Following a year which, BMI believes, saw increasing volumes across all freight modes, 2012 will signal slowdown in growth as country's freight transport struggles to return to pre-downturn levels.
Total trade is projected to pick up in real terms with our Country Risk desk forecasting a year-on-year (yo- y) increase of 1.8% in 2012, following estimated growth of 7.61% in 2011.
Road freight is set to continue to dominate the sector and is projected to grow by 0.9% in 2012. The sector so far appears to have defied EU pledges of securing a reduction in road haulage across the region. BMI notes that rail is the likeliest candidate in Czech Republic's freight transport mix to benefit from any diversification away from road.
BMI notes that the country's air freight development faces uncertainty after the liquidation of Hungarian flag-carrier Malev.
Headline Industry Data
- 2012 air freight tonnage is expected to fall by 0.4%;
- 2012 rail freight is forecast to grow by 0.7%;
- 2012 road freight is forecast to grow by 0.9%;
- 2012 inland waterway freight is forecast to grow by 0.4%;
- 2012 total real trade growth is forecast at 1.8%.
Key Industry Trends
Loss Of Malev A Threat To Cargo City Development
The liquidation of Hungarian flag-carrier Malev is a blow for Hungary's air freight development. We fear that the ceasing of the airline's operations could negatively impact the development of the planned Cargo City at the country's main airport Budapest Ferenc Liszt International Airport (Budapest Airport). BMI highlights that the company did have a cargo arm, Malev Cargo, which utilised the belly hold of its passenger planes. The loss of an air freight operator will be a blow for Hungary's import and export sector, as a fall in competition will likely see transport costs rise.
Risks to Outlook
With the eurozone macroeconomic outlook looking steadily bleaker, Hungary's growth outlook is threatened by a number of downside risks. The major downside risk for freight operators' volumes in Hungary is the likely slowing in growth of the country's exports, with Hungary's top trade partners located in Europe. Economies that are more highly integrated with the eurozone stand to lose the most in 2012 as BMI Country Risk team forecasts the bloc entering recessionary territory to the tune of 0.5% in real terms. Hungary, along with the Czech Republic, is the most exposed to eurozone demand in the Central and Eastern European region, meaning that our expectation for an easing in eurozone imports this year will translate into slower export growth in Hungarian economy.
Domestic demand has yet to stage a meaningful recovery in Hungary, meaning imports will not significantly drive up the growth of freight volumes. Hungary's role as a conduit for freight transport, with a number of pan-European transport corridors crossing the country, is also exposed. Any slowdown or decline in European trade volumes would negatively affect freight volumes in Hungary and hit the country's freight transport operators.