Egypt Freight Transport Report Q2 2008

In November Egyptian Prime Minister Ahmed Nazef laid the foundation stone for phase two of the container dock expansion programme at eastern Port Said Harbour, according to news agency MENA.

Transport minister Mohamed Mansour said phase one had involved investing US$250mn, while for an additional US$490mn to be spent through the Suez Canal Container Terminal (SCCT) phase two would double the length of the container dock to 2.9km. Phase one had made eastern Port Said harbour the third largest container terminal in the Middle East and Mediterranean. The total number of containers handled was expected to rise to 5.5mn within a year, with the revenues of the Port Said Port Authority rising from US$18.18mn in 2007 to US$43.6mn by 2012. According to Mansour, 30% of the world's containers and 13% of world transit trade passed through Port Said East Port, making it one of the four most important hub ports in the world. In our latest Egypt Freight Transport Report, BMI concludes that shipping traffic will rise by an annual average of 7.1% in the 2008-2012 forecast period, ahead of Egypt's general rate of economic growth, which we project at 5.5%.

Various factors support this prediction. Global trade will continue expanding despite the expected cooling in the US economy this year. Specifically Egyptian trade will be boosted by increasing gas and LNG exports. Greater port capacity will also play a part. Overall BMI is forecasting moderate growth in domestic freight transport sectors between 2008 and 2012. While the government has declared its intentions 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.

As a result, the industry will have to continue to make use of the existing facilities for several years.

Egypt scores a total of 52.9 (out of a theoretical maximum of 100) in our freight ratings. The country's strong points are economic and political 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$18.2bn in nominal terms by 2012, representing 8.8% of Egypt's GDP. The transport and communications sector employed 1.24mn people, or 6.4% of the labour force, in 2007. We see the figure rising to 1.34mn people by 2012, although it will remain stable as a proportion of the total workforce at 6.4%.