Boston, MA -- (SBWIRE) -- 07/23/2012 -- BMI maintains its view that 2012 will be another year of strong growth for Brazilian freight transport volumes. Although we expect a good level of growth to continue during our forecast period, there are a number of risks to our outlook for the country's booming shipping and freight transport sector, including the infrastructure deficit and signs of overheating in the Brazilian economy.
BMI notes that Brazil's freight transport network has not yet developed the infrastructure needed to handle increasing throughput levels, causing sever delays and increased costs for shippers. As such, we expect more investment in infrastructure, both public and private, as ports seek to deal with growing traffic and to capitalise on increasing trade opportunities.
Brazil's rapid economic growth has been aided considerably by the country's strong commodities mix. However, much of the demand for Brazilian exports of raw materials has come from China. With a slowdown in Chinese economic growth looking increasingly likely, we are concerned that demand for Brazil's raw materials could weaken.
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On the domestic consumer demand side, we are concerned about the fact that Brazil has some of the lowest saving rates in the region, and growth in real average incomes has been slowing for some time. These factors, combined with a recent uptick in non-performing loans, point to the possibility of a slowdown in consumer spending in the coming months. This could result in a repricing of Brazil's previously unstoppable consumer growth story, hitting demand for imports of containerised goods.
Key Industry Data
- Air freight tonnes to grow 9.4% in 2012 to reach 1.3mn tonnes. Over the medium term, to 2016, we predict that growth will average 8% a year.
- Air freight tonnes-km are set to grow 7.6% in 2012.
- Total tonnage throughput at the port of Santos to grow 12.2% in 2012 to reach 109mn tonnes. To 2016, we predict average annual growth of 10.5%.
- Rail freight tonnes to grow by 10.3% in 2012 to reach 556.5mn tonnes. To 2016, we predict average annual growth of 8.3%.
Key Industry Trends
Rapid Volume Growth And Need For New Port Infrastructure To Attract Investment
BMI believes Brazil is set to remain a popular area of investment for international container terminal operators, with Santos Brasil and APM Terminals (AMPT) eyeing up three new container terminal concessions there. We remain confident that Brazil's shipping and freight transport sector will post strong growth over the medium term, fuelled by the government's commitment to improving infrastructure to support economic growth and prepare the country to host two major sporting events. We caution, however, that Brazil's bureaucracy, corruption and rising costs could cap growth in the future.
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