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Egypt Freight Transport Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8557 Description In July 2009 the Egyptian transport minister, Mohamed Mansour, said that the results of the feasibilitystudy for a high-speed rail link between Cairo and Alexandria were expected in the next two months,reported Reuters. The Egyptian and Italian governments had allocated EUR0.55mn (US$781,300) for thestudy, which would investigate the route for the proposed railway, the number of passengers, andestimated cost. The government will tender the project to the private sector. Egypt's transport minister,announced in February 2008 that an investment of EGP90bn (US$16.3bn) would be made into thecountry's road, rail, port and waterway infrastructure over a five-year period. Mansour estimated that theroad network would receive an investment of EGP30bn (US$5.46bn) through public private investments(PPIs). The rail network would receive EGP10bn (US$1.82bn).We have again adjusted our macroeconomic forecasts for Egypt. We now expect the economy to grow by4.7% growth in 2009 (up from 3.7% previously) and envisage 2.5% growth in 2010 (was 1.8%). As aresult the forecast for 2009-2013 is for an annual average GDP growth rate of 4.1% per annum, down onthe average of 5.9% in the preceding five-year period in 2004-2008. The effect on our freight trafficforecasts for the period as a whole, compared with the preceding five years, is therefore negative. Wemaintain and have fine-tuned some adjustments to existing mode-specific forecasts. We have trimmed theairfreight forecast after 2008. While the government’s commitment to consider ‘open skies’ policies ispositive, the force of the global downturn in the sector in 2009 is clearly a negative factor. Likewise, wehave trimmed the mode-specific forecasts for shipping, given the slump in Egyptian and world tradelevels. Taking this into account, our forecasts for freight carried across all modes and measured in milliontonne kilometres (mntkm) stand at an annual average of 3.7% in the 2009-2013 period, just behind theexpansion of the economy as a whole. The fact that freight traffic is lagging behind general economicgrowth sets Egypt apart from many emerging economies, and highlights the fact that the sector remainssomething of a bottleneck. According to our latest estimates, transport and communications GDP rose by 7.4% in 2008, just ahead ofoverall GDP, which grew 7.2%. For the 2009-2013 forecast period, we expect the transport andcommunications sector, measured by value, to remain ahead of the wider economy. It will achieveaverage annual growth of 4.4%, compared to the 4.1% overall GDP growth rate. The total value oftransport and communications GDP will rise to US$27.8bn in nominal terms by 2013, representing 9.9%of Egypt’s GDP. The transport and communications sector employed 1.28mn people, or 6.4% of thelabour force, in 2008. We see the figure rising to 1.39mn people, still representing 6.4% of the total, by2012. BMI is forecasting no more than moderate growth in Egypt’s freight transport sectors between 2009 and2013. This is partly because foreign carriers account for much of the expected growth in foreign trade. Moreover, although the government has declared its intentions to improve all aspects of the transportinfrastructure, these plans are long term and their accruing benefits are unlikely to help the freighttransport industry until beyond the forecast period. As a result, the industry will have to continue to makeuse of the existing facilities for several years. A significant current feature of the Egyptian freight andlogistics sector is that while volumes may be exhibiting slow growth in some areas, the value of thebusiness was boosted by high oil prices. However, this factor went into reverse in the second half of 2008and in 2009 as the real level of international oil prices fell back. We expect pipeline throughput to be the fastest growing transport mode, on the back of the developmentof Egypt’s plentiful natural gas deposits and strong export demand. Pipeline throughput will grow by anaverage of 6.0% across the forecast period. It will be followed by air freight at 4.7%, inland watertransport at 4.5%, road freight at 4.0% and sea cargo at 3.0% and. Rail freight will be the slowest growingat 2.7%. Table of Contents
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