New Report Available: China Freight Transport Report Q4 2013

China's economy appears to be finally buckling under the weight of its credit binge. Despite record new credit issuance in recent months, the manufacturing sector has once again entered contraction in line with our view. Efforts to reform and rebalance are too little too late to avoid the hangover effects of past stimulus measures, and we believe that a recession is at hand, with negative knock-on effects for the freight transport sector.

BMI is sticking with a below-consensus 2013 growth forecast of 7.5%. The main risk to our economic outlook remains another collapse in external demand, such as the one that occurred at the height of the global financial crisis. Despite current stability in the global economy, China is at risk from its huge trade imbalance with the US. The bilateral surplus that China runs with the US continues to balloon. Should we see a rise in the personal savings rate in the US, this could trigger a sharp drop in consumer goods imports, with negative implications for the country's freight transport sector.

Full Report Details at
- http://www.fastmr.com/prod/673223_china_freight_transport_report_q4_2013.aspx?afid=301

Headline Industry Data

* 2013 air freight tonnes/km is expected to grow by 2.5%.
* 2013 rail freight tonnes/km is forecast to contract by 2.5%.
* 2013 Port of Shanghai throughput is forecast to grow by 4.2%.
* 2013 road freight tonnes/km is forecast to grow by 10.5%.

Key Industry Trends

Chinese Air Carriers Seek High-End Cargo As Competition Grows

Chinese airlines are growing concerned about growing competition from road and rail freight. In July 2013 China posted its latest road network development plan for the period from 2013 to 2030 that aims at same day delivery for shipments moving a distance less than 1,000 kilometres. The initiative has put pressure on the air cargo industry in addition to China's railway sector, which is also focussing on express delivery. Chinese Rail Volumes Down 3%

The volume of freight carried on China's railways declined 2.8% year on year during the January-June period, official data showed. Chinese railroads transported 1.94bn tonnes of cargo in the first half of the year, down 55.07mn tonnes from the volume seen in the same period last year, according to statistics from China Railway Corporation.

Shenzhen Set To Overtake Hong Kong

A relatively strong start to 2013 has led BMI to revise up its container throughput forecast for China's second largest box port the port of Shenzhen. This strong start has been achieved despite a weakening in the global outlook, which Shenzhen, as China's second largest export hub for containers, is exposed to. The impact of the Pearl River Delta curse also appears to be subsiding, as the port aims to keep pace with the trend of manufacturing moving inland by offering rail connections.

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