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Home > Business/Finance > Diversified Services > Shipping & Logistics
Czech Republic Freight Transport Report Q3 2007
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Ceske Aerolinie AS, or CSA Czech Airlines, in April said it flew 1.06mn passengers in the first quarter,
up 5.2% from the same quarter last year. CSA, the smallest member of the SkyTeam alliance led by Air
France-KLM, posted a net loss of CZK397mn (US$19.3mn) last year, reduced from a CZK496mn loss
in 2005. The Czech government, which controls the state's 91.5% stake in the airline, aims to return the
company to profit by 2008, at which point it is likely to privatize it. The airline says it expects to get back
into the black ahead of schedule, posting a net profit of CZK42mn in 2007. It has operated in the red
since 2005. Even taking into account the squeeze on margins and tougher competition, BMI believes the
Czech aviation sector is facing reasonably strong growth. In our latest Czech Republic Freight Transport
report, BMI concludes that air cargo traffic will grow by 9.2% per annum on average over the next five
years.
Our optimistic outlook is based on a number of factors. The Czech Republic is set for continued strong
economic growth (4.8% per annum on average to 2011, according to our forecasts). European Union
(EU) membership has placed the country near the centre of gravity of Eastern European logistics.
Although we have trimmed back our airfreight forecast, in view of CSA’s financial difficulties, the
outlook remains for strong growth in this sector, based on solid fundamentals such as the low-cost carrier
(LCC) boom.
In fact, BMI is bullish on freight across most modes in the Czech Republic. We expect freight carried by
road to be one of the most dynamic sectors over the next few years, with annual growth averaging 6.4%
in 2007-2011. This incorporates the negative effect of high petrol prices in 2006 and a small downwards
‘blip’ in the road haulage growth rate in 2007-2008, when the electronic tolling system is being
introduced. Oil shipped by pipeline should grow at around 5.4% per annum, ahead of GDP. However, we
expect rail freight to lag as investment in the rail system takes time to have an effect; the average growth
for 2007-2011 will come out at a more modest 3.0% per annum. Freight carried by inland waterways will
grow slowly at 2.1% per annum. The result is that we now forecast total freight carried across all modes,
measured in million tonne-km (mntkm), to rise by an annual average of 5.5% per annum in 2007-2011.
Under our freight transport business environment ranking the Czech Republic earns a composite score of
46, out of a theoretical maximum of 70. This places it at the upper end of its European peer group (and
above the average of just over 40).
The total value of transport and communications GDP will rise to US$24.5bn in nominal terms by 2011,
representing 11.5% of the Czech Republic’s GDP. The transport and communications sector employed
368,000 people, or 7.8% of the labour force, in 2006. We see that figure falling slightly to 361,000 by
2011, although it will remain unchanged as a proportion of the total labour force.
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