BMI's Executive Summary

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Peru's impressive economic growth is benefiting the freight-transport industry, although the politics remains somewhat turbulent. A rash of strikes and protests in July briefly disrupted air and road traffic. More positively, mid-2007 also saw advances in the funding of the Peru liquefied natural gas (LNG) project, designed to liquefy and export natural gas. President Alan García, who took office in mid-2006, is focusing on three key freight-related priorities BMI's newly released Peru Freight Transport Report identifies the three as the construction of the inter-oceanic highway connecting Peru to Brazil, Pacific coast port development and the complex of natural gas pipelines and LNG facilities associated with ongoing development of the Camisea deposits. These three projects underpin BMI's view that Peruvian freight-transport turnover, measured in million-tonne-km (mntkm) will grow by an annual average of 7.8% in 2007-2011, ahead of annual GDP expansion of 5.2% in the same period. By value, the transport and communications sector will grow to be worth US$2.95bn in 2011, representing 9.7% of total GDP.

The new president faces demands to make Peru more socially inclusive. A particular problem is posed by conditions in the impoverished Quechua-speaking south of the country. It is here that accelerating the construction of the inter-oceanic highway, intended to give Brazilian exporters an outlet to the Pacific, could help boost regional development and raise living standards. Work on the highway, valued at over US$1bn, began in mid-2005. Port development is another potentially critical element in future policy. The outgoing administration of President Alejandro Toledo finally signed a 30-year concession for the operation of Peru's main port at Callao. In a US$617mn deal, the port is being run by Dubai Ports World (DPW) and local partners; encouragingly the new operator plans to cut port charges, allowing Callao to compete more effectively with Chilean and Ecuadorean Pacific coast rivals. Finally, despite a series of controversies over its impact on the environment and on the rights of Indian communities, the massive Camisea natural gas project is another development pole. Significant new Camisea deals were signed this year with Suez Energy of France, Petrobras, and Chicago Bridge & Iron Co. Success depends on building effective pipelines (first-phase pipelines have leaked with alarming frequency) and a modern LNG coastal terminal, to facilitate exports by sea to Mexico and the US.

BMI's view is that freight transport has a critical role to play in Peru's development over the next few years. Much will depend not only on the management of concrete projects, but also on the quality of the business environment in this sector. BMI gives Peru a score of 42 (out of 70) in its freight transport business environment, placing it just above average among its peers (38.9), behind Mexico and Brazil. There is room for improvement in infrastructure development and the regulatory environment. Among the risks facing our forecasts are political uncertainty (though much reduced after the recent elections) and the possibility of a fall in the price of Peru's commodity exports, leading to downward revision of predicted growth rates.

On balance then, and despite the possibility of turbulence in the airfreight sector (traditionally volatile in recent Peruvian experience) and slower growth in rail freight, BMI is projecting an encouraging future for the country's freight sector.

Competitive Landscape for Latin America 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 Latin American Freight Transport Sources

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BMI's Latin American 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: