Market Report, "Brazil Freight Transport Report Q2 2011", published

March 31, 2011 - PRLog -- BMI expects to see strong growth and continued investment in the Brazilian freight transport sector in Q211. Growth will continue on the back of exports to Asia, particularly China, and rising domestic consumer spending, which should see increased demand for imported goods. The pace of growth of Brazilian trade has been rapid and it has outpaced the country's freight transport sector. With increases in traffic expected across the board in the run up to Brazil's hosting of both the 2014 World Cup and the 2016 Olympic Games, we expect to see more investment in infrastructure, both public and private, as the sector seeks to deal with growing traffic and to capitalise on increasing trade opportunities.

Key Industry Data

* Air freight tonnes to grow 4% in 2011. Over the medium term, to 2015, we predict growth average annual of 5%.
 * Air freight tonnes/hm to grow 4% in 2011. To 2015 we predict average annual growth of 5%.
 * Total tonnage throughput at the port of Santos to grow 12% in 2011. To 2015 we predict average annual growth of 10%.
 * Total tonnage throughput at the port of Itajai to grow 7% in 2011. To 2015 we predict average annual growth of 8%.
 * Rail freight tonnes to grow by 7% in 2011. To 2015 we predict average annual growth of 8%.


Key Industry Trends

Brazil Struggles To Prepare For Airfreight Growth

BMI believes that 2011 will be a crucial year for Brazil's airfreight sector as Latin America's biggest economy struggles to prepare for increasing traffic expected in the run-up to the 2014 World Cup and the 2016 Olympics. Thirteen of the country's 20 largest airports are currently operating above capacity. As such, investment is needed now to ensure the country does not run out of airport space well before it hosts the world's biggest sporting events.

Brazil is Latin America's fastest-growing aviation market, but its infrastructure capability is not keeping pace with growth in demand. The need for investment in the sector was highlighted last week, when defence minister Nelson Jobim announced that the government is considering selling shares in Infraero, Brazil's airport authority, which operates the country's 34 airfreight terminals. Earnings from the sale of the shares would use to fund badly needed upgrades of the country's airports. BMI believes this would be a welcome step towards generating the funds needed as we maintain our view that the Brazilian government will struggle to finance the long-term needs of the air cargo sector.

No More Slow Boats To China: Highway Boosts Brazilian Export Prospects

BMI believes that a new highway linking South America's Pacific coast with the Atlantic will give Brazilian exports an alternative route that could strengthen Brazil's economic ties with Asia. The highway should also prove beneficial to Peru, placing it at the centre of a strategic trade route between two of the world's largest emerging markets: Brazil and China.

The first of three transcontinental routes that will run through Peru is due to open in early-2011 after several fitful years of construction and strong opposition from environmental groups. The controversial thoroughfare, known as the Inter-Oceanic highway, links road networks from the continent's Atlantic and Pacific coasts. It crosses through the Peruvian town of Puerto Maldonado, deep in the Peruvian Amazon. From there, it links with Peru's Pacific ports of Ilo (in Moquegua), San Juan de Marcona and Matarani. The US$900mn highway has been built in five stages, with several Latin American construction companies having won concessions to construct different sections. Ecuadorian company Hidalgo e Hidalgo and Brazilian construction firm Odebrecht have both been heavily involved.

New Terminal To Cut Congestion At Santos And Capitalise On Brazil's Growing Consumer Demand BMI believes a new multipurpose terminal at Santos would help ease congestion and increase efficiency at Brazil's main port. The terminal would also be well positioned to take advantage of growing demand for imports from Brazilian consumers.

The Inter-American Development Bank has approved a US$100mn loan to finance the construction, operation and maintenance of the Embraport private multipurpose terminal at Santos. The project aims to ease the chronic congestion at the port during periods of high demand. The port project will cost BRL2.3bn (US$1.39bn) in total. The first phase of the Embraport terminal will be able to handle an estimated 1.2mn 20-foot equivalent units a year (TEUs) and roughly 2mn tonnes a year of liquid bulk.

Risks To Outlook

One of our main risks to outlook is on the downside. Many of the recent developments in Brazil's freight transport sector have been on the back of Chinese demand for Brazilian exports. Any downturn in Chinese demand would have a negative effect on Brazilian exports and therefore on Brazil's freight transport sector.

An upside risk to our forecasts is presented by Brazil's hosting of the 2014 World Cup and the 2016 Olympics. We expect to see more freight coming into the country as it prepares to host the world's biggest sporting events. We also expect to see more investment in the country's freight transport infrastructure as it prepares for the expected increase in traffic.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.