Israel Freight Transport Report Q3 2012

Israel''s freight transport sector had mixed results in 2011. On H111 figures we estimate that both air and rail freight endured contractions in volumes over the course of the year, though the Port of Haifa enjoyed growth of 4.2%. In 2012 we project that all sectors will return to growth and enjoy moderate expansions over the medium term, though there are risks to the downside from both regional tensions and global macroeconomic headwinds. Investments in new railways and the ongoing privatisation of the country''s ports provide opportunities for growth and investment. Headline Industry Data 􀂃 2012 air freight growth is forecast at 4.3%, following an estimated contraction of 0.5% in 2011; we project average growth of 4.6% per annum to 2016. 􀂃 2012 Port of Haifa tonnage throughput growth is forecast at 6.4%, following growth of 4.2% in 2011, and to average 4.6% per annum to 2016. 􀂃 2012 rail freight tonnage is forecast to grow by 4.6%, following an estimated contraction of 4.5% in 2011, to average 4.9% to 2016. 􀂃 Total trade growth in real terms in 2012 is forecast at 3.9%, and averaging 4.1% to 2016. Key Industry Trends Ashdod Achieves New Record For Container Movements Israel''s Ashdod Port has achieved a new daily record for container movements. During a single 24-hour period in the week ended May 5, the port recorded a 10% increase in container movements to 5,013 containers, compared with the previous record of 4,564 containers, achieved in October 2011. El Al Israel Airlines Reports 2011 Loss Israel''s flag carrier El Al Israel Airlines registered a net loss of US$49.3mn in 2011, compared with a profit of US$57mn in 2010. In the same period, revenue stood at US$2bn, down by 3.6% year-on-year (yo- y). Meanwhile, the carrier recorded a net loss of US$7.8mn in Q411, compared with a profit of US$16.3mn in Q410. The loss was mainly attributed to a rise in fuel prices and increased competition from other airlines. Haifa Dredging Offers Upside BMI believes that dredging of the entry channel to the Israeli port of Haifa, the largest in the Middle Eastern country, offers upside to our sluggish growth forecast for the facility. The ability to accommodate larger vessels could see Haifa maintain its position as Israel''s premier facility in the face of competition from the Port of Ashdod. Key Risks To Outlook Continued political turmoil in Israel''s Middle Eastern neighbours, especially within Egypt and Syria, offers both up and downside risk to BMI''s forecasts for Israel''s economy and freight transport sector. Further weakness in the economies of the US and eurozone could depress external demand and constrain economic growth; this would be felt in particular by the air freight sector.