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Israel Freight Transport Report Q3 2008Published by: Business Monitor International Published: Aug. 18, 2008 - 61 Pages Table of Contents
AbstractAccording to local media reports in early July the Ministry of Finance was considering relaunching its efforts to privatise Israel’s ports. Officials were said to be planning a new approach to the trade union movement in the shape of Histradut (the General Federation of Labour) and port workers’ committees, to get agreement on bringing the divestment process forward by a year, so that it would start in 2009 rather than in 2010. The move followed calls for faster port privatization made by the Manufacturers’ Association of Israel and the Federation of Israeli Chambers of Commerce. The existing plan is for IPOs to float 15% of the shares in Haifa Port Company and Ashdod Port Co. in 2010, and with the proportion of shares in private hands to be progressively increased over the following decade, until it reaches 51% in 2020. In our latest Israel Freight Transport Report, BMI concludes that annual shipping traffic is now likely to grow at an average of 3.8% in the 2008-2012 forecast period.Various factors support this prediction. We forecast that Israeli GDP growth will average 3.2% across the five-year forecast period (2008-2012). Of key importance is the performance of Zim Integrated Shipping Services (Zim) because sea freight is so dominant in the freight transport industry. Partly due to higher operating and fuel costs and the impact of strike action, the company’s 2007 profits were disappointing. Despite short-term difficulties, however, we believe Zim will get itself back on a recovery path during our forecast period. In common with the entire Israeli economy, the freight transport industry’s future depends on the resolution of the current long-tem struggle with the Palestinians. Withdrawal from the Gaza Strip was only a start towards the eventual normalisation of relations, and security risks will continue in the forecast period. Israeli action to cut off the Gaza strip, and the breaching of the border with Egypt on the other side of the territory, show the issue remains as volatile as ever. Also, a precarious ‘calming’ agreement may hold back rocket attacks from Gaza and the consequent counter-strikes by Israeli forces. With tension with Iran rising, however, political risk factors remain high. After years of under-investment, the logistics sector appears to be getting more top-level support, despite continuing fiscal constraints. At the same time, the privatisation campaign and public-private partnerships are again being pursued, partly to bring in outside capital and partly to engender more competition. Although our road-haulage projection is based on estimates, we nevertheless expect reasonable expansion, rising by an annual average of 4.5% per annum in 2008-2012. We believe freight carried by rail will grow by a lower annual average of 3.5%. Air freight will expand by 4.1%, a relatively modest figure when compared to more general trends in global aviation markets. Israel scores above the regional average in the freight rating, with a composite score of 60.5 (out of 100). Its strengths lie in the regulatory and competitive environment and its transport infrastructure growth. Where it is weak relative to its peers is in actual freight growth and in the transport intensity index, a measure of the dynamism of foreign trade. The total value of transport and communications GDP will rise to US$35.7bn in nominal terms by 2012, representing 12.5% of Israel’s GDP. The transport and communications sector employed 471,000 people in 2007. We see this figure rising to 497,000 by 2012. Get Full Details About This Report >> |
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