Netherlands Freight Transport Report Q3 2009

Rotterdam, Europe's largest port, was close to running out of oil storage as energy demand in developed countries continued to fall, according to an April 29 report by Bloomberg. The Dutch harbour is Europe's largest refinery centre and trading hub for oil derivatives. According to 2007 data, the port of Rotterdam can store 75mn barrels (bbl), enough to meet total EU demand for five days. Oil bottlenecks in major OECD ports are likely to continue throughout the year as we do not expect demand to pick up until 2010.

According to maritime information provider Royal Dirkzwager, quoted by Bloomberg, oil tankers were queuing up outside the port, with some being diverted. Onshore crude storage tanks were either full or had no more unreserved space, according to the Rotterdam-based refining consultants PJK International.

Major oil and petrochemical companies operating storage facilities in the area, such as Royal Dutch Shell, BP and Royal Vopak, refused to comment as data on their oil stocks are indicative of performance and could therefore affect their share prices. BMI forecasts oil product demand in Western Europe to fall by 1.9% in 2009, following a decline of 0.5% in 2008. There is risk on the downside here, although the relative maturity and oil-efficiency of Europe means that the scale of the downturn is unlikely to rival that of the US or developing markets.

Overall, and bearing in mind the major impact of the current recession, BMI concludes in our latest Netherlands Freight Transport Report that freight traffic across all modes will rise by an annual average of 0.4% in the 2009-2013 forecast period. This will be fractionally below the growth of the wider economy and down from 2.3% in the preceding five years. Slower economic growth is the key driver of the slowdown in the freight sector. According to our latest estimates, transport and communications GDP rose by 2.6% in 2008, 0.7 of a percentage point ahead of GDP. The total value of transport and communications GDP will rise to US$71bn in nominal terms by 2013, representing 9.0% of the Netherlands' GDP. The transport and communications sector employed 819,000 people, or 6.1% of the labour force, in 2007. We see that figure staying virtually constant at around 817,000 by 2013.

Our overall forecast for freight carried in the Netherlands is for it to be broadly on a par with the wider economy based on a mature industry, good infrastructure, a slower economic growth rate, and the country's openness to foreign trade. We expect the best performing sector to be airfreight, which, with annual average growth of 0.9%, will come through another period of relative turbulence in the sector, caused by the European-wide recession. We believe Dutch aviation and the Air France-KLM alliance in particular, will ride out the storm. It will be followed by rail freight, where we are forecasting growth of 0.6% per annum, with resilience coming from recent investments - in particular the opening of a new freight line to Germany. Pipeline freight will grow by 0.5% throughout the forecast period, as will road haulage. We think sea freight will be hardest hit by the current recession, with growth down to an average of 0.2%. Inland water transport will also experience low growth of 0.2% per annum.