Argentina Freight Transport Report Q4 2011

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Argentina Freight Transport Report Q4 2011 Published on August 2011

Report Summary BMI sees 2011 as a reasonably good year for Argentina's freight transport sector. The main driver will be better-than-expected economic growth as the government prepares for the October 2011 elections. BMI has lifted its forecast for GDP this year to 6.0%, up from 4.1% previously, as strong private consumption combines with government pump-priming to provide a supportive environment to the transport industry. Relatively speaking, though, the freight sector will lag behind GDP given the lack of sufficient investment in recent years and poor industrial relations, among other factors. In volume terms, the strongest expansion will be in airfreight, followed by some of the country's main ports and railfreight. Road haulage remains the country's main mode of transport, but there are no reliable data series allowing us to track its year-on-year (y-o-y) performance. Headline Industry Data * Airfreight volume growth is set to slow 5.0% to 167,300 tonnes this year, down from 10.1% in 2010. * Rail freight hauled in 2011 will grow by a modest 2.1% to 10.541bn tonnes. * Total volume at the Port of Buenos Aires is set to rise by 3.2% in 2011 to reach 12.06mn tonnes. Box handling at the same port will also grow by 3.2% to 1.16mn twenty-foot equivalent units (TEUs). Key Industry Trends Investment in Transport Infrastructure Talked Up Various factors seem to be generating interest in much-needed capital expenditure in this area. One is that the government of President Cristina Fernández faces general elections in October. The President said in March that a total of US$3.5bn worth of development loans had been secured from multilateral funding bodies and would be spent on a range of infrastructure projects, including transport. Separately, China continues to express interest in funding Latin American infrastructure through its ExImbank agreement with the InterAmerican Development Bank (IADB). This may create new opportunities for the Argentine export freight sector. Aerolíneas Argentinas Dispute With US: Solution Close Four US airlines had complained in 2003 that they were being overcharged for using Ezeiza International Airport. The Washington authorities responded by applying a surcharge on Aerolineas's use of US airports. In March 2011, reports indicated a negotiated settlement to the dispute was close. Grain Shipments Disrupted By Strikes Many of the stoppages were motivated by attempts to boost wage rates to keep in step with soy-crushing workers. On the plus side, unions and employers responded quite quickly to government calls for a negotiated solution. However, BMI is concerned that as the presidential campaign gets underway in the second half of 2011, industrial relations in the ports and shipping industry could take a turn for the worse. Key Risks To Outlook We believe there are two related downside risks to out current forecasts. First, there is the possibility of a hard economic landing sometime after the October elections, particularly if an incoming administration finds the fiscal coffers are in a worse state than has been publicly acknowledged. There is already some concern over the reliability of economic data and most analysts acknowledge the under-reporting of the inflation rate. We believe the extent of this risk will become clearer later in 2011 and is most likely to affect freight performance in 2012. The second downside risk relates to the general 'politicisation' of Argentina in an election year. Although Fernández is currently the

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Table of Content Executive Summary 5 SWOT Analysis 7 Argentina Freight Transport Industry SWOT ....... 7 Argentina Political SWOT .... 8 Argentina Economic SWOT .. 8 Argentina Business Environment SWOT ....... 9 Industry Trends and Developments ..... 10 Maritime ..... 10 Air ....... 11 Market Overview .... 12 Rail ..... 12 Road ... 12 Air ....... 12 Maritime ..... 13 Global Oil Products Price Outlook ....... 14 Table: Oil Product Price Assumptions, 2011 (Us$/Bbl) ..... 15 Table: Oil Product Price Forecasts, 2011-2015 (Us$/Bbl) . 17 Industry Forecast - Argentina Q411 ..... 18 Maritime Freight: Buenos Aires Outperforms .... 18 Table: Maritime Freight - Throughput, 2008-2015 ('000 Tonnes) ....... 18 Air Freight: Moderate Growth.... 18 Table: Air Freight, 2008-2015 .... 19 Rail Freight: Steaming Slowly Ahead . 19 Table: Rail Freight, 2008-2015 .. 19 Trade: Exports to Hold Up Well . 19 Table: Trade Overview, 2008-2015 .... 20 Table: Key Trade Indicators, 2008-2015 .... 21 Table: Argentina's Main Import Partners, 2002-2009 (US$mn) .. 22 Table: Argentina's Main Export Partners, 2002-2009 (US$mn), 2002-2009 ....... 22 Political Outlook .... 23 Macroeconomics Outlook ..... 25 Argentina - Economic Activity .... 27 Company Profiles .. 28 América Latina Logística (ALL) . 28 Ultrapetrol .. 30 Aerolíneas Argentinas . 32 Agunsa 34 BMI Methodology .. 36 How We Generate Our Industry Forecasts . 36 Transport Industry ...... 36

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