Kuwait Freight Transport Report Q4 2008

Startup Wataniya Airways (also known as National Airways) said in late August that it had signed an agreement to lease three Airbus A320s from the Dutch company AerCap. The planes would be leased for nine years starting in 2010, Wataniya said, while not revealing the price it would pay. The new agreement meant that Wataniya was effectively doubling the size of its planned fleet from three to six aircraft. The company said it planned to launch its services in January 2009. In May, Reuters news agency had reported that the company's intention was to build the fleet to at least 12 widebodied planes by 2012.

Wataniya, backed by Kuwait Projects Company (KIPCO) and other corporate investors, was set up to compete with stateowned Kuwait Airways Corporation (KAC) and the private sector low cost carrier, Jazeera Airways. Earlier in August Wataniya denied a report by AlQabas newspaper that it was interested in buying a stake in the lossmaking Kuwait Airways, which is being prepared for privatisation.

In our latest Kuwait Freight Transport Report, BMI concludes that airfreight traffic is likely to grow at an annual average rate of 6.7% in the 20082012 forecast period.

Various factors support this prediction. Although the recent global economy will cool and oil price boom will ease over the next couple of years, we still see Kuwaiti GDP rising by an annual average of 5.3% over the next five years. Growing capacity, and growing trade in highvalue/lowbulk goods will all contribute to airfreight growth. Kuwait is a relatively small country and its trading sector and therefore transport network has a vibrant reexport component. Kuwait has evolved as a trade hub for its larger neighbours, particularly Iran and Iraq, which have had limitations on their direct links with the international community.

BMI also forecasts 3.0% average annual growth for road haulage and 6.3% for maritime cargo in the five years to 2012. We estimate annual average pipeline throughput growth of 7.2%. We expect that the bulk of transport will continue to be waterborne and consist largely of oil and related goods. Transit trade, particularly that involving Iraq, will comprise raw materials involved in that country's eventual rebuilding (aggregates, basic metals and the like) and machinery related to building and construction work.

At 64.9 on a scale of zero to 100, Kuwait's overall freight rating is now above the average for the Middle East and Africa (MEA) region. It scores well in terms of its economic risk and its record of investment in infrastructure. However, it is below the average for freight growth, the regulatory environment and for the transport intensity index (a measure of the dynamism of foreign trade).

For the 20082012 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole. It will achieve average annual growth of 6.1%, versus 5.3% for overall GDP. The total value of transport and communications GDP will rise to US$8.26bn in nominal terms by 2012, representing 5.2% of Kuwait's GDP.

Agility Agility, formerly known as Public Warehousing Company (PWC), was established in 1979 and, as its first name suggests, was initially involved largely in the mobilisation, construction and management of all types of warehouses and warehousing of goods under customs. Since 1997, the company has shifted strategies and aims to be a fully integrated services provider with a regional perspective. By 2003 PWC was based around three areas: