Netherlands Freight Transport Report Q3 2012

BMI View: Downside Risks Increase We maintain our 2012 forecast for Netherlands GDP, which we expect to contract by 0.3%, dragged down by the wider sovereign debt and consumer confidence troubles affecting the eurozone. While the GDP number stays the same, it is clear that the eurozone crisis is becoming increasingly more serious, with a potential Greek exit from the Euro capable of triggering a contagion 'chain reaction' across various member countries. Domestic political risks have also increased, with the centre-right coalition government breaking up and the Netherlands under an interim administration until elections are held in September 2012. To summarise, the downside risks to our freight sector forecast have increased.

As a result, we have begun pegging back some of our mode-specific freight forecasts, with some of our air freight, ports, rail, and inland waterway predictions scaled back. The only freight mode that remains unchanged is road haulage, but we had in any case already brought that down to less than 1% expansion.

What we are seeing is two combined effects: lower freight growth due to the local economy having sunk back into recession; and lower freight growth due to falling demand, with the Netherlands acting as a 'gateway' to North East Europe and the whole region experiencing slower growth or outright recession.

Headline Industry Data Port of Rotterdam bulk throughput forecast for 2012: growth of 1.0% to 438.946mn tonnes. Container traffic to contract by 4.0% to 11.402mn twenty-foot equivalent units (TEUs).

2012 Port of Amsterdam bulk throughput forecast to grow 1.2% to 75.615mn tonnes. Container traffic to grow by 3.0% to 49.979TEUs.

2012 rail freight total tonnage volume growth reduced to 2.6% to reach 38.362mn tonnes. 2012 total trade growth forecast cut back to 2.8% in real terms, down from 3.0% in 2011. Export growth remains sluggish, at 2.5%, according to both 2011 estimates and 2012 forecasts.

Key Industry Trends UPS Takeover Of TNT Moving Forward US logistics company UPS has secured funding for its proposed takeover of Dutch logistics company TNT Express. The agreed price per share values TNT at EUR5.16bn (US$6.56bn). The company operates road and air transport networks globally, with employees totalling 77,000. The company's 2011 revenues stood at US$9.51bn. However, TNT Express reported a slowing in Asia-Europe volumes for Q112, but its Asia Pacific operations improved due to cost cutting and strong performances in Australia and Brazil.

Air Freight Volume Contracts at Schiphol Airport Schiphol registered a 3% year-on-year (y-o-y) fall in cargo volume to 358,220 tonnes in Q112. However, in the same period, the airport posted a 53% y-o-y rise in European imports and exports, thereby offsetting a 15% y-o-y drop in Asian freight traffic. The airport also reported growth in freight traffic from Latin America and the Middle East. In terms of both passengers and freight handled, Schiphol Airport is the fourth-largest in Europe after London, Paris and Frankfurt. Schiphol handles both the traditional and the new, low-cost carriers.

Euro Recession Hits Rotterdam Box Traffic Europe's second- and third-largest ports, Hamburg and Antwerp (which are part of Europe's northern seaport range and feature as ports of call on the Asia-Europe and transatlantic trade routes), both recorded a slowing in container throughput growth in Q112. The German port of Hamburg's box volumes slowed from a y-o-y growth of 18.2% in Q111 to a y-o-y increase of 5.2% in Q112. In Belgium, the Port of Antwerp's y-o-y box throughput slowed from 7.9% in Q111 to just 0.7% in Q112. Worryingly, the Dutch Port of Rotterdam, Europe's largest container facility, posted a y-o-y decline in container throughput in Q112, with box volumes decreasing by 3.9%.

Key Risks To Outlook The main downside risk continues to be the eurozone crisis. After inconclusive Greek elections in May 2012, a new round has been called for the following month, with markets fearing that a Greek exit from the single currency, possibly coupled with a debt default, cannot be ruled out. Timing could well be crucial for the Netherlands, which faces general elections in September 2012. One possible high-risk scenario is that the Greek and wider eurozone crisis could come to a head before a new Dutch government is in place, meaning that critical decisions may need to be taken by an interim administration.

Although BMI notes that the crisis may ultimately be contained without a break-up of the eurozone, it remains possible that the associated downturn will be deeper than we expect, with negative knock-on effects for the freight industry.