Boston, MA -- (SBWIRE) -- 03/13/2013 -- BMI maintains its cautiously optimistic view on the Argentine port sector. The country enjoys a good commodities mix, but it continues to struggle with external headwinds as well as internal difficulties in the form of rising inflation and labour unrest. We forecast Argentine real GDP growth will slow to 0.9% in 2013 on the back of a poor business environment, weakening domestic demand, and high inflation - the result of a large currency devaluation. We see the potential for a more sound policy course and base effects to result in growth trending upward from 2014-2017.

Headline Industry Data

- Total volume at the Port of Buenos Aires is set to increase by 5.4% in 2013 to reach 11.9mn tonnes. Box handling at the same port will contract by 4.8% to 1.1mn twenty-foot equivalent units (TEUs).
- The Port of Bahia Blanca will see 4.6% growth in volume to 14.0mn tonnes in 2013. Box handling at the port will also grow by 12.1% to 34,932TEUs.

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Key Industry Trends

Strike Offers Downside Risk To Forecasts

BMI believes that downside risk is presented to our freight transport forecasts for Argentina as a general strike has been implemented. Although the action is only scheduled to last for 24 hours the disruption to shipments could be severe. Further, the strike is not the first to take place in Argentina in recent years, and could impact upon future growth at the country's ports should shipping companies become wary with regards to the market.

Cargotec Signs Buenos Aires Deal

Cargotec reported orders for four new Kalmar reach stackers from two operators in the Port of Buenos Aires. Two new Kalmar DRF420-60S5 reach stackers have been purchased by Ferroviaria Argentina SA (TEFASA). Two DRF450-65S5 models have been sold to an undisclosed port operator.

Risks To Outlook

The key risks to our outlook are on the downside. We maintain our view that Argentina faces strong economic headwinds: soaring inflation, fiscal profligacy and growing government intervention, which means the Argentine economy will struggle to sustain its current growth trajectory, as investors become increasingly cautious of the economy.

A lack of investment in the port infrastructure has resulted in frequent bottlenecks and delays at ports. Argentina has a weak financial system and relatively weak legal and regulatory frameworks. A high level of perceived corruption damages the appeal of doing business in the country, possibly acting as a deterrent to foreign port operators.

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