A change of pace is forecast for Perus freight transport sector in 2010 as the countrys economy fights its way back from near stagnant growth in 2009. We are forecasting real GDP expansion of 5.9% - a significant rate when compared with last years growth of just 0.9%. A favourable economic backdrop should provide a platform from which Perus freight transport sector can continue its own recovery after last years downturn with a rebound in international trade volumes expected to benefit the countrys air, rail and maritime freight sectors.

Adding to a generally positive operating environment for the sector have been a series of encouraging developments one of the most encouraging of which has been the expansion of Perus largest international port, the port of Callao, which, in June 2010 saw a major new container terminal, Muelle Sur, come online. The maritime sector was further boosted by news of the launch of Perus first liquefied natural gas (LNG) shipments which left Callao for the Mexican port of Manzanillo and is hoped will become a growing source of revenue for shipping lines in the region over the next few years. Perus air freight sector is also recovering momentum with a new contender added to running for the tender to develop six airports in the south of the country in the form of Chinese airport operator, Capital Airports Holding. Meanwhile, work has begun on construction of a new air terminal at the town of Pisco in the countrys Ica region.

Despite positive currents running through Perus freight transport sector, a number of uncertainties remain. The most perturbing of these will be the growing likelihood of a slowdown in the Chinese and US economies from H210 which, given that they represent Perus largest export partners, present a downside risk to our forecasts for trade and freight transport growth in H210 and into 2011.

Maritime Freight
We forecast that total cargo volumes moved through the port of Callao (POK), which slumped by 8.7% to 17.39mn tonnes in 2009, will recover considerably this year with 8.4% growth to 18.86mn tonnes. For 2011, we expect growth at this port to moderate to 6.5%. At the port of Paita where volumes contracted by a heavy 33% to 847,000 tonnes, there will be more pronounced growth of 12.7% in 2010 to reach 955,000 tonnes. The surge will be short-lived, however, and next year the ports volume expansion will moderate to just 0.4%. In the medium term, both these ports are set to maintain a relatively strong performance with average annual increase in throughput for Callao and Paita forecast at 7.6% and 5.8% respectively.

Rail Freight
A downturn in mining activity has seen Perus rail freight sector registered two consecutive years of negative growth; however, for 2010, we see the sector recovering strongly with number of recorded freight tonne-km volumes set to rise by 6.7% to 1.25bn freight tonne-km, somewhat offsetting the 7.5% contraction of 2009. In the medium term, rail freight, which has been somewhat neglected in the past, is set to expand at a fairly steady rate. Between 2011 and 2014, we are projecting average annual increases of 4.5%, reaching 1.49bn freight tonne-km by 2014.

Trade Overview
In real terms, Peruvian trade volume is set to gain by 14.2% in 2010, recovering fully from the slump experienced in 2009 when import and exports dropped by 18.4% and 2.5% respectively. This year imports will lead the way with volume growth of 18%, ahead of exports that will achieve expansion of 10%. In value terms, imports will surge by 25.1% to reach US$32.4bn this year, while exports will be up by 16.6% to US$35.5bn. Looking at the medium term forecast across the five years to 2014, trade volume is set to expand by an annual average of 9.2%, with imports at 10.2% per annum, leading exports at 8% per annum.

Perus principal exports are raw materials including copper, gold, zinc and crude oil.The countrys main imports are oil-based products, as well as plastics, vehicles and machinery.

The countrys main export partners are the US, China, Canada and Japan with Switzerland and Spain key European markets. The countrys main sources for imports are the US and China, as well as South American neighbours Brazil, Ecuador, Argentina, Chile and Colombia. Perus location on South Americas Pacific coast allows it access to shipping routes to its Asian trade partners, as well as core North and Latin American markets. The country is located near the Panama Canal, offering access to sea routes heading east to the European Markets.