BMI View: Growth In The Shadow of The Arab Spring The freight transport outlook for Saudi Arabia is moderate-to-good, although there are a number of complicating factors on the horizon. The most significant is the Arab Spring, the wave of popular protests and uprisings around the Arab world. The ruling House of Saud is responding by boosting the local economy as well as its security services.
As a result of two stimulus packages totalling US$130bn, BMI is raising its GDP forecasts for the country this year and next. However, we note that improvements in already-high living standards in the country are unlikely to silence demands for political reform. We also highlight serious mid-term political challenges to the authorities. That said, on the short term, our raised GDP growth prediction of 5.1% this year will be beneficial for the industry.
Everything points to port activity levels remaining in generally positive territory, but lagging behind the wider economy this year. Throughput levels were strong last year, and inventory movements and base effects now point to a quieter 2011. First quarter throughput levels at some ports (such as Jubail) are down on 2010. In contrast, airfreight volume growth will pick up on last year as investments in new planes and airport infrastructure begin to make themselves felt. A similar story is unfolding in rail, where the beginnings of a national network is emerging.
Headline Industry Data
?? Total Saudi Arabian trade set to increase 2.3% in 2011 in real terms, with exports contracting 1.8% and imports growing 6.5%.
?? Airfreight volume set to grow 6.3% in 2011 to reach 598,900 tonnes.
?? Gross tonnage at Jeddah Islamic Port will be flat in 2011 (+0.12% to 49.224mn tonnes). Container throughput growth at the same port will also be muted (+0.3% to 3.842mn TEUs).
Key Industry Trends
Jalamid-Raz Azoor Railway Completed
The 1,392km railway line from the mining town of Jalamid to the Ras Azoor seaport has been completed. The line is part of the new North-South railway. The first trial shipments of phosphate, 200 tonnes at a time in four railcars, have commenced, but in time each shipment may be as large as 15,000 tonnes carried by 155 railcars. Apart from the North-South project, the Saudi authorities are also working on an East-West 'landbridge' and a link to the Jordanian rail network.
Saudi Cargo Developing Air Freight Hubs Saudi Airlines Cargo says it will begin investing in the development of domestic air freight hubs. An initial US$18mn will be divided up between Riyadh (with almost half), Jeddah (one third), and others. Chief executive Fahad Hammad says 'The building of domestic ground infrastructure stems from the board of directors' decision to increase fleet strength by 40% to 11 aircraft from so as to penetrate new global markets with sophisticated services.'
Fleet Expansion By National Chemical Carriers (NCC) NCC, the chemicals-carrying arms of the National Shipping Company of Saudi Arabia (NSCSA) in April took delivery of the NCC Huda, a 45,000dwt vessel built by SLS Shipbuilding of South Korea. This was the second of an order of two, and NCC has a further nine vessels on order for SLS Shipbuilding, as well as a 75,000dwt chemical carrier from Daewoo Shipbuilding and Marin Engineering. There are therefore 10 vessels on order at a cost of US$533.3bn. Expansion is designed to make NCC one of the world's top-five chemical tanker companies.
Key Risks To Outlook
The main downside risk to our forecast is political and concerns the possibility of the Arab Spring coming to Saudi Arabia sooner rather than later. So far, some localised protests have been quickly contained by the country's active security forces. Our core view is that the country will avoid immediate upheavals, although demands for reform will have to be addressed on the medium term. The risk is that despite everything, a protest movement will gather pace on the short term. Major popular protests could lead to very sharp reductions in activity levels, as have been seen in countries such as Egypt and Tunisia.
[Studien Infos ausblenden]
