Slovenia Freight Transport Report 2010

In November Slovenia joined the Russian-backed South Stream natural gas pipeline project. The proposed 63bn cubic metres/year (bcmy) pipeline is designed to pump Russian gas through South Eastern Europe to Italy. It is a rival to the European-backed Nabucco project, designed to bring Caspian basin gas to Europe and diversify the continent’s sources of supply. Slovenian economy minister Matej Lahovnik signed an agreement on his country’s involvement in South Stream with Russian energy minister, Sergey Shmatko. Under its terms, Slovenia’s state-owned gas company Geoplin was to set up as a joint 50-50 venture with Russia’s Gazprom, to build the Slovenian section of South Stream. Slovenia’s gas consumption is around 1bcmy, some 60% of which is supplied from Russia. Russian sources said that after completing arrangements with Slovenia, the South Stream project had achieved the backing of all necessary European partners. Separate agreements had been reached with Bulgaria, Serbia, Greece, and Hungary and negotiations continued with Austria. Commenting on his country’s involvement in South Stream, Lahovnik noted that the project was particularly important because of the ongoing disagreements between Russia and Ukraine over gas transport issues. ‘We had a gas crisis last year and the prospects for this year do not look much better either,’ he said, noting that South Stream would detour around the Ukraine.

Since our last report, we have modified our macroeconomic forecast for Slovenia, taking account of the global recession in 2009. We now estimate that Slovenian GDP will have dropped by 7.0% in 2009, and we project a weak recovery in 2010 (+1.8%), gathering more pace in 2011 (+2.9%). The average annual rate of expansion in 2010-2014 is now projected at 3.2%, an improvement on the 2.7% registered in the preceding five years. The effect on our freight traffic forecasts for the period as a whole relative to the preceding 2005-2009 period is therefore positive. We had earlier boosted our maritime freight carried forecast in the period up to 2008, in view of strong performance at Luka Koper, the country’s main port operator. However, from 2009 onwards the European slowdown had an impact. In airfreight, the recession has also taken its toll after strong, earlier growth. Taking all adjustments into account, we now project annual average growth in freight carried across all modes of 4.6% in the 2010-2014 period. According to our latest estimates, transport and communications GDP fell by 7.3% in 2009, 0.3 percentage points more steeply than overall GDP, which contracted by 7.0%. For the 2010-2014 forecast period we expect the transport and communications sector to outpace the economy as a whole by a narrow margin. It will achieve average annual growth of 3.4%, versus 3.2% for overall GDP. The total value of transport and communications GDP will rise to US$2.63bn in nominal terms by 2014, representing 7.4% of Slovenia’s GDP. The transport and communications sector employed 60,000 people, or 6.6% of the labour force, in 2009. We see those figures holding broadly steady to 2014.

In light of the extensive development in the road network in comparison to rail, we expect rail’s share of tonne-km to decline. We are still forecasting that road freight traffic will rise strongly in the 2010-2014 forecast period, registering average annual growth of 5.1%. Rail freight carried will also rise (largely based on Slovenia’s transit freight business), but we expect this to be at a much more modest annual average rate of 1.9%. As a result, road’s share of total domestic and international freight carried will continue to edge up from 10% in 1999 to 12% in 2003, and a predicted 13% in 2014. For the same years, rail’s share will move from 6% up to 9%, and then back down again to 6%.

The third (and biggest) contribution to the freight business comes, of course, from maritime cargo moving through the port of Koper. Slovenia is one of only three accession countries with no transitional period concerning cabotage, and there is a progressive commercial outlook of the port authorities, therefore tonnage passing through Koper is forecast to increase sharply. However, the sharp downturn in the shipping cycle in 2009 was a major offsetting factor, at least on the short term. We are forecasting that maritime freight carried will rise by an annual average of 4.8% in the forecast period. However, to serve further as a gateway to Central Europe and to be able to compete with ports in North Western Europe, investment will continue to be required, in order to increase the water depth at the general goods and container terminals, to enable larger vessels to call at the port. The construction of a new entrance to the Port of Koper and its’ connection with the new motorway between Koper and Ljubljana should further enhance the throughput of the port in relation to nearby competitors. Maritime freight carried should maintain its share of the total at around 77-78% during the forecast period.