Boston, MA -- (ReleaseWire) -- 04/30/2014 -- BMI maintains a cautiously optimistic stance with regards to South Africa's freight transport sector in 2014. Although there are risks to the mining sector from a potential hard landing in China, our Mining desk believes that growth will continue, which bodes well for the rail and port sectors in particular. Imports of containerised goods could struggle to maintain volumes as the rand depreciates against the dollar, though equally this could boost manufactured exports from South Africa. Nevertheless, we have made moderate downgrades to most of our forecasts for the country following the release of full-year 2013 data.
Headline Industry Data
- Rail freight growth will be 3.0% in 2014, and will average 3.4% to 2018.
- Richards Bay Port's tonnage throughput in 2014 is forecast to increase by 4.2%. Over the medium-term we project a 4.8% average annual increase.
- 2014 total trade growth is forecast at 5.3%, and to average 5.3% over the medium term.
- Road freight volumes are set to expand by 5.7% in 2014, and to average 5.9% over our forecast period.
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Key Industry Trends
Pharma Market Entices Companies: South Africa has one of the most promising pharmaceuticals markets in Sub-Saharan Africa (SSA). Despite challenges currently facing the sector, BMI is bullish with regards to the country over the longer term, as favourable demographics will ensure growth. This is a view shared by a number of freight players looking to capitalise on the market's growth prospects. Further, we believe that imports of pharmaceuticals will help support growth in freight volumes, and generate revenues.
TNPA Reaffirms Durban Harbour Development Plans Despite Criticism: South Africa-based Transnet National Ports Authority (TNPA) has reaffirmed its plan to lengthen and deepen Durban harbour. The confirmation follows media reports stating that the project is facing criticism from several environmental groups. The Department of Environmental Affairs (DEA) has not discarded the Environmental Investigation Agency (EIA)'s approval for the deepening, lengthening and widening of berths 203 to 205, according to a TNPA spokesperson.
Power Failure Hampers Exports: Following a poor month in January, in which there was a sizeable drop in throughput as compared to January 2013, Richards Bay Coal Terminal suffered a power cut on January 31 which paralysed the terminal for a week. This halt in exports from the terminal will have cost South Africa around ZAR200mn in exports a day. The power cut will not only affect the one week. There were still 28 ships at anchorage in mid-February, and the backlog will not be fully cleared until the end of March.
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