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Russia Freight Transport Report Q2 2009
Market |
Logistics |
Report Type |
Market Research |
Country |
Russia |
Published |
13 May 2009 |
Number of Pages |
71 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
According to the Moscow Times in February, chief executive of Russia's state-owned rail monopoly Russian Railways (RZD), Vladimir Yakunin, stated that the company might register a loss in 2009 as the global slump leads to a cut in industrial production and reduces the demand for freight traffic. Net income in 2008 was likely to be lower than RUB4bn (US$110mn). Yakunin added that cargo shipments would fall around 19% on an average in 2009 and added that freight shipments declined by 28% in February 2009, following a 33% fall in January 2009. The report believes that RZD's plans to improve infrastructure, expand the fleet and amplify international presence will be slowed by current market conditions.
Meanwhile, eventual privatisation may increase competitiveness, although RZD's ownership of the country's infrastructure means that it is set to maintain its overall domestic position.
In our newly released Russia Freight Transport Report, it is concluded that rail freight traffic will shrink this year, although we are less pessimistic than Yakunin. We expect rail freight carried to drop by 9.6% this year, and to grow by a low annual average of 1.2% in 2009-2013. Various factors support this forecast. Although the global economic slowdown is overshadowing current prospects, Russia’s economy is still set to grow at an annual average rate of 2.0% over the next five years, according to forecasts.
Demand for freight will still be significant, particularly once the recovery gets underway.
Russia is a vast country where transport infrastructure remains relatively thinly spread. The total value of transport and communications GDP will rise to US$248.4bn in nominal terms by 2013, representing 10.9% of Russia’s GDP. One of the faster rates of growth will be registered by pipeline throughput (an average of 3.5% per annum), reflecting resilient Asian demand for Russian oil and gas, as well as substantial, but slower-growing European demand. Air cargo will grow at the same rate, an average of 3.5% per annum, although this is a sharp reduction on earlier projections. Given the impact of the global financial crisis, we expect to see ongoing consolidation in the aviation sector.
The growth in pipeline turnover will, as mentioned, be based on continuing strong demand for Russian oil and gas, despite investor concerns over various issues, including the international recession, political risk, and the after-effects of gas disputes with Ukraine (in late 2005 and early 2009) and Belarus (in late 2006).
On balance we believe there will be ongoing funding for big pipeline projects to markets in both the West and the East, although foreign investors will be much more cautious.
In the long term, demand for road haulage will be boosted by the expansion of the motor vehicle fleet, and the sophisticated door-to-door logistics requirements of an increasingly consumer-oriented society.
However, the near-term recession and the lack of enough new highway capacity will be a severe limiting factor. We are now predicting annual average road haulage growth of 2.3%. Other modes of transport will experience comparable growth curves. Railway freight turnover will be hard hit by the downturn in 2009 and as a result will grow at a weak 1.6% per annum. Shipping cargo turnover will also reflect the reduction in world trade in 2009, and will expand at an average 1.4% a year, while inland waterways will have a similar performance.
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