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Home > Business/Finance > Diversified Services > Shipping & Logistics
Russia Freight Transport Report Q4 2008
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The crisis between Russia and NATO members over Georgia could have a significant impact on anumber of pipeline projects. One of its most important effects was to cast some doubt over the viability ofa transport corridor to bring Caspian oil and gas to European markets, reducing their dependence onRussian supply. The effective Russian military takeover of South Ossetia and Abkhazia gave Moscow theability to interrupt key oil flows, such as those through the 1,770km Baku-Tbilisi-Ceyhan (BTC) oilpipeline. US publication Business Week cited Chris Ruppel, a US energy analyst, commenting that afterthe fighting ‘any chance of a new non-Russian pipeline out of Central Asia and into Europe is prettymuch dead’. He said that for investors, the risk of building a pipeline through countries subject to Russianintervention was ‘just too high’. In late August, Bernhard Reutersberg, chief executive of Germany’sE.ON Ruhrgas told the Dow Jones news agency that his company’s activities in Russia had not been hitbut that there had been a change in the ‘climate’ in which it did its business. More generally, the fullimplications of the new political climate for the oil and gas pipeline industry had yet to be fully assessed.
One interpretation was provided by a senior Polish official quoted by Reuters news agency claiming thatthe conflict could turn Europe’s attention away from natural gas and back towards coal as the key tomeeting future energy needs. In our newly released Russia Freight Transport Report, BMI concludes thatdespite greater uncertainty, Russian pipeline throughput will rise by an annual average of 9.4% over the2008-2012 forecast period.
Various factors support this forecast. On the back of its current oil and gas boom, Russia’s economy is setto grow at an annual average rate of 6.5% over the next five years. Demand for oil and gas exports isstrong, with the economic slowdown in the US and Europe being offset by the continuing strength ofChina and Asia.
Russia is a vast country where the transport infrastructure remains relatively thinly spread. We nowexpect freight carried across all modes, measured in million tonne-km (mntkms), to achieve an annualaverage growth rate of 8.4% over the 2008-2012 period. The fastest rate of growth will be registered bypipeline throughout, averaging 9.4% per annum as mentioned. This will be followed by air freight at8.9%, where strong growth is now being trimmed back because of the impact of high jet fuel prices.
Demand for road haulage will be boosted by the expansion of the motor vehicle fleet and thesophisticated door-to-door logistics requirements of an increasingly consumer-oriented society. However,the lack of enough new highway capacity will be a severe limiting factor. We predict 7.8% annual growthin road haulage turnover. Other modes of transport will experience comparable growth curves. Shippingcargo turnover will expand at an average 7.4% per annum. Russia scored 65.6 (out of a theoreticalmaximum of 100) in the BMI freight transport business environment rating. This market’s stronger areasinclude freight traffic and infrastructure growth, with a relatively good showing for long-term economicrisk. Long-term political risk comes a little bit further down the scale. Areas of particular weakness arethe regulatory and competitive environments.
The total value of transport and communications GDP will rise to US$358.8bn in nominal terms by 2012,representing 10.9% of Russia’s GDP. The transport and communications sector employed 5.86mn people,or 9.0% of the labour force, last year. We see that figure falling to 5.71mn by 2012, while remainingconstant at 9.0% as a proportion of the total labour force.
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