Boston, MA -- (SBWIRE) -- 02/24/2014 -- BMI maintains its cautious outlook for the Argentine freight transport 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 ongoing labour unrest. We expect growth to reach 2.9% in 2014. We caution that the country will continue to struggle with spiralling inflation, sluggish private consumption, and a net rag on exports.

We acknowledge that there are some risks remain to the upside, as an improving business environment and more moderate economic policies could lead to a surge in inbound investment into the country's oil and gas sector. Nevertheless, we caution that on top of its internal economic difficulties, the country is struggling with a considerable infrastructure deficit. Investment is needed across the board if the country's rail freight system is to handle increasing volumes in the coming years.

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Headline Industry Data

- Total volume at the Port of Buenos Aires is set to increase by 2.6% in 2014 to reach 11.5mn tonnes.
- Air freight volume is set to grow by 5.1% to 242.4mn tonnes-km in 2014, with average annual growth 6.8% during our forecast period.
- Rail freight hauled in 2014 will grow by a modest 2.1% to 23.6mn tonnes, with average annual growth of 2.9% during our forecast period.

Key Industry Trends

Mendoza Aiming For Logistics Hub Role

Argentina's western province of Mendoza, which borders Chile and offers freight transport links to Chilean ports, is transforming itself into a logistics hub - part of a wider trend of Argentine investment into the country's freight transport network. Mendoza's plans to upgrade an existing rail line that will link up with the port of Buenos Aires will complete the link between South America's Pacific and Atlantic Coasts, providing upside risk to throughput traffic at ports in both Chile and Argentina.

Government Signs US$2.47bn Financing Deal With CMEC

Argentine Interior and Transport Minister Florencio Randazzo has announced that the country's government has reached a financing agreement worth US$2.47bn with Chinese engineering and trade company China Machinery Engineering Corporation (CMEC). The funding will be used to repair railway equipment and infrastructure of Argentine state-onwed Belgrano Cargas y Logistica.

Cargolux Expands Latin America Freight Network

BMI notes that increasing demand in Latin America has led Cargolux to expand its network of B747-8 freight flights to Buenos Aires. The additional rotation will carry general cargo, consumer goods, automotive cargo and spare parts to Argentina. Return flights should carry mainly perishables, auto parts and live animals.

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