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United Arab Emirates Freight Transport Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8615 Description According to press reports in September, work was continuing on the development of the UAE’s railsector. Dubai was preparing to launch its local light rail network while the seven emirates acting togetherwere drafting shared railway regulations. Dubai’s local network was described as the world’s longestfully-automated driverless metro system; introduced at a cost of AED28bn (US$7.6bn) the system, knownas the Dubai metro, will when complete have 47 stations and 76km of track. For the UAE as a whole aconsultant was expected to be appointed to help define standards for competition, licensing, andengineering procedures, with the complete package of regulations due to be finalised before the end of2010. In July the authorities had announced the creation of a new Union Railways Company with startupcapital of AED1bn (US$270mn), which would act independently of the regulator. The company wouldoversee passenger and freight services linking the seven emirates. It was expected that the first phase ofthe network would be built up around Abu Dhabi to serve its developing industrial sector. Subsequently arail link between Sharjah and Dubai would be built, designed to ease exiting traffic congestion by road.The UAE rail network would eventually connect with the proposed GCC (Gulf Co-operation Council)international network.Since our last report, we have slightly lifted our macroeconomic forecast for UAE. While we see thecontraction in 2009 being a little deeper than at first projected (-3.0% vs -2.9% before) we are projectinga stronger recovery with growth of 5.2% in 2010 (was 3.9%) and 6.4% in 2011 (was 4.6%). For the 2009-2013 period as a whole, we expect GDP growth to reach an annual average of 4.2%, down from 7.5% inthe preceding five-year period. The effect on our freight-traffic forecasts across the two periods istherefore quite strongly negative, although offset by continuing strong investment in transportinfrastructure. Although the UAE has developed a sophisticated infrastructure and its economy generates significantwealth, the country is reticent about providing official statistics. This is apparent in the dearth ofpublished material on the freight-transport sector and BMI forecasts are based on very limitedinformation. That said, we are predicting faster-than-GDP rates of expansion for freight carried by air,sea, and road. Despite the 2006 controversy over its role in the US, the globalisation of DP World (DPW)should drive higher growth in maritime freight. The net result of these and a few other small adjustmentsis that we now expect freight carried growth across all modes, measured in million tonne kilometres(mntkm), to average 3.7% per annum over the 2009-2013 forecast period. According to our latest estimates, transport and communications GDP rose by 8.2% in 2008, 0.8percentage points faster than overall GDP, which we estimate to have increased by 7.4%. For the 2009-2013 forecast period, we expect the transport and communications sector to continue outpacing theeconomy as a whole in value terms. It will achieve average annual growth of 4.4%, versus 4.2% foroverall GDP. The total value of transport and communications GDP will rise to US$22.15bn in nominalterms by 2013, representing 6.8% of the UAE’s GDP. The UAE economy is relatively dynamic and is now more diversified and shows evidence of robustnessto withstand external shocks. Strong investment in transport infrastructure and the global ambitions ofcompanies like Emirates and DPW will be positive factors. By transport modes, we expect the fastestgrowingin the 2009-2013 forecast period to be air, with an annual average of 7.9% growth in freightcarried, followed by pipeline throughput at 4.6%, road haulage at 4.4% per annum (just ahead of GDP)and shipping at 2.6%. Table of Contents
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