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Kuwait Freight Transport Report Q3 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: September 2007 Product Code: R302-1494 Description Big investments continue to be planned in Kuwait’s aviation and airfreight sector. Apart from theintroduction of an ‘open skies’ agreement with the US and plans to expand the airport, locally-based airlines are renewing and expanding their fleets. Kuwait Airways was planning to buy 12 Boeing and seven Airbus planes from Kuwait's Aviation Lease and Finance Co. (ALAFCO) for about US$3bn, a Kuwait Airways official said in early June 2007. The state-owned airline, which is looking to spend as much as US$6bn to replace its ageing fleet, would order the aircraft from the Kuwaiti lessor rather than the manufacturers so as to get them earlier, said the official, who did not want to be identified. Meanwhile, Kuwait-based budget airline Jazeera Airways said it was likely to exercise an option to buy six additional Airbus A320s. As capacity grows, so will Kuwait’s contribution to regional airfreight traffic. In our latest Kuwait Freight Transport Report, BMI concludes that airfreight traffic is likely to grow at an annual average rate of 6.2% in the 2007-2011 forecast period. Various factors support this prediction. Although the oil price boom of 2005/2006 will ease over the next couple of years, we still see Kuwaiti GDP rising by an annual average of 4.9% over the next five years. Growing capacity, and growing trade in high-value/low-bulk goods will all contribute to airfreight growth. Kuwait is a relatively small country and its trading sector - and therefore transport network - has a vibrant re-export component. Kuwait has evolved as a trade hub for its larger neighbours, particularly Iran and Iraq, which have had limitations on their direct links with the international community. BMI also forecasts 2.7% average annual growth for road haulage and 5.6% for maritime cargo in the five years to 2011. We estimate annual average pipeline throughput growth of 6.5%. We expect that the bulk of transport will continue to be waterborne and consist largely of oil and related goods. Transit trade, particularly that involving Iraq, will comprise raw materials involved in that country’s eventual rebuilding (aggregates, basic metals and the like) and machinery related to building and construction work. Kuwait’s overall business environment rating is now just above the average for the Middle East and Africa (MEA) region. It scores well in terms of its economic risk and its record of investment in infrastructure. However, it is below the average for freight growth, the regulatory environment and for the transport intensity index (a measure of the dynamism of foreign trade). For the 2007-2011 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole. It will achieve average annual growth of 6.1%, versus 4.9% for overall GDP. The total value of transport and communications GDP will rise to US$5.22bn in nominal terms by 2011, representing 5.2% of Kuwait’s GDP. Table of Contents
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