Market Report, "Peru Freight Transport Report Q2 2014", published

From: Fast Market Research, Inc.
Published: Wed Apr 30 2014

BMI maintains its broadly positive view on Peru's freight transport sector. While we expect real GDP growth to level off at around 5.0% during our forecast period, below its recent trend, significant mineral wealth, attractive investment opportunities at the sector level, and a growing consumer story underpin our view that Peru will remain one of the most dynamic economies in Latin America in the coming years.

Further upside comes from the recently announced plan to heavily invest in Peru's transport network, which BMI believes will help boost the country's freight transport volumes, through providing easier routes to market. However, we caution that perhaps the plan is overly ambitious, and might not quite hit the desired target by the scheduled date. According to Peru's transport and communications minister, Carlos Paredes Rodrigues, US$22bn is set to be invested in the Latin American country's transport and communications sectors by 2016.

On the downside, given our Asia Country Risk team's expectation that Chinese real GDP growth will trend lower in the coming years, as the economy rebalances away from an investment-led growth model to one in which private consumption plays a larger role, we anticipate that Peru will continue to be hit hard through the trade and investment channels due to weaker Chinese demand, lower average metals prices, and more moderate capital expenditure plans by major mining firms.

Full Report Details at

Headline Industry Data

* We expect growth of 4.3% in total tonnage throughput at the Port of Callao, to 21.2mn tonnes in 2014.
* We predict air freight volume to increase 5.2%, to 350,000 tonnes in 2014.
* We expect rail freight carried (volume x distance) to grow 3.3%, to 1.02mn tonnes-km in 2014.

Key Industry Trends

UN Court Rules On Maritime Border Dispute

The International Court of Justice, the highest UN court, has ruled on the bitter dispute over the Pacific maritime border between Peru and Chile. Redrawing the maritime border, judges at The Hague, Netherlands, awarded Peru approximately 20,000km2 of ocean waters.

Morales Calls For Discussions On Mega Port Project

Bolivian President Evo Morales has expressed the need to discuss a construction plan for the Ilo mega port with the President of Peru. Once constructed, the Peruvian port will reduce the time needed and distance covered when exporting to Western countries, said Morales.

Avianca Holdings 2013 Operating Profit up 37%

Avianca Holdings reported a 2013 operating profit of US$384.9mn, up 37% year-on-year, and an 8% rise in revenue to US$4.6bn. Avianca Holdings, which owns Taca Peru and Colombian freight carrier Avianca Cargo (formerly Tampa Cargo), said its 2013 EBITDAR (earnings before interest, taxes, depreciation, amortisation and rents) grew 25.8% y-o-y to US$828.2mn.

Key Risks To Outlook

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