The rail freight sector is going to lead the way in terms of Bulgaria’s year-on-year (y-o-y) growth prospects by sector, increasing by an impressive 7.78% in 2012 to average 7.21% average annual growth over our forecast period to 2016. The Port of Varna is set to enjoy steady growth during 2012, while road and air will bring up the rear. Although industrial action affected the rail sector in 2011, the proposed privatisation of BDZ Cargo presents an opportunity for the sector with DB Schenker and Rail Cargo Austria showing an interest.
Bulgaria Freight Transport Market Report 2012
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A project overseen by Bulgaria’s transport ministry and the Bulgarian Ports Infrastructure Company, BULRIS, is aimed at making better use of the Danube to meet the country’s freight transport requirements. The project will offer data exchange between 16 stations along the Bulgarian section of the Danube, which will enable it to connect to the information services for river navigation within the EU. BULRIS is due to become operational by the end of 2013.
BMI has revised our forecast for Bulgaria’s current account to reach a surplus of 1.0% GDP surplus in 2011, from a 1.0% deficit in 2010, before returning to a 1.1% deficit in 2012. The strong export performance in H111 underpins our revisions, while our expectation for domestic demand to recover in 2012 leads us to forecast a wider deficit on the merchandise goods account. We caution that in the event of a more severe deterioration in the eurozone debt crisis, Bulgaria’s financing position could questioned.
Headline Industry Data
.. 2012 port of Varna tonnage throughput forecast to grow 4.0% to 8.55mn tonnes.
.. 2012 port of Varna container throughput forecast to increase 5.32% to reach 132,346TEUs.
.. 2012 total trade growth forecast to rise 4.32% to US$69.60bn.
.. 2012 air tonnage throughput forecast to increase 2.36% to reach 21,940 tonnes.
.. 2012 rail tonnage throughput forecast to rise 7.78% to hit 15.09mn tonnes.
.. 2012 road tonnage throughput forecast to grow 3.52% to 152.61mn tonnes.
Key Industry Trends
Strikes Pose Downside Risk To Rail Freight Recovery
Volatility in the Bulgarian rail freight sector looks likely to dampen BMI’s bullish outlook for volume growth in 2011. The privatisation of BDZ Cargo, however, still appears set to go ahead and we doubt that industrial action will dampen interest in the sale of the rail freight unit, especially as it has joined the European intermodal freight club, with the launch of an intermodal transport terminal in Sofia.
Strong Growth Puts Varna On Course To Meet BMI’s 2011 Throughput Forecast
By September 2011 the Port of Varna was on course to achieve our throughput estimate for the year, after reporting strong growth in tonnage and container throughput, as well as a record-breaking August in terms of cargo turnover. BMI cautions, however, that although tonnage volumes have fully recovered from the downturn, Varna’s box throughput has some way to go before returning to pre-downturn throughput volumes.
BDZ To Be Privatised In 2012
Bulgaria’s transport minister, Ivaylo Moskovski, announced in August 2011 that the planned privatisation of the freight unit of financially-troubled Bulgarian state-owned rail operator BDZ Holding could be completed within six months.
Risks To Outlook
On the upside, the long-awaited and much-needed privatisation of BDZ will hopefully provide a boon to the Bulgarian rail sector. However, against the backdrop of souring global growth, risks to our fiscal forecasts in Bulgaria are skewed to the downside. On the revenues side, there is a high potential that the labour market does not recover as strongly as we are forecasting, which would result in lower tax revenues for the government. In the event of a more prolonged global downturn, we would expect tax revenues from businesses and exports to come in lower than we currently forecast.
In global terms, container lines will no doubt be looking to force rates up in 2012, as operators face a year of losses in 2011 after sustained declines in rates on the major trade routes, brought about by overcapacity. BMI warns that carriers will face an uphill struggle in 2012, as overcapacity is set to remain an issue and could become more acute with the slowing global growth outlook.
Overcapacity is set to continue to haunt the box shipping sector in the medium term. While BMI notes that the industry is well practised in dealing with this threat, after facing faced varying degrees of the problem for the last three years, we fear that as demand slows, and new and larger vessels come online, the problem of overcapacity will become more acute and could lead to prolonged periods of oversupply, and by extension, low rates.
In terms of political risk we expect 2012 to pose significant challenges to the government of Bulgaria, in particular to the ruling party GERB. The party will likely face high public discontent after its failure to tangibly reduce corruption and gain entry to the Schengen visa-free travel zone, two key pillars of its election platform. Moreover, the deteriorating economic environment and rising ethnic tensions will further compound challenges facing the government. However, due to weak opposition, we do not see GERB’s power coming under serious threat in 2012, at this juncture.
- Executive Summary
- SWOT Analysis
- Bulgaria Freight Transport Industry SWOT
- Bulgaria Political SWOT
- Bulgaria Economic SWOT
- Bulgaria Business Environment SWOT
- Industry Trends And Developments
- Road
- Rail
- Maritime
- Market Overview
- Global Oil Products Price Outlook
- Industry Forecast
- Air Freight
- Table: Air Freight, 2008-2016
- Maritime Freight
- Table: Maritime Freight – Port Of Varna, 2008-2016
- Rail Freight
- Table: Rail Freight,2008-2016
- Road Freight
- Table: Road Freight, 2008-2016
- Inland Waterway Freight
- Table: Inland Waterway Freight, 2008-2016
- Trade
- Table: Trade Overview
- Table: Key Trade Indicators, 2008-2016 (US$mn and % change y-o-y)
- Table: Bulgaria’s Main Import Partners, 2002-2009 (US$mn)
- Table: Bulgaria’s Main Export Partners, 2002-2009 (US$mn)
- Political Outlook
- Macroeconomic Outlook
- Company Profiles
- Navibulgar
- DB Schenker Bulgaria
- BDZ Cargo
- Country Snapshot: Bulgaria Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2002-2005
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Wages, 2000-2012
- BMI Methodology
- How We Generate Our Industry Forecasts
- Transport Industry
- Sources