Following a year of increasing volumes in all freight modes, except road freight, BMI believes 2011 will signal the beginning of the recovery for road freight, with growth expected in all other modes. Total trade is projected to pick up, with our Country Risk desk forecasting a year-on-year (y-o-y) increase of 7.72% in 2011 following growth of 5.58% in 2010.
Road freight will continue to dominate the sector, and is projected to grow by 9% in 2011. The sector, however, did not manage to defy the downturn with volumes falling substantially both in 2009 and 2010 and, with EU pledges of a reduction in road haulage across the region, it will take time to recover its predownturn levels. Nevertheless, road freight's market share remains safe.
BMI notes dynamic development of Hungary's air freight sector. Budapest airport is upgrading its cargo facilities in a bid to become Central Europe's new air freight hub, which would increase the competitiveness of country's air freight sector.
Headline Industry Data
?? 2011 air freight tonnage is expected to grow by 4.5%;
?? 2011 rail freight is forecast to grow by 2.1%;
?? 2011 road freight is forecast to grow by 8.95%;
?? 2011 inland waterway freight to grow by 13.05%;
?? 2011 total real trade growth is forecast at 7.7%.
Key Industry Trends
New Freight-Only Service Developing Central European Air Cargo Hub Turkish Cargo is looking to increase its already considerable presence in the air cargo sector with the launch of a new freight service linking Istanbul with Budapest. BMI notes that the Turkish airfreight carrier is just one of a number of firms expanding its cargo coverage of Hungary, as the country develops into an airfreight hub for Central Europe. Budapest airport is further expanding its freight facilities and is due to open its new Cargo City, where handling agents and freight forwarders will be located, by the end of 2012.
Risks To Outlook BMI highlights freight modes exposed to the transport of containers as the forecast areas which have risk to the downside as it is these modes of transport which benefit from the increase of container volumes on the back of a strengthening consumer base - our Country Risk team holds the view that Hungary's pace of economic growth will not pick up considerably over the coming years as fiscal austerity and debt deleveraging weigh on overall domestic consumption.
However, BMI expects net exports to help prop up the country's recovery, particularly in light of strong trade linkages to Germany's booming economy, creating upside risks to our freight forecasts. Our Country Risk also raised country's 2011 growth forecast from 2.3% to 2.9% on account of BMI's recent upward revision to Germany's growth for that year.
At the same time, we do keep in mind downside risks to our freight forecasts should conditions in the EU deteriorate significantly, potentially via a worsening of the region's sovereign debt crisis - this would have pronounced effects on Hungary's economic recovery given its heavy reliance on export-oriented industries.
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