Abstract
According to the Moscow Times in February, chief executive of Russia' s
state-owned rail monopoly
Russian Railways (RZD), Vladimir Yakunin, stated
that the company might register a loss in 2009 as the
global slump leads
to a cut in industrial production and reduces the demand for freight traffic.
Net income
in 2008 was likely to be lower than RUB4bn (US$110mn). Yakunin
added that cargo shipments would
fall around 19% on an average in 2009 and
added that freight shipments declined by 28% in February
2009, following a
33% fall in January 2009. BMI believes that RZD' s plans to improve
infrastructure,
expand the fleet and amplify international presence will
be slowed by current market conditions.
Meanwhile, eventual privatisation
may increase competitiveness, although RZD' s ownership of the
country' s
infrastructure means that it is set to maintain its overall domestic
position.
In our newly released Russia Freight Transport Report, BMI
concludes that rail freight traffic will shrink
this year, although we are
less pessimistic than Yakunin. We expect rail freight carried to drop by
9.6%
this year, and to grow by a low annual average of 1.2% in 2009-2013.
Various factors support this
forecast. Although the global economic
slowdown is overshadowing current prospects, Russia’s economy
is
still set to grow at an annual average rate of 2.0% over the next five years,
according to BMI forecasts.
Demand for freight will still be significant,
particularly once the recovery gets underway.
Russia is a vast country
where transport infrastructure remains relatively thinly spread. The total
value of
transport and communications GDP will rise to US$248.4bn in
nominal terms by 2013, representing
10.9% of Russia’s GDP. One of
the faster rates of growth will be registered by pipeline throughput (an
average of 3.5% per annum), reflecting resilient Asian demand for Russian oil
and gas, as well as
substantial, but slower-growing European demand. Air
cargo will grow at the same rate, an average of
3.5% per annum, although
this is a sharp reduction on earlier projections. Given the impact of the
global
financial crisis, we expect to see ongoing consolidation in the
aviation sector.
The growth in pipeline turnover will, as mentioned, be
based on continuing strong demand for Russian oil
and gas, despite
investor concerns over various issues, including the international recession,
political risk,
and the after-effects of gas disputes with Ukraine (in
late 2005 and early 2009) and Belarus (in late 2006).
On balance we
believe there will be ongoing funding for big pipeline projects to markets in
both the West
and the East, although foreign investors will be much more
cautious.
In the long term, demand for road haulage will be boosted by the
expansion of the motor vehicle fleet,
and the sophisticated door-to-door
logistics requirements of an increasingly consumer-oriented society.
However, the near-term recession and the lack of enough new highway capacity
will be a severe limiting
factor. We are now predicting annual average
road haulage growth of 2.3%. Other modes of transport will
experience
comparable growth curves. Railway freight turnover will be hard hit by the
downturn in 2009
and as a result will grow at a weak 1.6% per annum.
Shipping cargo turnover will also reflect the
reduction in world trade in
2009, and will expand at an average 1.4% a year, while inland waterways
will
have a similar performance.
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