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Israel Freight Transportation Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: May 2008 Product Code: R302-3383 Description Israel needed to improve efficiency and reduce bureaucratic hold-ups in its import and export sectors toboost its candidacy for acceptance into the Organization for Economic Cooperation and Development(OECD), the Manufacturers Association of Israel said at the beginning of January according to a report in The Jerusalem Post. The Association said it was asking the government to work out how it could makethe country more efficient and well-run when it came to import and export logistics. It took considerablylonger to import and export products from Israeli ports than it did for many other countries around theworld, claimed the Manufacturers Association. This was not the first time the private sector raisedconcern about the efficiency of freight transport. The Federation of Israeli Chambers of Commerce at thebeginning of 2007 published a study that said that the ports reform two years earlier did not bring aboutcompetition between the ports, and that labour relations at the Ashdod Port Company and Haifa Port Company were still the ports’ Achilles Heel. In our latest Israel Freight Transport Report, BMIconcludes that annual shipping traffic is now likely to grow at an average of 3.4% in the 2008-2012forecast period.Various factors support this prediction. We forecast that Israeli GDP growth will average 2.9% across thefive-year forecast period (2008-2012). Of key importance is the performance of Zim Integrated Shipping Services (Zim) because sea freight is so dominant in the freight transport industry. Partly due tohigher operating and fuel costs and the impact of strike action, the company’s 2007 profits weredisappointing. Despite short-term difficulties, however, we believe Zim will get itself back on a recoverypath during our forecast period. In common with the entire Israeli economy, the freight transport industry’s future depends on theresolution of the current long-tem struggle with the Palestinians. Withdrawal from the Gaza Strip wasonly a start towards the eventual normalisation of relations, and security risks will continue in the forecastperiod. Israeli action to cut off the Gaza strip, and the breaching of the border with Egypt on the otherside of the territory, show the issue remains as volatile as ever. After years of under-investment, thelogistics sector appears to be getting more top-level support, despite continuing fiscal constraints. At thesame time, the privatisation campaign and public-private partnerships are again being pursued, partly tobring in outside capital and partly to engender more competition. Although our road-haulage projection is based on estimates, we nevertheless expect reasonableexpansion, rising by an annual average of 4.0% per annum in 2008-2012. We believe freight carried byrail will grow by a lower annual average of 3.1%. Airfreight will expand by 3.6%, a relatively modestfigure when compared to more general trends in global aviation markets. Israel scores above the regionalaverage in the freight rating, with a composite score of 60.4 (out of 100). Its strengths lie in the regulatoryand competitive environment and its transport infrastructure growth. Where it is weak relative to its peersis in actual freight growth and in the transport intensity index, a measure of the dynamism of foreigntrade. The total value of transport and communications GDP will rise to US$29.1bn in nominal terms by 2012, representing 12.5% of Israel’s GDP. The transport and communications sector employed 471, 000 peoplein 2007. We see this figure rising to 497, 000 by 2012. Table of Contents
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