New Market Study Published: Czech Republic Freight Transport Report Q1 2011

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Jan. 5, 2011 - PRLog -- In early November 2010, transport minister Vit Barta said that the construction of motorways under public-private partnerships (PPPs) would begin in 2012 or 2013. His ministry had invited construction companies to bid for participation in PPPs. A study by the government's National Economic Council (NERV) had suggested that motorways built exclusively by the public sector could be 82% more costly than those constructed by the private sector. Barta said that the next few years would be critical for motorway construction in the Czech Republic. Public sector investment funds available for spending on motorways would have fallen by CZK26bn (US$1.49bn) in 2010. Four key projects had been suspended and the Ceske Budejovice bypass would not go ahead if the cost could not be cut from CZK12bn to CZK10bn.

Following elections in October 2010, the opposition Social Democrats (CSSD) gained a majority in the Senate. BMI's view is that this means the centre-right ruling coalition will moderate its fiscal austerity drive, but that otherwise existing economic policies will continue. This has led us to revise upwards our projections for economic growth in both 2010 and 2011. After estimated GDP growth of 2.2% in 2010 (better than we had originally expected), we see the slow recovery continuing to build in 2011, with the rate of expansion rising to 3.2%. High unemployment, low external demand and the need for fiscal austerity at home are still acting as limiting factors holding back economic growth. In the five years to 2015, we project average annual GDP growth of 3.4%.

The Czech airfreight sector experienced falling volumes in both 2008 and 2009: BMI sees marginal growth in 2010 and 2011. We estimate cargo carried rose by 2.0% in 2010 and forecast further expansion of 1.6% in 2011 to 55,900 tonnes. CSA is slowly emerging from its financial troubles and may return to profit in 2011 or perhaps more likely in 2012.

Road haulage volumes have in recent years been restrained by low demand and plans to extend tolls charged on trucks to regional, as well as national highways. On the other hand, however, road remains one of the more dynamic freight modes in the Czech Republic. Road cargo volume fell -14.3% in 2009, its second consecutive year of contraction. For 2010, we estimate growth of 3.1% followed by a slight slowdown in 2011, when our forecast is for 3.0% expansion to 393.22mn tonnes.

There has been talk of a European rail revival, based on a realisation of its greater cost efficiency for bulk freight and its lower negative environmental impact relative to road transport. However, it is difficult for a small country like the Czech Republic to reap economies of scale from rail, and also difficult for it to gain a favoured position in the emerging European freight rail alliances. In addition, it looks as if the government is considering a new restructuring of state-owned rail companies. Consequently, BMI's outlook is mixed. After falling by an estimated -19.3% in 2009, rail cargo volume gained 11.33% in 2010 to 85.403mn tonnes. We project a 0.4% gain in 2011 to 85.739mn tonnes. The rail freight carried picture was a little better, with 14.1% growth in 2010 and 0.3% growth in 2011 to 14.63bntkm.

Inland waterway freight, is set for a strong recovery after a very deep contraction in 2008 and a renewed fall in 2010. Inland waterway freight volume fell a massive -34.1% in 2009. We estimate a strong bounce back in 2011 (growth of 13.4% to 875,000 tonnes. In terms of freight carried by the waterways (volume x distance), we predict 13.9% growth in 2011 to 34.45mntkm. Volume growth over the next five years will average 15.5% which freight carried growth will average 15.9%.

In real terms, Czech foreign trade fell by -9.9% in 2009 which was close to the average contraction of world trade and BMI's estimate is for a modest recovery in 2010 of 2.9%. We do see trade eventually picking up pace, however, with growth of 5.5% in 2011, and an average annual rate of 6.2% across our five-year forecast period, which will be significantly ahead of GDP. This is because across the forecast period exports will perform a little more dynamically than imports. In nominal terms, for 2011 we see exports gaining 11.1% to US$162.8bn, while imports are expected to expand by 10.0% to US$150.0bn.

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Tags:Freight, Rail, Road, Waterway, Transport, Cargo, Construction, Gained, Inland, Motorway
Industry:Transportation, Automotive, Shipping
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