Poland Freight Transport Report Q4 2009

In June, German state railway company Deutsche Bahn (DB) received approval from the EU to take over the operations of Poland's privately-owned rail freight company PCC Logistics. The European Commission examined the deal and concluded that it would not lead to any competition concerns in the European rail cargo market. PCC Logistics has a workforce of 5,000 and annual revenue of nearly US$460mn. DB has not disclosed the value of the deal. Industry observers believe the merger will enhance DB's operational capacity. The company, along with its units Shenker, Railion and DB Logistics, operates the most dense land transport network in Europe. DB is one of the world's largest transport groups, carrying close to 2bn passengers a year. Moreover, its freight transport division moves about 280mn tonnes of freight annually For the five-year period running up to 2013, BMI expects overall freight carried to increase by an annual average of 1.3%, a weaker performance than in the past. We see the best-performing sector being airfreight, with annual average growth of 3.7%. Despite positive long-term fundamentals, the airfreight picture is overshadowed by the current global downturn in the industry and LOT's financial difficulties.

In maritime freight, the downturn in trade levels (-24% by value this year) will be the dominant factor, with gradual recovery from 2010 onwards. Because of the abrupt fall this year, maritime freight carried will contract on average by an annual 0.6% over the next five years. Pipeline throughput will grow by an average of 2.9% per annum, with a one-off cut back in Russian volume through the Druzhba pipeline in 2009 eventually being offset. Road haulage will grow by 3.2% per annum. Here, we believe strong demand for haulage will continue to be held back by the slow rate of improvement of Poland's highway network as well as by the short-term effects of the recession. Finally, rail freight will grow by an annual average of 2.7%, as the process of reform and deregulation gradually begins to take hold.