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Philippines Freight Transport Report Q4 2009
Market |
Logistics |
Report Type |
Market Research |
Country |
Philippines |
Published |
26 August 2009 |
Number of Pages |
63 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Overall cargo volume in the Philippines is forecast to grow by an annual average of 2.9% during 2009 to 2013
Philippine-owned port operator International Container Terminal Services Inc (ICTSI) in May announced its financial results for Q109, revealing a 44% year-on-year (y-o-y) drop in net income. ICTSI recorded net income of US$11mn as revenues over the quarter fell by 16% y-o-y to US$92.8mn. The company attributed the decrease in its profit margin to the impact of lower global trade volumes as well as the effect of the depreciation of the Philippine peso and Brazilian real, the currencies in which its core revenue was received, against the US dollar. Despite the decline, however, ICTSI chairman Enrique K.
Razon Jr said the results were ‘better than expected’ given the tough operating environment in which the company found itself. The report notes that the steepest drop in revenue was recorded by the group’s EMEA operations, which comprise of terminals managed in Poland, Georgia, Syria and Madagascar, income from which fell by 42% y-o-y to US$13.93mn. It is believed the effect of declining terminal activity has been exacerbated by additional factors relating to recent major expansions to its global operations.
The newly released Philippines Freight Transport Report notes that overall cargo volume in the country should grow by an annual average of 2.9% in the 2009-2013 period, down from 4.7% in the preceding five years. Bearing in mind the impact of the global recession, the outlook for the Philippines economy over the next five years is for moderate to slow growth, averaging 3.3% per annum in 2009- 2013. The effect is to give freight a reasonable platform for development, although companies will face greater pressure on their margins than before. While in many developing economies freight growth usually exceeds GDP growth by a significant margin, the fact that we see it falling behind the wider economy shows the extent to which the transport sector is failing to live up to its full potential.
The air freight sector is expected to experience the most significant growth rate, averaging 4.3% y-o-y.
This takes into account cooling demand in the sector. Next in importance will be rail freight, growing by 4.0% from a low base as a result of the Northrail and Southrail projects. We see shipping growing by only 1.5%, pulled down by the steep fall in foreign trade in 2009. One constraint facing the freight industry is the environment in which it operates. Comparatively speaking, the Philippines’ BMI freight rating is a little disappointing in comparison with regional peers, with an overall score of 47.4 (out of a potential 100). Under most categories, the national industry received a medium to low score. Freight and infrastructure growth rates, together with the transport intensity index (a measure of the dynamism of foreign trade) are all at the lower end of the scale.
For the 2009-2013 forecast period, we expect the transport and communications sector to outpace the economy as a whole by a small margin, as far as value of output is concerned. It will achieve average annual growth of 3.6%, versus 3.3% for overall GDP. Again, the gap between these two rates is narrower than experienced in many other emerging economies. The total value of transport and communications GDP will rise to US$17.8bn in nominal terms by 2013, representing 7.2% of the Philippines’ GDP.
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