina, which would come into service in 2010. However, as Bolivia moved to nationalise its oil and gas deposits and continues to face various internal political conflicts, very little progress on the new pipeline was achieved, and supplies through the existing 7.7mn cubic metres/day pipeline suffered various interruptions. In March 2008, Bolivian Vice-president Alvaro García Linera suggested the new pipeline would not be completed until 2012 or 2013. As a result the above we have trimmed our forecasts for pipeline throughput. For the 2009-2013 period, our core forecast is for average annual pipeline traffic growth of 3.3%.
Various factors support the core prediction. Across our 2009-2013 forecast period, we now expect average annual GDP growth of 3.0%, significantly lower than the 8.3% registered in the preceding fiveyear period. The government of President Cristina Fernández de Kirchner will find it more difficult to keep the growth rates up in a less supportive international economic climate, and the transport sector will remain constrained by somewhat patchy infrastructure. On the plus side, however, the long freeze of natural gas tariffs has been eased, meaning pipeline companies will become more profitable and be more likely to invest in new capacity.
The outlook for the overall freight industry is that it will keep pace with, rather than lead the general rate of economic expansion in the country. Road haulage will continue to be the dominant freight transport mode. Growth will be somewhat constrained by capacity limits, with investment needed in both the highways network and truck fleets. Nevertheless, over the forecast period annual average growth in road freight carried will be 3.1%, down from the preceding five years. BMI now forecasts 3.6% annual growth in rail freight over the next five years, with new investments helping to lift capacity. We are forecasting maritime traffic to grow by an annual average of 3.0%.. We see airfreight registering satisfactory, but not spectacular, growth rates – partly because much of Argentina’s international trade remains in the relatively higher bulk/low value pattern and is therefore not particularly suited for transport by air. While we take LAN’s entry to the Argentine market as a positive sign, the recent re-nationalisation of Aerolineas Argentinas may herald a period of uncertainty. We are now forecasting average annual airfreight growth of 3.5% during the forecast period.
We have awarded Argentina a freight transport rating of 60.1 (out of a theoretical maximum of 100.0), which places at the upper end of the range of key Latin American markets that BMI monitors. Positive factors contributing to the country’s score include the country’s long-term economic and political risk assessments and potential for growth in infrastructure. The total value of transport and communications GDP will rise to US$66bn in nominal terms by 2013, representing 9.9% of Argentina’s GDP. The transport and communications sector employed around 666,000 people, or 7.1% of the labour force, in 2007. We see the figure rising to 701,000 by 2013, although as a proportion of the labour force it will remain unchanged at 7.1%.
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