New Transportation research report from Business Monitor International is now available from Fast Market Research

Boston, MA -- (SBWire) -- 03/11/2013 --Although iron ore prices have risen on the back of optimism that stimulus from China will support demand, we remain a little sceptical of the Chinese recovery as the structural problems still exist, and do not expect the rebound to last beyond H113. As such, we maintain our expectations for the federal government to miss its surplus goal for the fiscal year 2012/13 (July-June). With China now taking its place at the top of Australia's export partner list, the fortunes of the country's freight industry are very much entwined with the Asian powerhouse.

While we expect domestic woes to weigh on import consumption and consumer sentiment, the recent improvement in the Chinese economy is likely to at least provide some reprieve to iron ore and coal exports. The increasing reliance on Australian iron ore exports as a result of further mine closures in India could also provide a boost to exports. Moreover, the lack of progress in Japan's restart of nuclear plants further suggests that demand for Australian coal is unlikely to wane as quickly. We expect the trade account to return to surplus in 2013 of 0.2% of GDP, from a forecasted deficit of 0.5% of GDP in 2012.

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Moving into the second quarter of 2013, the air freight sector is set to take its place as the outperformer in the freight mix, with annual growth in tonnage handled coming in at 3.37%. This contrasts sharply with the dire outlook for the rail freight sector, which we expect to grow by just 0.09% in 2013. Also suffering this year will be the road freight sector, penciled in for year-on-year (y-o-y) growth of just 0.20%. Meanwhile, in the maritime sector, the The Port of Sydney is also set for a torrid 12 months in terms of tonnage throughput in 2013 (contracting by 0.04%), while the Port of Melbourne will see a 3.0% annual increase, trailing slightly the country's tonnage outperformer Brisbane (3.92%).

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 contract by 0.04%.
- 2013 road freight is forecast to increase by 0.20%.
- 2013 total real trade growth is forecast to contract by 0.08%.

Key Industry Trends

Mitsubishi Cuts Oakajee Spending: Another Nail In The Coffin

Japan-based conglomerate Mitsubishi Corporation has announced that its budget and headcount have been reduced for the AUD5.9bn (US$5.7bn) Oakajee Deepwater port and railway project in Western Australia. We believe that this decision by Mitsubishi on the long-delayed project supports our initial view that further delays could be in store for the Oakajee project. BMI feels that there is scope for additional delays given the doubt still surrounding the project's economic feasibility.

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