BMI's Executive Summary

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Although affected by another brief general strike in July 2007, Israel's freight sector continues to normalise after the disruptions caused by the invasion of Lebanon in July-August 2006. They included the effective closure of the country's main port at Haifa, and the diversion of cargoes to Ashdod. Trade disruption had ripple effects on manufacturing and small business across the north of Israel. There have also been doubts over the underlying efficiency of Israeli ports, even in normal times. The Federation of Israeli Chambers of Commerce at the beginning of 2007 published a study that said that the ports reform two years earlier did not bring about competition between the ports, and that labour relations at the Ashdod Port Company and Haifa Port Company were still the ports' Achilles Heel. In our latest Israel Freight Transport Report, BMI concludes that annual shipping traffic is now likely to grow at an average of 3.7% in the 2007-2011 forecast period.

Various factors support this prediction. We forecast that Israeli GDP growth will average 3.3% across the five-year forecast period (2007-2011). Of key importance is the performance of Zim Integrated Shipping Services (Zim) because sea freight is so dominant in the freight transport industry. Partly due to higher operating and fuel costs and the impact of strike action, the company's H107's profits were disappointing. Despite short-term difficulties, however, we believe Zim will get itself back on a recovery path during our forecast period.

In common with the entire Israeli economy, the freight transport industry's future depends on the resolution of the current long-tem struggle with the Palestinians. Withdrawal from the Gaza Strip was only a start towards normalisation of relations, and security risks will continue in the forecast period. After years of under-investment, the sector appears to be getting top-level support, despite continuing fiscal constraints. At the same time, the privatisation campaign and public-private partnerships are again being pursued, partly to bring in outside capital and partly to engender more competition.

Although our road-haulage projection is based on estimates, we nevertheless expect reasonable expansion, rising by an annual average of 4.0% per annum in 2007-2011. We believe freight carried by rail will grow by a lower annual average of 3.1%. Airfreight will expand by 3.5%, a relatively modest figure when compared to more general trends in global aviation markets. Israel scores above the regional average in the freight industry business environment ranking, with a composite score of 43. Its strengths lie in the regulatory and competitive environment and its transport infrastructure growth. Where it is weak relative to its peers is in actual freight growth and in the transport intensity index, a measure of the dynamism of foreign trade.

The total value of transport and communications GDP will rise to US$26.7bn in nominal terms by 2011, representing 12.5% of Israel's GDP. The transport and communications sector employed 477,000 people in 2007. We see this figure rising to 512,000 by 2011.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Freight Transport Industry SWOT

Economic SWOT

Chapter 3 - Business Environment Overview

Regional Overview

Table: Africa & Middle East (AME) Countries Freight Business Environment Ranking

Country Overview

Politics – Long-Term Risk

Economics – Long-Term Risk

Freight Transport Growth

Transport Infrastructure Growth

Regulatory Environment

Competitive Environment

Transport Intensity

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Legal Issues

Labour Force

Chapter 4 - Industry Trends And Developments

Road

Rail

Air

Sea

Pipelines

Chapter 5 - Macroeconomic Environment

Table: Economic Activity

Chapter 6 - Country Snapshot: Israel Demographic Data

Section 1: Population

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages Per Year

Chapter 7 - Industry Forecast

Transport Outlook

Table: Transport Industry Forecasts

Freight Turnover (Domestic And International):

Chapter 8 - Trade Environment

Overview

Free Trade Agreements

Free Trade Zones

Trade Policy

Foreign Investment Policy

Tax Regime

BMI Total value of imports (US$mn)

Table: Total Value Of Exports

Table: Top Export Destinations (US$mn)

Table: Export Trade (% y-o-y)

Table: Top Import Sources

Table: Import Trade (% y-o-y)

Chapter 9 - Market Overview

Multimodal

Competitive Landscape: Multimodal

Road

Infrastructure

Competitive Landscape: Road

Company Profiles

Rail

Infrastructure

Competitive Landscape: Rail

Company Profiles

Air

Infrastructure

Competitive Landscape: Aviation

Company Profiles

Water

Infrastructure

Competitive Landscape: Maritime

Company Profiles

Pipelines

Infrastructure

Competitive Landscape: Pipelines

Chapter 10 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Transport Industry

Sources

Chapter 11 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Middle East & Africa Freight Transport Reports: Sample of Companies Ranked

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Analysis of latest projects across the freight transport sector – road, rail, air, sea, logistics – including market overview which provides an outline of the key elements driving development. SWOT analysis of the state’s business environment, transport sector, politics and economics, which carefully evaluates the short- and medium-term issues facing the industry.

Network of Middle Eastern & African Freight Transport Sources

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BMI's Middle Eastern & African Freight Transport Reports are based on an extensive network of multilateral organisations, government departments, freight transport industry associations, chambers of commerce and company reports. Information sources include: