South Africa Freight Transport Report Q1 2014 - New Market Research Report

Boston, MA -- (SBWire) -- 01/24/2014 --BMI maintains a cautiously optimistic stance with regards to South Africa's freight transport sector in 2014. Although there are risks to the mining sector from a potential hard landing in China, our Mining desk believes that growth will continue, which bodes well for the rail and port sectors in particular. Imports of containerised goods could struggle to maintain volumes as the rand depreciates against the dollar, though equally this could boost manufactured exports from South Africa.

Headline Industry Data

- Rail freight growth will be 6.7% in 2014, and will average 6.3% to 2018. - Richards Bay Port's tonnage throughput in 2014 is forecast to increase by 5.2%. Over the medium-term we project a 6.0% average annual increase. - 2014 total trade growth is forecast at 3.5%, and to average 4.7% over the medium term. - Road freight volumes are set to expand by 5.7% in 2014, and to average 5.9% over our forecast period.

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Key Industry Trends

Vehicle Transport Strike Backs Shift To Rail: After a short period of stability, the South African vehicle production segment was again under threat from strike action in November 2013, this time by workers in the vehicle transportation business. With little sign of a resolution to the week-long stoppage, the risk of expanding inventories at factories leading to reduced or even temporarily halted production threaten BMI's already bearish forecast for production growth of 2.0% in 2013. It also supports the case for a growing shift toward transporting vehicles by rail rather than road.

SAA Cargo Eyes International Expansion: South African Airways Cargo (SAAC), the cargo unit of South African Airways (SAA), has moved to modernise its fleet. BMI views this as a positive step, coming at a time when the global air freight industry is recovering from the international financial crisis. However, we caution that SAA is over-exposed to the domestic and regional market, which make up 75% of the destinations the company flies to. BMI believes that SAAC's expansion focus will be on international routes, specifically Latin America and the Middle East, which have been experiencing stellar growth in the year-to-date (y-t-d-).

Durban Must Expand To Retain Top Spot Over Long Term: Transnet's planned Durban dig-out port development that aims to add a container terminal to the current port of Durban has become essential as the existing facility nears its maximum installed capacity. The port is the largest box port by container throughput in Sub-Saharan Africa and it must expand to keep pace with the growth in box demand, not only in South Africa, but also from neighbouring states that use the port. Failure to expand would risk the port losing its coveted number one throughput position, as competition both domestically and regionally is increasing.

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