Bulgaria registered a 3.8% quarter-on-quarter (q-o-q) rise in the transportation of freight goods in Q1 2014, according to preliminary seasonally adjusted data released by the National Statistical Institute. Goods transported by land and water climbed 19.7% year-on-year (y-o-y) in the same period, according to the preliminary non-adjusted data, reported by Focus.
Although 2015 will see a slightly slower growth rate across the freight modes in Bulgaria compared to 12 months previous, we still anticipate moderate growth to be the norm this year. Leading the way is set to be the road freight sector (7.30% y-o-y growth), while air freight is also pencilled in to register healthy y-o-y gains of 5.00%.
That said, the large contractions in growth that peppered the latter years of the '00s and the early '10s look to be a thing of the past, which is welcome news going into the midterm.
Headline Industry Data
2015 tonnage throughput at the Port of Varna is forecast to grow by 3.76% to 17.09mn tonnes.
2015 air freight tonnage forecast to grow by 5.00% to reach 21,660 tonnes.
2015 rail freight tonnage forecast to increase by 3.00% to hit 14.59mn tonnes.
2015 road freight tonnage forecast to rise by 7.30% to reach 185.73mn tonnes
2015 total trade (real terms) forecast to rise 2.52%.
Key Industry Trends
Trains To Begin Running Over Danube Bridge 2: Passenger and freight trains are expected to begin running over the Danube Bridge 2, from February or March 2014, according to Kristian Krastev, CEO of the Bulgarian state-owned railways company BDZ Holding. The project, which is part of the Pan-European transport corridor IV and will link Vidin in Bulgaria and Calafat in Romania, represents an investment of EUR282mn (USD386.7mn). The EU has contributed EUR106mn (USD145.3mn), while the remaining amount was paid by national financing and private investments.
Burgas And Vargas To Be Used In Pipeline Project: The Bulgarian ports of Burgas and Varna are to be used as storage areas for pipes to be used in the South Stream Offshore Pipeline for between four and six years, it was reported in January 2014. The CEO of South Stream Transport, Oleg Aksyutin, explained: 'The marshalling yards in Bulgaria will play a key role in the logistics for laying the offshore pipeline and we are very happy to have come to an agreement with the two Bulgarian ports. This brings additional business to Bulgaria and at the same time ensures timely implementation of the South Stream Offshore Pipeline.'
Varna Revisits Terminal Expansion Plan: Bulgaria plans to develop an intermodal container at the Black Sea port of Varna. Investments in the country's container shipping facilities have been in the pipeline since 2008, but were derailed by the 2009 global economic downturn. Steady growth at the port since 2009 and the fact that box throughput volumes are nearing their pre-downturn levels is necessitating expansion plans once more.
Key Risks To Outlook
Bulgarian President Rosen Plevneliev and his Hungarian counterpart János Áder have confirmed their support for the construction of the South Stream gas pipeline. The announcement was made at a press conference after the Bulgarian president met with the Hungarian president, who is on a two-day official visit to Bulgaria. According to Plevneliev, the establishment of a regional gas market comprising the members of the Visegrad Group will help to increase energy security in Central Europe as well as assist Bulgaria in diversifying its supplies. The Visegrad Group consists of the Czech Republic, Poland, Slovakia and Hungary.
As we anticipated, the centre-right Citizens for Economic Development of Bulgaria (GERB) signed a coalition deal with the Reformist Bloc (RB), itself a combination of five small centre-right parties, to form a minority coalition government on November 6 2014. To pass legislation, the coalition will have to rely on support from two other parties: the nationalist Patriotic Front and the breakaway socialist ABV. This will achieve a majority of 137 out of 240 seats in the National Assembly.
We do not believe that this fragile coalition will survive the duration of its four-year mandate, though businesses and consumers will welcome the relative political stability that an elected government will bring, given that this will be Bulgaria's fifth government (two of which were technocratic) in two years. Nevertheless, the GERB-RB coalition will not enjoy a honeymoon period, as it faces a banking crisis, frozen EU funding, and a faltering energy sector.