BMI View: The outlook for the Saudi Arabian freight transport sector in 2015 is positive and we forecast robust growth across all freight modes. Rail freight in particular will perform well as the country ramps up its mineral exports, utilising newly developed freight lines like the North-South Railway. Despite the fall in the oil price through the end of 2014 and a dip in nominal trade volumes, we expect that the economy will continue to grow, driven in large part by private consumption. As a result, demand for containerised goods imports will be strong, boosting box throughput at container ports and intermodal volumes on the roads.
Saudi Arabia's trade is overwhelmingly driven by its oil exports. With the global price of Brent crude having fallen dramatically through the close of 2014, the country's nominal trade value has dropped off. Nevertheless, in real terms we expect continued growth, and the rising wealth of the country's population, and steady - if slow - diversification of the economy will see trade continue to expand over the course of our forecast period.
Road freight will be positive in 2015 and over the medium term, although as a developed sector its expansion will be slower than we expect in other freight modes. Growth will be bolstered by household spending, the mining sector and infrastructure projects. In 2016 growth will slow somewhat as the effects of the government's stimulus package wear off. Nevertheless, volumes will continue to increase, as we expect government spending to be kept up despite falling oil revenues. We forecast that Saudi Arabia's road freight volumes will grow by 4.8% in 2015, slowing to 2.2% in 2016. If our 2015 forecast is borne out, 128.27mn tonnes will be transported on the country's roads by year-end. In 2016 we forecast that 131.11mn tonnes will be transported.
Rail freight will be the outperformer in terms of volume growth in Saudi Arabia in 2015, and over the length of our medium-term forecast period to 2019, as it benefits from massive investment. Although Saudi Arabia has had some limited rail services for some time, this has never been developed fully. Now, in common with the rest of the Gulf Cooperation Council (GCC) countries of the Arabian Peninsula, the kingdom is investing heavily in building an effective rail network. We forecast growth of 9.8% this year and 10.0% in 2016, which if realised would result in 5.00mn tonnes and 5.49mn tonnes being transported respectively in each year.
We forecast growth of 2.1% in Saudi Arabian air freight volumes in 2015. If realised this would see 1.04mn tonnes of air freight transported in the kingdom this year. Our 2015 growth forecast is insufficient to recoup the volumes lost in 2014, when Saudi Arabia's air freight volumes underwent a decline of 3.7% - in 2013, 1.06mn tonnes were handled. Lost volumes will be recouped in 2016, however, when we forecast growth of 5.3%, with volumes rising to 1.10mn tonnes. In terms of freight tonne/km, we forecast 3.4% this year and 3.5% in 2016. While the decline in volumes in 2014 is a blow to the Saudi air freight sector, it must be looked at in the context of the extraordinary growth experienced in recent years; 2011 growth in volumes was 13.1%, followed by a massive 58.7% in 2012.
We forecast total road freight volumes will rise by 4.8% in 2015 to reach 128.27mn tonnes. Growth will be 2.2% in 2016.
We forecast total rail freight volumes will rise by 9.8% in 2015 to reach 5.00mn tonnes. In 2016, growth will be 10.0%.
We forecast total air freight volumes will rise by 2.1% in 2015 to reach 1.04mn tonnes. Growth will be 5.3% in 2016.
We forecast total trade value to fall by 14.6% in nominal terms in 2015, to USD521.90bn.
The top trade partners will be China, the US, Japan, South Korea, India and Germany.