Australia Freight Transport Report Q1 2014 - New Report Available

We expect to see a deterioration in the outlook for Australia's fiscal balances under the new government, given the Liberal-National coalition's enthusiasm to go ahead with proposed infrastructure plans, despite increasing signs of a pick-up in the economy. Indeed, Treasurer Joe Hockey's recent proposal to account separately for debt used to fund infrastructure further points to the coalition's declining keenness to pursue fiscal discipline. Given the lack of structural reforms on the cards, we have downgraded our outlook for the country's fiscal accounts, expecting the deficit for fiscal year 2014/15 (July-June) to widen to 1.9% of GDP, versus our previous forecast of 1.4%.

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Australia's goods and services trade surplus came to US$541.2mn in June 2013, according to the Journal of Commerce. The sum represents a month-on-month (m-o-m) increase of 19%. In seasonally adjusted terms, exports of goods and services dropped by 1% m-o-m, falling to US$23.6bn, while imports of goods and services dropped by 2% m-o-m, dropping to US$23bn. The value of non-monetary gold fell by 20% m-o-m, coming in at US$255.3mn.

In other news sure to have a knock-on effect on the Australian freight industry, China has demanded that Australia should relax the restrictions imposed on foreign investment, introduce a working holiday scheme for Chinese citizens as well as ensure a streamlined entry for its business people. Under a free-trade deal, Australia is demanding better access for farmers along with better access to invest in China's financial, banking, legal, education and environmental services industries. Australia is believed to get a better deal on beef and dairy, with China relaxing restrictions on dairy imports owing to milk contamination scandals. However, the outlook is not bright for other commodities, such as rice and sugar, which China is aiming to protect from competition.

The Australian freight mix continues to be witnessing something of a lull at present, with our forecasts suggesting that the air and road freight sectors will only just manage to nudge over 1% annual tonnage growth in 2014, following a less than sparkling 2013. The rail freight sector is set to perform even worse, with year-on-year (y-o-y) growth expected to come in at just 0.97%. The Port of Melbourne will be the outperformer in terms of y-o-y growth in 2014, with our forecasts anticipating growth of 3.10%.

Headline Industry Data

* 2014 air freight tonnage is expected to grow by 1.16%.
* 2014 rail freight tonnage is forecast to grow by 0.97%.
* 2014 Port of Melbourne tonnage throughput is forecast to increase by 3.10%.
* 2014 Port of Sydney tonnage throughput is forecast to grow by 1.31%.
* 2014 road freight is forecast to increase by 1.14%.
* 2014 total real trade growth is forecast to grow by 2.95%.

Key Industry Trends

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