Australia Freight Transport Report Q3 2008

The Australian Competition & Consumer Commission (ACCC) in late April 2008 finally gave the green light for Newcastle Port and Donaldson Coal to operate a quota or 'capacity balancing' system at Newcastle Port, Australia and the world's largest thermal coal export terminal. The ACCC said it remained concerned that the system might be anti-competitive, and therefore extended its authorization only until the end of 2008. Mining companies and port operators have argued that some form of slot allocation at the port is necessary to reduce the large queue of ships waiting to load. But ACCC chairman Graeme Samuel said he remained concerned that the system might reduce incentives to invest in expanding capacity. 'The ACCC considers that this may ultimately result in several billion dollars of lost export revenue' he warned. For that reason authorization had been extended only to the end of December 2008, placing the onus on the private sector operators to come up with a better long-term solution. BMI's Australia Freight Transport Q308 report predicts that shipping freight carriage will rise by an annual average of 5% per annum in 2008-2012.

According to our latest estimates, transport and communications GDP rose by 4.8% in 2007, ahead of overall GDP. For the 2008-2012 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole. It will achieve average annual growth of 3.8%, versus 3.6% for overall GDP. The total value of transport and communications GDP will rise to US$69.7bn in nominal terms by 2012, representing 5.7% of Australia's GDP.

In advanced economies, freight transport tends to grow at roughly the same pace as the economy as a whole. In Australia, however, we believe there is continuing upside potential in the freight sector, reflecting the size of the country's infrastructure development opportunities and the strong potential for the continuing growth of mineral exports. Airfreight, as a result of renewed competition, will see 7.1% average annual growth in freight carried. We now expect rail freight to grow by 3.6% per annum, on the back of strong mining exports and infrastructure development. Road haulage freight carried will achieve average annual growth of 4.3%. We see this number reflecting very strong demand, which will, however, be constrained by capacity limits. Although new investment in road will be forthcoming, it will not do so fast enough to alter the picture radically before 2012.