Abstract
In June the government said that the Suez Canal registered a 13% year-on-year
(y-o-y) decline in transits
to 1,482 in April 2009. Transits slumped 17.5%
y-o-y to 5,506 for January-April 2009. It posted a 22.7%
y-o-y plunge in
revenues to US$346.9mn in April, while the canal' s revenue figures were
US$1.3bn in
January-April, down nearly 22.4% y-o-y. The news was likely to
worry the Egyptian government, as the
Suez Canal is the third largest
generator of foreign currency in the country after tourism and remittances
sent home by Egyptians abroad. Further losses are expected and the authorities
have been forced to
downgrade their forecast of a 3.5% decline in revenues
for 2009. According to the Suez Canal Authority
(SCA), the decline is due
the economic crisis rather than piracy in the Gulf of Aden. The SCA was
expecting the fall in revenues for 2009 to be around 20%. In 2008, revenues
from the canal reached a
record US$5.4bn, with the highest ever monthly
figure of US$504mn generated in August 2008. Since
then, the global
economic crisis has severely affected freight transport as global industrial
demand
plummets. In Q109, container ship volumes were about 15-30% lower
than in Q108. The SCA maintains
that the Suez Canal is actually a safer
route than the longer trip around the Cape of Good Hope, where
there is
far less protection. An example cited is Saudi supertanker Sirius Star, which
was hijacked by
pirates in Kenya in November 2008. The ship was on its way
to the US via the tip of Africa. As a result of
the negative forecasts,
the SCA will not be raising canal transit fees.
In our latest Egypt
Freight Transport Report, BMI concludes that total freight traffic, measured
in million
tonnes-km (mntkm) will rise by an annual average of 3.9% in the
2009-2013 forecast period, a little ahead
of Egypt’s general rate of
economic growth. Various factors support this prediction. Egypt is taking a
hit
from the global slowdown, but GDP growth over the next five years will
show some resilience at an
average of 3.8% per annum. This compares with
5.9% over the preceding five years. Going forward, the
poor state of the
country’s transport infrastructure will remain an important factor, and
we doubt whether
the investment flows hoped for by the transport ministry
will materialise. Overall, BMI is forecasting no
more than moderate growth
in domestic freight transport sectors between 2009 and 2013. While the
government has said it wants to improve all aspects of the transport
infrastructure, these plans are long
term and the benefits are unlikely to
make a major difference to the freight transport industry until beyond
the
forecast period. The industry will have to continue to use the existing
facilities for several years.
Egypt scores 58.6 out of 100 in our freight
ratings. The country’s strong points are economic risk and the
competitive environment, at least with reference to its peers. Areas for
improvement include
infrastructure, freight growth, transport intensity (a
measure of the dynamism of foreign trade) and the
regulatory environment.
The total value of transport and communications GDP will rise to US$27.3bn
in
nominal terms by 2013, representing 9.9% of Egypt’s GDP. The
transport and communications sector
employed 1.28mn people, or 6.4% of the
labour force, in 2008. We see this rising to 1.39mn people by
2013,
although it will remain stable as a proportion of the workforce at 6.4%.
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