Kuwait Freight Transport Report Q3 2009

In June budget airline Jazeera Airways took delivery of its tenth aircraft, an Airbus A320 that was flown to Kuwait International Airport from the manufacturing centre in Toulouse, France. Jazeera chairman and CEO Marwan Boodai, welcoming the arrival on June 20, told local media that 'today's aircraft delivery marks our second in the month of June - in time for what we expect to be an excellent season, having added 13 more routes this month to our rapidly growing network and having increased operations from Kuwait by 68%, compared to summer 2008'. Boodai went on to say the fleet expansion would allow Jazeera to increase the frequency of its services to popular destinations such as Dubai. Beirut, and Alexandria. Earlier he was quoted saying that Jazeera would acquire or set up a regional airline during the course of 2009 as it set about expanding in the Middle East, despite the impact of the global recession. It also planned to opemn a secondary hub in the Middle East before the end of 2009.

In our latest Kuwait Freight Transport Report, BMI concludes that freight traffic across all transport modes, measured in million tonne-kms (mntkms) is likely to grow at an annual average rate of 2.1% in the 2009-2013 forecast period. Various factors support this prediction. Despite its accumulated oil wealth, Kuwait is being affected quite seriously by the current global downturn and we expect average annual GDP growth to fall to 2.1% over the next five years (down from 7.7% in the previous five years). This will bring down freight volume growth, although on the plus side Kuwait is a relatively small country and its trading sector - and therefore transport network - has a vibrant re-export 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.

Like all Gulf Cooperation Council (GCC) states, Kuwait does not disclose statistics, other than some basic banking releases. Accordingly, it is difficult for BMI to establish solid facts relating to the transport sector. Nevertheless, BMI forecasts 1.3% average annual growth for road haulage, 2.1% for maritime cargo and 2.8% for airfreight, in the five years to 2013. We estimate annual average pipeline throughput growth of 3.0%. 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 continue to comprise raw materials involved in Iraq's re-building (aggregates, basic metals and the like) and machinery related to building and construction work. At 54.1 on a scale of zero to 100, Kuwait's overall freight rating 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 2009-2013 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole in value terms. It will achieve average annual growth of 2.5%, versus 2.1% for overall GDP. The total value of transport and communications GDP will rise to US$8.21bn in nominal terms by 2013, representing 5.2% of Kuwait's GDP.

Agility Agility, formerly known as Public Warehousing Company (PWC), was established in 1979 and, as its original name suggests, was initially involved largely in the mobilisation, construction and management of all types of warehouses and the 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: supply chain services; facilities management and development; and customs modernisation and consulting.