Boston, MA -- (SBWIRE) -- 04/10/2014 -- We forecast that growth in Brazil's freight transport volumes will outpace the Latin American giant's real GDP growth in 2014 and over our medium-term forecast period (2014-2018), across all modes. Continued growth in the BRIC nation's mining and agribusiness sectors will ensure that the road, rail and ports sectors will continue to experience healthy expansion, while air freight will benefit from the growing demands of the country's expanding middle class. Further, the sector will benefit from Brazil's role as a major exporter of a host of commodities.

Nevertheless there remain serious challenges to growth, and hence risks to our outlook. These stem from both the physical side - whether infrastructure development in the country will be sufficient to support our projected growth rates; and the human - the ports sector is already undergoing a wave of industrial unrest as workers contest the government's proposed ports privatisation moves. We forecast real GDP growth of 2.4% in 2014, only modestly stronger than 2.3% in 2013.

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Key Industry Data

- Air freight tonnes to grow 5.4% in 2014 to reach 1.81mn tonnes. Over the medium term, to 2018, we predict that growth will average 6.5% a year.
- Total tonnage throughput at the port of Santos to grow 10.0% in 2014 to reach 125.48mn tonnes. To 2018, we predict average annual growth of 6.5%.
- Rail freight tonnes to grow by 3.2% in 2014 to reach 544.6mn tonnes. To 2018, we predict average annual growth of 3.6%.

Key Industry Trends

AA Cargo Expands Brazil Coverage: American Airlines Cargo (AA Cargo)'s newly added Los Angeles-Sao Paolo route will be the North American carrier's fourth service route to the Brazilian city. AA Cargo has been strengthening its Latin America presence in 2013 and BMI believes this is due to the recovery seen in 2013 in the region's air freight sector. AA Cargo will also benefit from the uptick in air freight traffic that Brazil will experience in the lead-up to the FIFA World Cup, which kicks off in Sao Paolo in June 2014.

ALL To Merge With Rumo Logistica: Brazil's railroad operator America Latina Logistica (ALL) and Cosan Group's subsidiary Rumo Logistica have revealed plans to merge. However, ALL and Rumo have not unveiled their new trading name. The contract will be focused on completion of track-doubling on the line between Itirapina and the port of Santos in Sao Paulo state, building of new terminal facilities and purchase of 50 locomotives and 929 wagons. ALL is intending to invest BRL20bn ($US8.6bn) in its network by 2020 and of this total investment, nearly BRL11bn (US$4.7bn) will be used in the next four years. In addition, removal of bottlenecks on the lines from Campinas to Estrela D'Oeste and Santos is among the key projects to be undertaken after the merger.

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