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Home > Business/Finance > Diversified Services > Shipping & Logistics
Colombia Freight Transport Report 2007
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The government was unsuccessful in its first attempt to privatise state natural-gas transporter Empresa
Colombiana de Gas (Ecogas). In late September, the government halted the privatisation, citing as too
low the lone bid of US$823mn, made by a group of six local pension funds. Arguably Ecogas is worth
more; not least because of its potential strategic importance in joining South America’s gas grids with
North America. Ecogas distributes 45% of Colombia’s gas through 3,233km of trunk lines located
predominantly in north-east and central Colombia. Although the prospect of a pipeline through Central
America to North America is still a way off, Colombia’s geographic importance is self-evident. The
government intended to hold a new auction within 45 days, and was expected to open the company up to
a broader range of potential bidders. In our latest Colombia Freight Transport Report, BMI concludes
that pipeline throughput (both oil and gas) will grow by an annual average of 3.5% over the next five
years.
Various factors support this prediction. The economy will grow by an annual average of 3.3% in 2007-
2011, a little slower than the preceding five-year period (an average of 4.1%), partly as a result of a
cooling cycle for commodity exports. At the same time, however, oil and gas demand will remain strong,
and there are growing opportunities for Colombia to act as a transit corridor, particularly for Venezuelan
hydrocarbon exports out to the Pacific, on their way to China and other markets. Lawlessness and
guerrilla insurgencies, which have targeted pipelines, will continue to be a factor, but the overall security
situation is set to improve
Overall prospects for the freight sector are relatively encouraging. We are expecting freight turnover to
grow by an average of 4.6% during 2007-2011, significantly ahead of the economy’s general growth rate.
We believe President Uribe’s emphasis on restoring a strong central government based on the rule of law
is gradually improving the operating environment and slowly encouraging a pick-up in investment levels.
This implies a scenario in which some of Colombia’s ageing transport infrastructure will gradually be
modernised and upgraded and some of the country’s ‘no-go’ rebel areas will be slowly brought back to
normality with the re-establishment of transport links. We do not, however, see the country’s deep-rooted
problems of social and political violence coming to an early end -?in that sense there are few ‘quick wins’
to be had. Airfreight growth will average 5.9%, followed by rail freight traffic growth at 5.9%, road
freight at 5.3%, inland waterways at 3.7%, pipeline throughput at 3.5% and maritime freight at 2.6%.
Overall, Colombia scores 36.0, out of a possible maximum of 70.0, in our freight transport business
environment matrix. It comes in a little bit below the average regional score. The country scores relatively
well on freight transport growth, long-term economic risk and the competitive environment. Areas of
relative weakness include long-term political risk (largely a reflection of the poor security situation as a
result of long-running guerrilla insurgencies), patchy infrastructure growth and aspects of the regulatory
environment. The transport intensity index, a measure of the dynamism of foreign trade, has also been
relatively low.
According to our latest estimates, the total value of transport and communications GDP will rise to
US$14.96bn in nominal terms by 2011, representing 9.0% of Colombia’s GDP. The transport and
communications sector employed an estimated 1.192mn people, or 6.5% of the labour force, in 2006. We
see that figure rising to 1.296mn by 2011, although it will remain at 6.5% of the total labour force.
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