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Home > Business/Finance > Diversified Services > Shipping & Logistics
Argentina Freight Transport Report Q3 2007
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Bolivia and Argentina signed a contract on March 26 to build a US$1.5bn, 1,500km gas pipeline that will
eventually quadruple the amount of natural gas Bolivia exports to its southern neighbour. The deal
finalises the terms of an agreement the preceding October between Bolivian President Evo Morales and
Argentine President Néstor Kirchner and brings a step closer to reality a project first proposed by the two
South American nations three years ago. Officials say the Northeast Argentina Pipeline will be able to
pump up to 20mn m3 of gas daily from Bolivia to Argentina by 2010, effectively quadrupling the 7.7mn
m3 daily capacity of the existing pipeline built between the two countries in the 1970s. On average,
Bolivia currently sells Argentina about 5mn m3 of gas daily. Under the October agreement, Argentina
signed a new 20-year, long-term gas-import accord with Bolivia that will eventually be worth an
estimated US$16-20bn in fiscal revenues to Bolivia over its lifetime. Gas is expected to begin to flow
through the pipeline in late 2009 or early 2010 and supplies will gradually be ramped up until full
capacity is reached by the end of 2011. In our latest Argentina Freight Transport Report, BMI concludes
that this and other developments will lift pipeline throughput growth to an annual average of 4.7% over
the next five years, expressed in terms of million tonnes-kms (mntkms). This will be faster than the
country’s economic growth rate over the same period.
Various factors support this prediction. Across our 2007-2011 forecast period, we now expect average
annual GDP growth of 4.5%. Energy demand will expand more strongly, however. Despite the Bolivia
deal, there are still some question marks about how fast new capacity will be built. We still envisage that
pipeline throughput will only begin to pick up a little more towards the tail-end of our forecast period as
the new pipeline comes on-stream around 2010 (not 2008/2009 as currently predicted).
The outlook for the overall freight industry is moderately encouraging. Road haulage will continue to be
the dominant freight transport mode. Growth will be somewhat constrained by capacity limits, with
investment needed in both the highways network and truck fleets. Nevertheless, over the forecast period
annual average growth in road freight carried will be 5.0%, down from the preceding five years, when
growth was 6.1% per annum. BMI now forecasts 5.6% annual growth in rail freight over the next five
years, with China-funded new investments helping to lift capacity. We are forecasting maritime traffic to
grow by an annual average of 4.2%, with the growth concentrated in the early part of the forecast period
because of the global shipping boom, which is now easing. We see airfreight registering satisfactory, but
not spectacular, growth rates - partly because much of Argentina’s international trade remains in the
relatively higher bulk/low value pattern and is therefore not particularly suited for transport by air.
However, we take LAN’s entry to the Argentine market as a positive sign of some supply-side impetus
and are now forecasting average annual airfreight growth of 6.5% in the forecast period.
We have awarded Argentina a combined freight transport business environment ranking of 32 (out of a
theoretical maximum of 70), which places it below the average score of 39 for the range of key Latin
American markets that BMI monitors. The positives include the country’s long-term economic risk and
political risk and infrastructure growth.
The total value of transport and communications GDP will rise to US$34.2bn in nominal terms by 2011,
representing 9.0% of Argentina’s GDP. The transport and communications sector employed around
660,580 people, or 7.1% of the labour force, in 2006. We see the figure rising to 704,410 by 2011
although as a proportion of the labour force it will remain unchanged at 7.1%.
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