Peru Freight Transport Report Q3 2009

A US$227mn contract to modernise the port of Paita, situated in the northwestern state of Piura, was announced in April. The announcement comes after a series of delays, in part due to the governor of Piura and workers objecting to the privatisation of the port. Paita is the 2nd busiest port in Peru and has a strategic location on the Pacific Ocean, which makes it a hub for regional trade. As reported by Reuters, work on the Paita project, which will involve building a new container dock, could begin by Q210. The consortium includes Peruvian companies Cosmos and Translei, together with Portuguese construction firm Mota-Engil. The president of Peru's National Port Authority (APN), Frank Boyle Alvarado, believes that as a result of such projects, Peru's port infrastructure will reach, and maybe even surpass, regional standards by 2011.

Despite concern over inadequate infrastructure and an adverse international economic climate, BMI's newly released Peru Freight Transport Report remains bullish over freight prospects in the country, highlighting the construction of the inter-oceanic highway connecting Peru to Brazil, Pacific coast port development, and the complex of natural gas pipelines and LNG facilities associated with ongoing development of the Camisea deposits. These three projects underpin BMI's view that Peruvian freighttransport turnover, measured in million-tonne-km (mntkm) will grow by an annual average of 5.3% in 2009-2013. By value, the transport and communications sector will grow to be worth US$2.7bn in 2013, representing 8.6% of total GDP.

BMI's view is that freight transport has a critical role to play in Peru's development over the next few years. Much will depend not only on the management of concrete projects, but also on the quality of the business environment in this sector. BMI gives Peru an overall freight rating of 56.8, placing it in the middling range relative to its peers. There is room for improvement in infrastructure development and the regulatory environment. Among the risks facing our forecasts are political uncertainty and the possibility of further falls in the price of Peru's commodity exports, leading to downward revision of predicted growth rates.

On balance, despite the possibility of turbulence in the airfreight sector (traditionally volatile in recent Peruvian experience) and slower growth in rail freight, BMI is projecting an encouraging future for the country's freight sector.