Following a year in which BMI believes saw mixed trends in different freight modes, 2014 will signal slow to moderate growth across all freight modes.
Total trade is projected to pick up with our Country Risk desk forecasting a y-o-y increase of 6.15% in 2014 following an estimated growth of 7.15% in 2013.
Road freight is to grow at a highest pace, with 7% increase predicted, although rail freight is to continue to dominate the sector and is projected to grow by 1% in 2014. The sector did not manage to defy the downturn but quickly recovered its pre-2009 freight volumes, only to lose a quarter of them in 2012. However, it will be boosted by a large number of railway infrastructure upgrades.
The country finally found strategic partner for the national airline and rebranded Jat Airways as Air Serbia.
Headline Industry Data
2014 Air freight tonnage is expected to grow by 2.2%
2014 Rail freight is forecast to grow by 1.4%
2014 Road freight is forecast to grow by 7.4%
2014 Inland waterway freight is forecast to grow by 1.5%
2014 Total real trade growth is forecast at 6.2%.
Key Industry Trends
Russia to Modernise Serbia's Rail Infrastructure : Russian Railways (RZD) via its subsidiary Russian Railways International will build new and reconstruct existing railway infrastructure in Serbia and will also supply diesel trains for Serbian Railways. The respective contract was signed by Russian Railways International and Serbian Railways top executives in Serbia's capital Belgrade in May 2013. All infrastructure works are expected to be completed within five years.
Jat Links-Up with Etihad, Gets Rebranded : The new Serbian national carrier was officially launched on October 25 2013. Air Serbia is the product of rebranding Jat Airways after 49% of the latter was sold to Etihad Airways. Apart from new name and link-up with Etihad, Serbia's carrier also boasts new aircraft, new routes and will receive further investment.
New Serbia-Hungary Road Border Crossing Opened : Serbia and Hungary formally opened a new border crossing in May 2103, which becomes their eighth in total and sixth road border crossing.
Navigation along the Danube Improved : Serbia announced the completion of the EU-funded River Information System on the Danube project. The EU provided EUR$11mn through the Instrument for Pre-Accession Assistance (IPA) funds for the system allowing faster and safer navigation on the Danube. This project leads to improved control over the navigation along almost 600km of the Danube and 200km of the Sava River in Serbia.
DB Schenker Logistics Enhances Its Presence in Serbia : DB Schenker Logistics has extended its operations in Serbia with the opening of a new warehouse in Kragujevac at the start of 2013. The facility, which is located 7km from the Fiat plant, has been designed to offer logistics services particularly to the suppliers of the Fiat car manufacturing plant.
Risks t o Outlook
BMI highlights freight modes exposed to the transport of containers as the forecast areas which have moderate risk to the upside as it is these modes of transport which will benefit from the increase of container volumes on the back of a possible strengthening of the consumer base within Serbia. However, with high unemployment weighing on consumer confidence and elevated inflation of 7.2% eroding consumer purchasing power, private spending in Serbia remains under pressure, and BMI Country Risk team only expects a gradual recovery in consumer spending.
Serbia's main driver of growth remains the export sector, specifically manufactured and agricultural products. We expect Serbia to enjoy a modest economic recovery over 2013, forecasting real GDP growth to accelerate from -1.8% in 2012 to 1.3% in 2013. 2014 real GDP growth is forecast at 2.4%. A significant slowdown in external demand would present a risk to the downside to our economic growth and freight forecasts for Serbia.