Global freight transport levels have continued their steady recovery from the economic downturn and are increasing across the world. That said, however, we continue to see risks to all three core shipping sectors (container and dry and liquid bulk), with overcapacity and a drop in demand continually threatening to push down rates and impinge on lines' profits. As austerity measures take hold in Europe and the US continues to have high unemployment and recover from the downturn sluggishly, shipping levels are set to slow their growth considerably.
Having posted growth during the downturn of 2009, the port of Bandar Abbas has proven resilient in the face of adversity, and continued double-digit growth in 2010. However, our outlook for the medium term is not so optimistic and the days of such growth look set to become a thing of the past, over the medium term at least. The effect of international sanctions against Iran will be acutely felt in the Iranian economy, and this is sure to trickle down into the shipping sector, with the Islamic Republic of Iran Shipping Lines (IRISL) already feeling the pinch.
The development of a railway network, however, should enable Iran to increase its freight transport links with its neighbours. The air freight sector is set to perform unremarkably over the medium term, with the slow rate of growth forecast mainly because of the impact of international sanctions that have restricted investment, fleet modernisation and spare part supplies.
Headline Industry Data
?? 2011 Port of Bandar Abbas throughput growth forecast is 1.4%, and is expected to average 2.71% a year to 2015.
?? 2011 rail freight tonnes growth forecast is 0.9%, and is expected to average 1.68% a year to 2015.
?? 2011 air freight tonnes growth forecast is 0.37%, and is expected to average 0.70% a year to 2015.
?? 2011 total trade real growth forecast is 0.11%.
Key Industry Trends
Iranian Oil All At Sea As many as 38mn barrels of crude oil may currently be being stored offshore, as of April 2011, due to international sanctions proving hugely detrimental to exports.
Positive Step For North-South Rail Corridor The unveiling of a cooperation agreement between transport ministry representatives from Russia, Azerbaijan and Iran has boosted the North-South Rail Corridor, an ambitious project to create a freight rail link between Europe, from Russia to Azerbaijan and through Iran, eventually linking to India and South East Asia. It is hoped the rail line will carry around 20mn tonnes of cargo a year, and improve transport links across Eurasia.
NITC Not Immune From Sanctions
The National Iranian Tanker Company (NITC) has been forced to seek a new insurance provider due to fears from its current supplier that it cannot renew the company's policy without violating EU regulations.
Key Risks To Outlook
Although Iran has welcomed popular uprisings in the Arab world as marking an 'Islamic awakening', we believe that Tehran cannot afford to take comfort from them. Iran has many of the socioeconomic characteristics of Egypt, and is in a worse position economically, because it is under international sanctions and has no powerful allies. Thus, we see rising risks of political instability in Iran over the coming years.
Allied to this, the high oil price underpinning Iran's budget reflects the extent to which state expenditure remains dependent on oil export revenues. There is no guarantee, however, that Iran will re-invest its crude export revenues in its upstream segment sufficiently to sustain output from ageing fields and boost exploration efforts.
Also, the sanctions imposed on Iran provide considerable risk to our forecasts. With the nuclear-energy development programme, which the Iranians insist is not for the development of weapons, elevated to the status of a national cause, it seems unlikely that it will be dropped anytime soon.
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