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.
Road freight volumes are set to expand by 3.1% in 2015, to 582.56mn tonnes.
Air freight volumes will expand by 2.3% to 1.52mn tonnes.
2015 total trade real growth is forecast at 4.0%. In nominal terms, growth will decline by 3.4% to USD217.6bn.
We forecast real growth of 4.0% in South Africa's total trade in 2015, followed by a slight pick-up to 4.3% in 2015. This year this will be driven equally by imports and exports growth, both projected at 4.0%, while in 2016, exports will outpace imports, expanding by 4.5% while imports growth will remain at 4.0%. However, the real growth obscures the nominal picture, where we envisage a decline in South Africa's total trade levels in nominal terms. We forecast that trade will total USD217.6bn in 2015, following a decline of 3.4%. This would mark the fourth consecutive year that nominal trade in the country declines.
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 the sector will benefit hugely from transit volumes passing through the country from landlocked neighbouring states to South African ports. Domestically, there will be some impetus provided by the South African mining industry and demand for containerised consumer goods, and by parts for the autos industry, but the economic outlook in South Africa is generally fairly bleak at present, and risks to our road haulage forecasts are weighted to the downside.
In 2015, and into the long term, BMI expects that growth in the country's mining sector and investment in the rail network will translate into rail freight volume growth. However, we expect the expansion rate to remain low as growth in Chinese demand for South African commodities is expected to slow as a result of the China slowdown, and risks abound given the current industrial strife in the South African mining sector. In 2015 we expect that growth in rail freight tonnes will moderate to 0.9% from a 4.1% expansion in 2014. If realised this would see 225.48mn tonnes handled over the year. This will largely be driven by coal, although other minerals and, increasingly, containers, also contribute.
In 2015 we forecast growth of 2.0% in air freight tonnes-km in South Africa, and project that growth will remain relatively subdued over the medium term to 2019. In 2016 we forecast a 2.1% expansion, and project an average annual growth rate of 2.2% over our medium-term forecast period. The challenging outlook for the South African consumer - confidence is still fairly low despite the recent fall in oil prices, unemployment remains high, and the depreciating rand will limit import growth in consumer goods - will constrain growth in air freight volumes over the next several years. Some support will come from sectors such as mining, pharmaceuticals and agribusiness.