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Home > Business/Finance > Diversified Services > Shipping & Logistics
Romania Freight Transport Report Q3 2008
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In June 2008, the European Investment Bank (EIB) announced funding for a combined EUR550mn (US$853mn) road and rail project designed to upgrade the Romania East-West transport axis running along Pan-European Corridor IV. The railway segment would involve spending EUR300mn (US$465mn) on upgrading the tracks between Simeria and the Hungarian border, while EUR250mn (US$388mn) would be spent on building a new motorway between Cernavoda and Constanta. The Romanian authorities said they had received a total of 13 bids from foreign companies interested in designing and building the 52km motorway link between the two cities.
Construction work would be completed within 24 months. In our latest Romania Freight Transport Report, BMI predicts that rail freight will grow at a satisfactory rate in the country, with traffic rising by an average of 4.0% every year in the 2008-2012 period.
Various factors support this prediction. The Romanian economy is itself set to grow at an average rate of 5.0% over the next five years, and demand for freight transport will be on the rise. Thanks to EU membership from the beginning of 2007, there is no shortage of funds on offer from Brussels for infrastructure development. The credits have been rolling in and some EUR5bn in EU transport investment is expected over the next six-year period. Closer integration with the wider European economy will be important, with trade growing strongly and physical links to the main European transport corridors opening up. We are predicting average annual growth in freight carried across all modes, measured in mntkm, of 7.9% in 2008-2012, ahead of GDP growth. As competition begins to increase and investments take effect, rail freight traffic should pick up. Road haulage will surge ahead by an annual average of 9.5%. Inland waterway traffic will rise by an annual average of 6.0% as bottlenecks are removed from the Danube. Maritime freight will grow by an annual average of 7.0%. Airfreight will see growth of an annual average of 12.0%, boosted by the spread of low-cost airlines across Europe. The total value of transport and communications GDP will rise to US$33.5bn in nominal terms by 2012, representing 11.2% of Romania’s GDP. The transport and communications sector employed 457,100 people, or 5.0% of the labour force in 2007. We see that figure rising to 474,200 by 2011, although it will remain constant at 5.0% as a share of the total workforce.
Romania has a composite score of 63.4 out of 100 for its BMI freight transport business environment rating. This places it in the upper range among its European peers. The country scores well for long-term political risk, transport infrastructure growth and transport intensity (an indicator of the dynamism of foreign trade). It does less well, however, in areas such as long-term economic risk and the regulatory and competitive environments.
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