Argentina Freight Transport Report Q3 2009

The obstruction of Argentina's main trucking routes worsened in late March 2009, stalling freight cargo movement between the South American country and its neighbours. Several blockades on major highways were created by agricultural workers, protesting against the government's refusal to lower export tariffs on soya beans. BMI notes that the dispute was the latest in a series of protests which has disrupted trade flow in Argentina and the surrounding region. The strike, which began on March 20, led to farmers creating checkpoints at more than 60 of the country's key roads, aimed at preventing truckers from transporting certain goods such as grain and livestock. The protests escalated to affect trade volumes between Argentina and neighbouring Brazil, the largest single destination for Argentine exports with more than US$10bn worth of exports to the country in 2007. The protests by farmers arose in reaction to the Argentine government blocking a bill to reduce the current 35% tariff on exports of soya beans, the main crop grown in the country.

For the 2009-2013 period we are now expecting average annual freight growth across all transport modes - measured in million tonnes-km (mntkm) - of only 0.7%. Various factors support this core prediction.

Across our 2009-2013 forecast period, we have reduced the average annual GDP growth forecast to only 0.6%, a pretty dismal performance when compared to the 8.5% annual average registered in the preceding five-year period. The government of President Cristina Fernndez de Kirchner will find it more difficult to keep the growth rates up in a less supportive international economic climate, and the transport sector will remain constrained by patchy infrastructure. On the plus side, the freight industry is now experiencing much more manageable fuel prices, but this contribution to the bottom line will not be enough to dispel the gloom caused by slumping demand.

Road haulage will continue to be the dominant freight transport mode. Investment is still needed in both the highways network and truck fleets, but recession will ease bottlenecks. Over the forecast period annual average growth in road freight carried will be 0.7%, down sharply from the preceding five years.

BMI now forecasts 0.9% annual growth in rail freight over the next five years, with some new investments still expected to go ahead. We are forecasting maritime traffic to grow by an annual average of 0.7% with lower grains exports this year playing a part.

We give Argentina a freight transport rating of 54.7 (out of a theoretical maximum of 100.0), which puts it in the medium range of key Latin American markets that BMI monitors. Positive factors contributing to the country's score include the country's long-term economic and political risk assessments and potential for growth in infrastructure. The total value of transport and communications GDP will rise to US$44bn in nominal terms by 2013, representing 9.9% of Argentina's GDP. The transport and communications sector employed around 666,000 people, or 7.1% of the labour force, in 2008. We see the figure rising to 701,000 by 2013, although as a proportion of the labour force it will remain unchanged at 7.1%.