The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
Peru's strong domestic demand story will continue in 2012, although an anticipated drag from net exports means we stick to our below consensus 4.8% real GDP growth forecast. However, significant external risks to the economy means we cannot rule out a more pronounced slowdown in growth in the latter stages of the year, on the back of weaker global demand for the country's minerals and moderating global commodity prices.
The expected slowdown in the Chinese economy will drag on the country's exports, putting some downside pressure on volumes, particularly at dry bulk handling ports. That said, we believe President Ollanta Humala is likely to implement pro-growth policies which will translate into stronger public consumption, which should in turn result in stronger demand for imports of containerised goods, boosting freight transport volumes and supporting our positive outlook for the Peruvian freight transport sector.Headline Industry Data
- We expect growth of 8.6% in total tonnage throughput at the Port of Callao, to 20.2mn tonnes.
- We predict air freight volume to increase 8.7%, to 266,000 tonnes in 2012.
- We expect rail freight carried (volume x distance) to grow an impressive 8.0%, to 1.3bn tonnes/km in 2012.Key Industry TrendsAPM Splashes Cash To Improve Callao Efficiency On Back Of Strong Throughput Outlook
BMI believes that 2012 will be a year of strong growth for the Peruvian Port of Callao. APM Terminals has announced that it has spent US$25mn on the port's Muelle Norte Terminal since taking over the facility. BMI believes the operator's investment will pay off, as we expect increasing domestic demand will drive the port's container throughput over the medium term.Peru Aims To Close Port Investment Gap, Improvement Needed Across Freight Sector
BMI maintains its view that Peru is well placed to position itself as a 'gateway to Asia' for Latin American exports. However, we caution that efforts to do so may be stymied by the lack of investment in infrastructure. It seems the government is now trying to close the gap in funding to improve competitiveness and efficiency, with a US$2bn investment in the port sector. The news bolsters our view that Peru has the potential to become a regional logistics centre, providing strong growth opportunities for shippers and shipping lines.LatAm Airlines Green Light, But More Infrastructure Needed
BMI believes a soon-to-be formed airline comprising Brazil's LAN and Chile's TAM will be very well placed to enjoy growing air freight volumes in Latin America, although more infrastructure investment is required for the company to meet its growth potential. While operators in Latin America, as well as in the Middle East and Africa, have been enjoying growing traffic, sluggish consumer demand in the traditionally strong markets of the US and Europe has sent volumes plunging. Given the difficult operating environment that air freight carriers are faced with, BMI maintains its view that more airlines will be seeking to merge in order scale back capacity and cut costs.Key Risks To Outlook
Upside risks come from the fact that increased private consumption could possibly lead to greater demand for imports. We expect consumption to benefit from President Ollanta Humala's economic policies. Humala's new economic plan does not include increasing taxes on consumers. In fact, Humala will seek to reduce VAT in the coming years, supporting consumer demand.
The recent free trade agreement (FTA) agreed between Peru and Japan and the associated abolition of import tariffs on goods travelling between the two countries should increase trade flows between the two. Downside risks come in the form of a possible slowdown in Chinese demand, which would hit shipments of copper and other raw materials from Peru.
Click for Report details:Peru Freight Transport Report Q2 2012