Romania Freight Transport Report Q3 2009

Since our last report, we have cut back our GDP growth forecasts. Following the sharp 6.2% y-o-y contraction in Romanian real GDP in the first quarter of 2009, we now project a 5.7% economic contraction. Moreover, we caution that trend growth over the next five years will be 'L-shaped' as lower global growth will translate into weaker demand for Romanian goods while reduced capital inflows, in the form of loans and investment, will weigh on demand. The overall effect on our freight traffic forecasts is therefore substantially negative. We are now predicting average annual growth in freight carried across all modes, measured in mntkm, of 2.1% in 2009-2013, ahead of GDP growth. Anti-crisis measures by the government for the transport sector could take the form of a relaxation of taxes for Romanian carriers, although nothing has been agreed yet. This is partly because public funds are already being pressured, and there is little room for tax cuts. Another measure could be the halving of road tolls in 2009, which would have a great impact on overheads for road haulage firms, which are suffering greatly in the current recession.

In June 2009, the Deputy Speaker in the Russian parliament, Valeri Yazev, urged Romania to join the South Stream pipeline that will transport natural gas from Russia to Western Europe. At the Black Sea Economic Conference, Yazev called for Romania to become a transit country for the pipeline, which is to be completed in 2015. The 900km South Stream pipeline is planned to transport 31bcm from the Russian Black Sea port of Beregovaya under the Black Sea to Bulgaria, with plans to expand capacity to 47bcm at a later stage. From Bulgaria, the pipeline will split into one north-western section to Austria and one south-western section to Italy. Overall, the entire pipeline could be 3,200km in length. It will bypass traditional transit states Belarus and Ukraine, with Russia arguing that the project is aimed at providing greater security of supply for European customers through diversification of transit routes. However, in order to reach Austria, Romania could prove a vital transit country (currently the pipeline is set to go through Bulgaria and Serbia). Yet with Romania a key partner in the rival Nabucco pipeline, it is unlikely that the country will join South Stream. The European Union Energy Commissioner was keen to stress in June 2009 that although Romania is providing some technical support for Russia's Gazprom, which is building South Stream, it will in no way imperil the Nabucco project.

In March 2009, the National Union of Road Transporters in Romania warned that 1/5th of road freight companies in Romania could go out of business by the end of the year. The global financial meltdown has resulted in a severe liquidity crisis for freight transporters, while there has been a decline in core markets such as the automobile manufacturing sector. This has resulted in a slump in orders, while other problems include delayed payments - as clients struggle for cash -and the extension of invoice payments from 45 days to 90 days.