[EN-BIZ] Study Finds Cargo Infrastructure Key to Egyptian Growth

EGYPT's economic growth can be maintained, or even increased by up to two per cent a year, if steps are taken to upgrade transport, storage and logistics infrastructure, according to new research.

Egypt's logistics costs are 20 per cent of GDP compared to 10-12 per cent in developed economies, explained the Frost & Sullivan study, commissioned by Singapore's NOL and its units APL and APL Logistics.

Cutting that down "would help attract foreign direct investment (FDI) and make Egypt a more attractive manufacturing location as well as an international hub for shipping and logistics", said Frost & Sullivan consultant VG Ramakrishnan.

The study, Connecting Egypt: Challenges and Opportunities in Freight Transportation and Logistics, said "growth of bilateral trade and transshipment traffic present major opportunities for Egypt's shipping companies."

But the country's shipping fleet handles less than five per cent of its waterborne trade. The study also called on the country's ports to accelerate productivity and expand port capacity by 30 million tons to meet an expected demand of 274 million tons a year by 2025.

"Egypt has the potential to take a place among the world's leading containerised transshipment hubs, particularly for Europe. Of total container traffic of around 5.4 million TEU in 2008, more than 65 per cent was transit cargo.

Moreover, while the recession contributed to a 22.4 per cent decrease in Egypt's exports in 2008, transshipment traffic recorded double-digit growth." Roads are expected to be the main way freight moves.

They currently handle 80 per cent, prompting the study to call for more investment and development in highways. But the report also urged Egypt to look at "rail over road in terms of reliability, safety and profitability".

Looking at Egyptian inland waterways, the report noted that the Nile River has the "potential to offer low-cost, efficient, environment-friendly freight transportation, which could take pressure off the country's congested roads" as barges are also able to carry far more cargo than trucks and more cheaply than road or rail".

The report added that Egypt's economic growth has exposed areas requiring attention, highlighting its lack of "quality storage and handling facilities offering value-added services has in some cases required international manufacturers to create their own facilities".

Source : HKSG, 15.10.09