BMI View : Our forecasts for the South African freight transport sector are positive across all modes in 2015 - air, road, rail, and through the country's ports. The economy will see a partial recovery from 2014's anaemic growth of 1.4%, and we forecast a real expansion of 1.9% this year and in 2016. That said, growth in freight volumes will not be particularly robust, and there are significant downside risks to our projections, not least from the mining sector and a potential hard landing in China. South Africa's freight transport sector is driven primarily by two forces: private consumption and the mining sector. Manufacturing industries play a limited role in the intermodal transport of containers, but this is primarily driven by imports. Automotives production necessitates the transport of spare and intermediate parts.
Headline Industry Data
Rail freight growth will be 0.9% in 2015, to 225.48mn tonnes. In 2016, growth will be 3.1%.
Road freight volumes are set to expand by 3.1% in 2015, to 582.56mn tonnes. Growth will be 4.6% in 2016.
Air freight volumes will expand by 2.3% to 1.54mn tonnes. Growth will be 2.3% in 2016.
2015 total trade real growth is forecast at 4.0%. In nominal terms, growth will decline by 3.4% to USD217.6bn. Nominal growth will return in 2016 at 6.3%, with trade value rising to USD226.2bn.
Real growth in trade will be positive in South Africa in 2015, belying the decline in nominal values. Total nominal trade will return to growth in 2016 after four consecutive years of contraction, although risks are to the downside. Economic challenges domestically could hamper trade growth, impacting upon the freight transport sector, but South Africa's freight transport network will benefit from regional transit trade from hinterland countries.
We forecast relatively downbeat growth in South African road haulage volumes in 2015 and 2016, and risks are weighted to the downside. Fuel shortages and depreciation of the local currency will offset the benefit of lower global oil prices. Domestic macroeconomic challenges will impede growth, although hinterland transit demand will provide some support. We forecast a 3.1% expansion in South Africa's road haulage volumes in 2015, rising to 4.6% in 2016. Our slower rate of growth in 2015 is in large part predicated on statistical base effects following the robust expansion of 6.5% in 2014. If our growth forecasts are realised, 582.56mn tonnes will be transported on the country's roads in 2015 and 609.30mn tonnes next year.
We expect that growth in South African rail freight volumes will remain positive in 2015 and 2016, and over the course of our medium-term forecast period. New coal projects and improved infrastructure will outweigh rising risks from a China slowdown. We expect that demand for South African coal and other minerals will remain buoyant, although it is important to be cognisant of the rising risks from the East.
The outlook for the South African economy - and the consumer in particular - is looking shaky at present, and this will weigh on demand for high-end imported goods freighted by air. The sector will have to look to exports to support volume growth, which will be driven by pharmaceuticals and seasonal fruit exports. Ongoing investment in infrastructure will support growth. In 2015 we forecast growth of 2.3% in air freight in South Africa, and project that growth will remain relatively subdued over the medium term to 2019. In 2016 we forecast a 2.2% expansion, and project an average annual growth rate of 2.4% over our medium-term forecast period.