BMI View: We forecast positive growth across Israel's freight transport modes in 2015 and 2016. This is an improvement on recent years, when the sector has seen declining volumes on air planes and at the country's major ports, thanks to sluggish economic growth - both domestically and in major trade partner Europe - and political instability on its borders with other states, and with Gaza . Political risk is always a threat in Israel, and could derail our forecasts should further war break out with Gaza or other of Israel's neighbours, but at present the outlook is relatively sanguine. That said, growth in freight transport volumes will be outpaced by other regional markets. Israel's freight transport sector is already well developed, and further, given the regional political situation, it serves almost exclusively the domestic market.
Israel's trade will experience positive real growth over the coming years, despite an expected decline in nominal trade in 2015. This will support the freight transport sector's growth. Given that Israel is not a major trade hub, despite its strategic location between East and West, the Red Sea and the Mediterranean, demand is almost solely driven by domestic macroeconomic concerns. Poor political relations with its neighbours mean that transit trade is minimal, although there was a pick-up in this in 2011 when the outbreak of the Syrian Civil War meant that transiting through this country was no longer possible.
As a developed market, growth in Israel's road haulage volumes will be sedate, if steady. A positive outlook for private consumption growth in the country supports this view. Israeli road freight volumes, which are to a large degree informed by private consumption, will expand by 2.5% in 2015 and 4.2% in 2016, reflecting our positive outlook on the economy.
We expect that rail freight will be the outperforming freight transport mode in Israel in 2015 and over our medium-term forecast period to 2019. Although Israel's road and air freight sectors are both fairly well developed, there is still large-scale investment going on in rail freight, which will support continued growth in the sector. In 2015, we forecast that rail freight volumes will expand by 4.0%. If realised, our forecast would result in 7.84mn tonnes being transported by rail by year-end. Growth will again be 4.0% in 2016, rising to 4.4% in 2019.
We forecast that Israel's air freight volumes will expand by 1.1% in 2015. If realised, our forecast would result in 282,932 tonnes transported by year-end. In 2016, we expect that growth will accelerate slightly, to 1.2%, with 286,000 tonnes expected to be transported by air in the country.
Key BMI Forecasts
We forecast total road freight volumes will increase by 2.5% in 2015 to reach 26.82mn tonnes. Growth will rise to 4.2% in 2016.
We forecast total rail freight volumes will climb 4.0% in 2015 to reach 7.84mn tonnes. Growth will be 4.0% in 2016 also.
We forecast total air freight volumes will rise by 1.1% in 2015 to reach 282,932 tonnes. Growth will be 1.2% in 2016.
We forecast total nominal trade value to fall by 4.9% to reach USD181.7bn in 2015.
The top trade partners will be the US, China, Germany, the UK, Belgium and Switzerland.