BMI View: Our outlook for Egyptian ports is fairly mixed. Although the economy's recovery will bolster demand for shipping services, the growth driver will largely be investment, while private consumption will falter. We exp ect acceleration in gross fixed capital formation (GFCF) in Egypt over the coming quarters on the back of relative political stability and policy continuity as well as substantial pent-up demand. We expect that this will drive up gross tonnage volumes at Egyptian ports. However, fuel subsidy cuts and elevated inflation will ensure household consumption growth remains relatively slow over the coming quarters, even with lower global oil and food prices. Hikes to domestic energy prices will have a pronounced impact on spending patterns, as households are forced to devote a greater share of their incomes to fuel. This will impact on consumer demand for containerised goods imports, and so will negatively impact box throughput at Egypt's ports.
Fundamentally, strikes at the country's ports have diminished, and a number of expansions are under way once more, including a new berth to be developed at Damietta. The country benefits from the presence of the Suez Canal, and a recovery in consumer demand in Europe's developed markets - thanks to lower oil prices boosting household spending power - will see volumes through the waterway grow, delivering a boost to Egyptian container-handling facilities near the channel such as East Port Said.
Headline Industry Data
2015 total tonnage throughput at El-Dekheila is forecast to grow by 4.0% to 25.52mn tonnes, and to average 2.1% per annum to 2019.
2015 East Port Said container throughput growth forecast at 2.9% to reach 3.26mn twenty-foot equivalent units (TEUs), and to average 3.1% growth to 2019.
2015 Egyptian trade forecast to grow by 3.2%, and to average growth of 3.4% over the medium term.
Key Industry Trends
Port Investment Bouncing Back: Following the Arab Spring revolution of 2011 which forced President Hosni Mubarak's ouster, and the subsequent political turmoil during President Morsi's short tenure and subsequent ouster, investment into the country's port stalled. Given that many of the facilities were in need of development, this was bad news for the sector. However, under the current relative stability of the presidency of former Field Marshall President el-Sisi, investment is beginning to pick up once more. In June it was reported that the government of China would finance 15 infrastructure projects worth about USD10bn in Egypt, according to Egyptian Trade Minister Mounir Fakhry Abdel. These include six transport projects, including an urban railway in north-east Cairo and expanding Alexandria port. Funding for the transport projects will be provided by the Export-Import Bank of China. This is not the only development in the Alexandria region. In March it was reported that the port of Damietta, on the country's Mediterranean coast and a major entry point for Alexandria and cities on the Delta, had signed a deal for the construction of a new berth. The berth will be 630m long and have a draught of 17m. This deep draught is important, as it means the port will be able to accommodate the new class of mega vessels, and save the facility from being relegated to feeder services. This will help keep costs down for Egyptian importers and exporters.
New Grain Terminal Will Ease Grain Shortage: The European Bank for Reconstruction and Development (EBRD) will lend USD20mn to Egyptian company Medsoffs for the development of its grain import business. There is a gap between supply and demand for grain in Egypt, necessitating high levels of grain imports, and Medsoffs has aided this through developing its own grain import terminal at the port of Alexandria. The facility is the fourth privately operated facility in Egypt.