Boston, MA -- (SBWIRE) -- 07/01/2013 -- The extent of Chinese growth in recent years has been the driving factor behind Australia's export boom, as well as the expansion of the country's freight transport sector. With China's growth outlook now starting to slow and BMI projecting that an expansion of 8% in China's economy is not sustainable, we believe that Australia will need to diversify its trade mix to help keep its freight sector ahead of the curve.

Although Australia does have free trade negotiations under way with other Asian nations, such as India, Japan, South Korea and Malaysia, China is set to remain Australia's dominant trade partner, with the two tied together by the former's mineral wealth and the latter's continued appetite for raw materials.

China currently accounts for 27.4% of Australia's imports and 18.5% of the country's imports. With such a dominant role in Australia's trade mix the countries are inextricably linked; what impacts China will also affect Australia. Therefore, the slowing of China's economic growth is the greatest threat to Australia's freight transport sector over the medium term.

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The outperformer in terms of mode is set to be air freight in 2013 with year-on-year (y-o-y) growth coming in at over 3%. Road freight's annual growth is forecast at an uninspiring 1.08%, while rail freight is set for a torrid year, with negligible growth predicted.

Headline Industry Data

- 2013 air freight tonnage is expected to grow by 3.37%.
- 2013 rail freight tonnage is forecast to grow by 0.09%.
- 2013 Port of Melbourne tonnage throughput is forecast to increase by 3.00%.
- 2013 Port of Sydney tonnage throughput is forecast to grow by 0.43%.
- 2013 road freight is forecast to increase by 1.08%.
- 2013 total real trade growth is forecast to grow by 1.72%.

Key Industry Trends

Mining Infrastructure Back With Abbot Point Announcement: The state government of Queensland, Australia, is on the lookout for interested parties to develop the first stage of its latest expansion plan for the Abbot Point port, one of the state's key ports for coal exports. BMI believes that the announcement of the AP-X project, as it is known, highlights the renewed interest in developing mining-related infrastructure in Australia and the presence of political risks in the country's infrastructure.

Aurizon, GVK Hancock To Develop Railway, Port Infrastructure: In April 2013 non-binding terms were agreed by Aurizon and GVK Hancock over the development of a 495km standard gauge railway along with associated port infrastructure. It will have the capacity to handle 60mn tonnes of coal annually and will likely result in the exploitation of coal reserves in Queensland's Galilee Basin. GVK Hancock secured primary environmental approvals for the railway in 2012, which would connect its Alpha, Kevin's Corner and Alpha West mines with an export terminal at Abbot Point.

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