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Home > Business/Finance > Diversified Services > Shipping & Logistics
Argentina Freight Transport Report Q3 2008
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Argentina suffered a major farmers’ strike in March and early April that disrupted transport networksacross the country. Because the underlying dispute with the government over export taxes remainedunresolved, there were fears that another stoppage called in May after the expiry of a 30-day truce couldescalate. At the root of the conflict was a government decision to introduce a new sliding-scale export tax,which sharply increased tax payments required on soya exports. During the three-week March proteststrike farmers set up around 400 roadblocks around the country, causing supermarkets in the capital,Buenos Aires, to run out of meat and other products.
Argentina is the world’s third-largest soya beanexporter and the largest soya meal and soya oil exporter. As a result of the strike, grain shipments came toa halt and shippers had to declare force majeure on contracts. Exports from Rosario port during the strikein March were reported to have fallen to only 1% of their normal levels at that time of year. Large cargoships, forced to wait empty at key Argentine ports - incurring charges of US$60,000-80,000 per day -began to divert to Uruguay and Brazil. The simmering conflict took an unusual turn in April when fires litby cattle ranchers in the La Plata river delta area blanketed the capital Buenos Aires with thick smoke fordays, shutting down roads and the domestic airport, and leading to a sharp rise in respiratory problemsreported in local hospitals. As a result of these problems we have trimmed our 2008 forecasts for freightcarried, with growth now expected at a lower figure of 5.6%. For the 2008-2012 forecast period our coreforecast is for average annual freight carried growth of 4.1%. We have also modelled an alternative globalscenario, marked by a significant US recession. In that eventuality, Argentine freight growth would dropfurther to an average of 3.9% a year.
Various factors support the core prediction. Across our 2008-2012 forecast period, we now expectaverage annual GDP growth of 3.9%, significantly lower than the 8.8% registered in the preceding fiveyearperiod. The government of President Cristina Fernández de Kirchner will find it more difficult tokeep the growth rates up in a less supportive international economic climate, and the transport sector willremain constrained by a somewhat patchy infrastructure.
The outlook for the overall freight industry is that it will keep pace with, rather than lead, the general rateof economic expansion in the country. Road haulage will continue to be the dominant freight transportmode. Growth will be somewhat constrained by capacity limits, with investment needed in both thehighways network and truck fleets. Nevertheless, over the forecast period annual average growth in roadfreight carried will be 4.1%, down from the preceding five years, when growth was 10.7% a year. BMInow forecasts 4.9% annual growth in rail freight over the next five years, with new investments helpingto lift capacity. We are forecasting maritime traffic to grow by an annual average of 3.7%, with strikeaction in 2008 weighing down the average across the 2008-2012 period. We see airfreight registeringsatisfactory, but not spectacular, growth rates - partly because much of Argentina’s international traderemains in the relatively higher bulk/low value pattern and is therefore not particularly suited for transportby air. However, we take LAN’s recent entry to the Argentine market as a positive sign of some supplysideimpetus and are now forecasting average annual airfreight growth of 5.8% in the forecast period..
We have awarded Argentina a freight transport rating of 63.6 (out of a theoretical maximum of 100.0),which places at the upper end of the range of key Latin American markets that BMI monitors. Thepositives 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$41.1bn in nominal terms by 2012,representing 9.8% of Argentina’s GDP. The transport and communications sector employed around660,000 people, or 7.1% of the labour force, in 2007. We see the figure rising to 693,000 by 2012,although as a proportion of the labour force it will remain unchanged at 7.1%.
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