Boston, MA -- (ReleaseWire) -- 09/15/2012 -- BMI is cautiously optimistic with regards to South Africa's rail freight sector in 2012, with Transnet expected to surpass its target in volumes. Risks are to the downside, however, given the slowing growth in China and the possibility of a hard landing, which would impact on its need for South African iron ore and coal. Should this scenario take place, South African iron ore and coal ports, such as Richards Bay, would be affected. Strong private consumption should support the transport of containerised goods through ports and on rail and road.
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Headline Industry Data
- Rail freight growth will be 8.4% in 2012, and will average 3.9% to 2016.
- Richards Bay Port's tonnage throughput in 2012 is forecast to increase by 1.2%. Over the medium-term we project a 1.5% average annual increase.
- 2012 total trade growth is forecast at 4.5%, down from the estimated 7.8% expansion in 2011.
Key Industry Trends
Rail Investment Offers Upside
BMI believes that a pledge by the South African government to procure a new fleet of locomotives underlines its commitment to developing the country's rail freight sector. We have recently upgraded our 2012 rail freight forecast given the performance logged in January and February, and this investment provides upside risk to our medium-term forecast.
TPT Investment In South African Ports To Help Prolong Regional Importance
BMI believes that investment plans announced by TPT will be needed in the years to come if South Africa is to keep pace with demand at its ports. Further, we believe that the country must continue to invest in its facilities if it is to remain competitive and continue to be the gateway to Africa that it has been to now.
Transnet Woos Automobile Companies
BMI believes that a potential deal between Transnet and leading automobile manufacturers Mercedes- Benz and BMW will help the state-owned freight logistics company realise its aim of growing the number of vehicles it transports by rail.
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