A strengthening macroeconomic picture both domestically and regionally will boost growth in the Netherland's freight transport market. The country boasts a diversified freight transport sector which functions not only to meet domestic trade demand, but with Europe's largest port in its remit (the port of Rotterdam) also plays a role in the continent's transshipment and freight transit market.
In 2013 the Netherland's economy will start to expand once more having dipped into recession in 2012. BMI forecasts the start to a slow but steady recovery in Netherland's economy with an expansion of 0.2% in 2013 following an estimated retraction of 1.1% in 2012. Over the medium term (2013-2017) the macroeconomic outlook will continue to improve with BMI forecasting the country's real GDP to average an annual increase of 1.3%.
| Getting Back On Track |
|Netherlands and Eurozone Real GDP growth, % change y-o-y|
The macroeconomic picture from both Netherlands' export stand point and freight transit role is also looking up. The country's main export partners are fellow Eurozone members, with Germany, Belgium and France accounting for 26.2%, 14.1% and 9.3% respectively of Netherland's total exports. Netherland's freight transport sector has also developed to play a role in Europe's transhipment and transit market and so will also be aided by the uptick in the region's macroeconomic outlook. In 2013 we project the eurozone to pull itself out of recession after an estimated y-o-y contraction of 0.7% in 2012. In 2013 we project a slow recovery of 0.1%, with real GDP forecast to average 1.3% per annum over the medium term.
While a recovery is afoot we emphasise that this is a slow recovery outlook and so too is the growth outlook for Netherland's freight transport sector. This view is highlighted by our forecasts for the country's imports and exports. While projected to strengthen over the medium term, the country's imports (measured in real terms) will expand on average by 5.6%, with exports projected to increase by 2.5% per annum.
| Slow And Steady Pace |
|Netherland's Imports, Real Growth, % y-o-y and Netherland's Exports, Real Growth, % y-o-y|
The Netherlands is a well-developed freight transport sector, scoring high in terms of transport infrastructure, according to the Global Economic Forum, logistics, according to the World Bank's Logistics Performance Index (LPI) and is well connected in the container shipping sector, according to the World Bank's Liner Connectivity Index. Nevertheless, the sector does not offer the same level of growth opportunities as those on offer in some of the emerging markets that BMI covers. That is not to say opportunities don't exist and BMI pinpoints the country's inland waterway freight sector as one of particular interest over the medium term.
Dominates But Position In Decline
Road freight dominates the Netherlands' freight transport sector, as it does across most of Europe, with road haulage being the most flexible and available mode.
| Road Dominates, But More Diverse Than Most |
|2013f % Of The Netherlands Total Freight|
Road haulage operators in the country benefit from a well-developed road network, which stretches for 136,827km, of which 2,631km is expressway.
The Netherlands' main trade partners are also the country's neighbours, with Germany accounting for 26.2% of the country's exports and 14.5% of the country's imports and Belgium accounting for 8.6% of imports and 14.1% of exports, thereby making road, rail and inland waterways key to meeting the country's trade demands.
| Neighbourly Trade Partners |
|LHC: Netherland's Export Partners % of Total. RHC: Netherland's Import Partners % of Total|
As highlighted, although road freight dominates the Netherlands' freight transport mix, the country is one of the most diverse in terms of freight transport modal breakdown that BMI covers. Road freight accounts for a projected 59% of the country's total freight mix in 2013, with inland waterway and rail also taking a sizeable market share.
While we predict road freight to retain its dominate position over the medium term and for its growth to strengthen, with BMI forecasting road freight volumes to increase by 3.7% in 2013 up from an estimated growth of 3.4% in 2012 to 593.7mn tonnes, with the medium term growth levels to be 13.6% an annual average of 2.6% to reach 650.2mn tonnes in 2017, we believe that road-freight market share in Netherlands' freight mix will steadily decline.
This trend is already evident. In 2007 road freight accounted for 61.8% of the Netherland's total freight, in 2013 we estimate this to have dropped to 59.1% and by 2017 to decline to 58.7%.
| Steadily Slipping |
|Netherlands Road Freight % of Total|
The driver of this trend is an EU-wide push for the region to become less reliant on road haulage, thereby addressing issues of pollution and congestion.
The Netherlands already started off in a strong position, with a diverse freight transport sector, to adapt to the EU's strategy. The country is ensuring it places heavy emphasis on inland waterways and rail as it continues to develop its transport network. The country has gained financial backing from the EU to develop a multimodal container terminal at the port of Rotterdam. The terminal's role will be heavily developed toward the use of the country's inland waterways and rail to freight imported and exported containers via Rotterdam. A dedicated barge terminal, with a stacking capacity of 9,616 20-foot equivalent units (TEUs) is part of the project, as too is a dedicated rail terminal, which is projected to handle 246,750 TEUs.
The stated aim of the project is to 'reduce the road share of hinterland transport from the new Rotterdam World Gateway from 50% to 35% by 2016'.
In Line For A Larger Freight Role
As highlighted the Netherland's inland waterways are in a strong position to benefit from the country's push to decrease its use of road to meet its freight transport needs. This offers upside to our forecasts for freight volumes on the country's inland waterway network.
We currently project inland waterway freight volumes to strengthen in 2013 in line with our macroeconomic projections. Freight transported by the country's inland waterways is projected to increase by 3.8% in 2013 up from 3% in 2012 to reach a forecast 368.2mn tonnes. Over the medium term we forecast inland freight volumes to growth by 13.6%, an annual average of 2.6% to reach a projected 402.9mn tonnes in 2017. It is over the medium term that our forecasts will be exposed to risks to the upside.
BMI highlights that the Netherland's inland waterways already play a strong role in the country's freight transport mix, accounting for the second largest percentage of freight transport carried in the country.
The Netherlands freight transport sector benefits from its natural river network with the Rivers Waal and Maas crossing the country and offering connection options into the Netherland's neighbours and two largest export partners of Germany and Belgium. The country's inland waterways stretch for 6,214km, which are navigable for ships of 50 tonnes.
| Waterway Role Increasing |
|LHC: Netherland's Freight Breakdown % of Total. RHC: Netherland's Freight Breakdown % of Total.|
In line with our freight volume predictions for the country's inland waterway sector we highlight that the trend for the sector to play a larger role in the Netherland's freight mix will continue to expand. In 2007 the country's inland waterways accounted for 34.3% of the total freight carried. In 2013 we project this to rise to 36.7% of the total.
Stronger Growth Potential
Rail freight in the Netherlands, while playing a smaller role than the other two freight modes, is also set to witness growth on the back of the improving macro outlook and the diversification away from road freight.
We forecast rail freight to grow by 4.9% in 2013 up from an estimated 3.4% increase in 2012 to reach 42.5mn tonnes. Over the medium term we project rail freight volumes to grow by 32.2%, an annual average increase of 5.8% to reach 53.5mn tonnes in 2017.
Over this period rail freight, while remaining in third position in the freight mix, will witness a continued increase in its percentage in market share. In 2007 rail freight in the Netherlands accounted for 3.9%; by 2013 we project this to have increased to 4.2%; by 2017 we forecast rail freight to account for 4.8% of the total.
Netherlands and Neighbouring States' Railway Network Overview
| Country || Rail Gauge || Length Of Railway Network |
|Source: CIA World Factbook |
|Netherlands ||Standard Gauge ||2,896 km |
|Germany ||Standard Gauge ||41,722 km |
| ||Narrow Gauge ||220 km |
|Belgium ||Standard Gauge ||3,233 km |
BMI believes there is considerable potential for rail freight to expand its market share further and increase its growth outlook. While the country's railway network only stretches for 2,896km, it is well developed; 75.8% of the total network is electrified.
The Netherland's gauge system - standard gauge - matches that of its two neighbour and key trade partners, Germany and Belgium, thereby offering seamless transport options.
Hub Role To Drive Growth
A stronger growth outlook for the Netherland's air freight sector is on the cards as domestic factors, such as the macroeconomic climate, pick up and growth gets back on track in the regional and global air freight sector.
In 2013 we project air freight volumes to increase by 1.7% up from an estimated 0.2% in 2012 to reach 1.6mn tonnes. BMI highlights that there is downside risk to this short term forecast, as the 2012 figure is still an estimate. While the country's full-year air freight results haven't been released, data from the country's main air freight hub offers some indication. Amsterdam Airport Schiphol has reported that its cargo volumes stood at 380,284 tonnes in 2012, a year-on-year (y-o-y) decline of 2.5%, placing downside risk on our 2012 estimate and by extension our volumes forecasts for 2013 and the medium term.
As our forecasts currently stand, we project air freight levels to expand by 18.2% over the medium term, an annual average increase of 3.4% to reach a projected 1.9mn tonnes in 2017.
The country's main freight airport (Amsterdam Airport Schiphol) also plays a key role as a transshipment and transit hub and is one of Air France-KLM's main bases.
Port: Developing To Stay In Front
The port of Rotterdam, the Netherlands' premier maritime facility has retained and looks set to continue to retain its position as Europe's number-one port in terms of both total tonnage and container throughput.
The port has made steps to ensure it retains its position by showing it understands the current pressures faced by container lines. In 2013 the facility is cutting port dues even further, for the fourth year in a row, taking them below 2008 levels.
| Regional Leader |
|LHC: Top 10 European Ports By Tonnes (mn). RHC: Top 10 European Ports By Containers ('000 TEU)|
This will no doubt enable the firm to retain clients and attract more, lending support to our outlook of growth for the facility.
In 2013 we predict total tonnage volumes through the port to expand by 5.5%, up from a y-o-y increase of 1.6% in 2012, to reach 465.6mn tonnes. Container levels are forecast to return to growth, with a y-o-y increase of 6.2% a recovery from the 0.09% decline recorded in 2012, which will take port box volumes to 12.6%
Over the medium term we project total tonnage throughput volumes at the facility to expand by 30.4%, an annual average increase of 5.5% to reach 575.7mn tonnes in 2017. Container levels are forecast to grow by 43.7%, an annual average of 7.5% to reach a projected 17.1mn TEUs by the end of our medium term forecast period.
BMI highlights upside risk to this already-bullish throughput outlook with Rotterdam's Maasvlakte 2 project well underway. In 2014 both APM Terminals' (APMT) Maasvlakte 2 and Rotterdam World Gateway will open for business.
In order to stay ahead Rotterdam must ensure it adapts to shipping trends. The facility has a strong track record with this, the most recent example being the port's ability to play a role in the mega ship trend. The facility featured as a port of call for the largest launched-to-date container ship, CMA CGM's Marco Polo, which has a capacity of 16,500TEUs. The port is set to feature on the rotation of an even-bigger box ship, the Maersk Line Triple E-Type, which is due for launch in June 2013.
The port is now looking to keep pace with newer trends, with the facility among those investigating development as a hub for liquefied natural gas (LNG) bunker fuel.