Romania Freight Transportation Report Q2 2008

Germany's Deutsche Bahn (DB) rail company said in December 2007, it was considering expansion into Romania as a result of the country's railway privatization programme. Norbert Bensel, head of DB's logistics unit, said he expected Romania's state-owned logistics and rail freight units to be sold for under EUR100mn (US$144mn). Government officials hope for rather higher figures. DB said it was seeking to play an active role in the consolidation of the European rail freight industry, because the passenger business was still heavily regulated and was showing slower rates of growth. In our latest Romania Freight Transport Report, BMI predicts that rail freight will grow at a satisfactory rate in the country, with traffic rising by an average of 4.1% every year in the 2008-2012 period.

Various factors support this prediction. The Romanian economy is itself set to grow at an average rate of 5.1% over the next five years, and demand for freight transport will be on the rise. Thanks to EU membership from the beginning of 2007, there is no shortage of funds on offer from Brussels for infrastructure development. The credits have been rolling in and some EUR5bn in EU transport investment is expected over the next six-year period. Closer integration with the wider European economy will be important, with trade growing strongly and physical links to the main European transport corridors opening up. We are predicting average annual growth in freight carried across all modes, measured in mntkm, of 7.7% in 2008-2012, ahead of GDP growth. As competition begins to increase and investments take effect, rail freight traffic should pick up. Road haulage will surge ahead by an annual average of 9.1%. Inland waterway traffic will rise by an annual average of 6.1% as bottlenecks are removed from the Danube. Maritime freight will grow by an annual average of 5.6%. Airfreight will see growth of an annual average of 7.1%, boosted by the spread of low-cost airlines across Europe. The total value of transport and communications GDP will rise to US$33.2bn in nominal terms by 2012, representing 11.2% of Romania's GDP. The transport and communications sector employed 457,100 people, or 5.0% of the labour force in 2007. We see that figure rising to 474,200 by 2011, although it will remain constant at 5.0% as a share of the total workforce.

Romania has a composite score of 63.4 out of 100 for its BMI freight transport business environment rating. This places it in the upper range among its European peers. The country scores well for long-term political risk, transport infrastructure growth and transport intensity (an indicator of the dynamism of foreign trade). It does less well, however, in areas such as long-term economic risk and the regulatory and competitive environments.