Czech Republic Freight Transport Report Q3 2012

Following a year in which BMI believes the recovery began in Czech Republic's main freight mode – road freight – and increasing volumes in all other freight modes, 2012 will signal further growth across the whole freight transport sector.

Total trade is projected to pick up with our Country Risk desk forecasting a year-on-year (y-o-y) increase of 1.69% in 2012, following a growth of 9.3% in 2011.

Road freight should continue to dominate the sector and is projected to grow by 1% in 2012. The sector did not manage to defy the downturn and so far appears to have defied EU pledges of a decrease in road haulage across the region; that is not to say, however, that road freight's market share is safe. BMI notes that rail is the likeliest candidate in the Czech Republic's freight transport mix to benefit from any diversification away from road.

Headline Industry Data

2012 Air freight tonnage is expected to grow by 1.1%.

2012 Rail freight is forecast to grow by 2.1%.

2012 Road freight is forecast to grow by 1.03%.

2012 Inland waterway freight is forecast to grow by 2.1%.

2012 Total real trade growth is forecast at 1.7%. Key Industry Trends HHLA Expands Czech Republic Operations Metrans, a rail subsidiary of Hamburger Hafen und Logistik AG (HHLA), is boosting its Central and Eastern European transport network by constructing an additional terminal in the Czech Republic. The facility in Ceská Trebová will be the second rail container freight hub in the country and is planned to supplement the existing terminal in Prague. Self-Employed Drivers Case Could Be Referred To ECJ The Czech Republic could be referred to the European Court of Justice over its regulation of selfemployed drivers. It is one of seven countries (others include Austria, Finland, France, Poland, Portugal and Spain) that according to the European Commission (EC) failed to apply the Working Time Directive to self-employed drivers. The EC could refer their cases to the European Court of Justice if the countries do not comply with the directive.

Raben Mergers Czech Republic Logistics Assets Raben Group reported that it has completed the process of joining together its Czech companies after the merger of Raben Logistics Czech and Raben Trans European Czech (known as Wincanton Czech Republic before it was acquired by Raben). From May 2012 the merged company operates under the name Raben Logistics Czech. Elbe Navigation To Be Enhanced The building of two locks - at Decín and Prelouc - will be undertaken in a bid to improve navigation on the Czech Republic's waterways.

Risks to Outlook A more pronounced slowdown in eurozone growth than BMI currently forecasts, creates considerable downside risks to our forecasts for Czech Republic's freight transport growth. The country and the sector rely heavily on the external market for growth, particularly while government expenditure is dragged down by fiscal austerity and as consumers struggle to bounce back from the global recession.

BMI's country risk team has so far downgraded our 2012 real GDP growth forecast for Czech Republic to 0.1% from 0.8% previously. The country's reliance on trade and investment with Germany will filter down from slackening export demand to decreasing the Czech Republic's demand for imports, in turn affecting country's freight transport outlook.

Should oil prices remain at elevated levels or experience a significant increase during 2012, a number of our forecasts for the Czech economy would likely be put under review, including our forecasts for economic growth and consumer price inflation further affecting the outlook for freight transport.