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Now  the second half of 2010 it was sure that the slow recovery experienced by Argentina's shipping and ports industry was not risk-free. The threat of a blanket strike by one of Argentina's major grain worker unions in mid-June was the latest controversy facing the sector as it sought to regain momentum after 2009's downturn. Ports had been hit by a series of disputes over the preceding months, making Argentina one of the most volatile spots for freight transport operations in the Latin America region. Workers were threatening to block shipments of grains and oilseeds at export facilities unless their wage demands were met. According to the union, wages have failed to keep track with the recent surge in sales made by Argentine exporters on the back of 2009/10's bumper grains harvest. Argentina has emerged as a trouble spot from a freight transport/shipping perspective, owing to an increasing number of disruptions to port throughput, road haulage and other areas of the supply chain.

 

While the current economic recovery, bigger agricultural harvests and rising LNG tanker demand are positives, the road ahead contains many uncertainties. Since the difficulties of last year, the government of President Cristina Fernández has regained some of its lost popularity through deficit spending, but the money will eventually run out and a necessarily painful fiscal tightening cannot be postponed forever. Analysts believe the crunch moment may come either just before or just after the 2011 presidential elections. After a sharp deceleration in GDP growth last year to 1.0%, this year we predict a recovery of 4.3%, falling to 2.3% growth in 2011. However, we believes that the average annual growth rate over the next five years will be a disappointing 2.0%. To this rather sombre outlook must be added quite high levels of political risk, with high inflation fuelling industrial unrest and potential protests as the election campaign begins to take shape.

 

After slumping by 32.5% in 2009, this year we are predicting that tonnage volume at the Port of Buenos Aires will edge upwards by 3.7% to 8.915mn tonnes. In the medium term, we see moderate growth, averaging 4.7% to 2014 - this will, however, be twice the rate of growth of the Argentine economy. At the Port of Bahia Blanca (POBB), the tonnage downturn was spread over two years (2008 and 2009) and was less severe than in Buenos Aires. But the recovery here too will be a rather tepid affair, with tonnage set to grow by 2.9% this year to 11.304mn tonnes, and average annual growth between 2010 and 2014 projected at 3.2%.

 

In the container sector, we predict Buenos Aires container movements to rise by 3.4% to 940,252 TEUs, and to achieve average annual growth of 4.6%, between 2010 and 2014. At Bahia Blanca, container handling has grown steadily in the last few years from a very low base and there was no 2009 downturn. This year, we are predicting a 46.4% surge to 67,121 TEUs. Thereafter, however, medium-term average annual growth should stabilise in the high single percentage figures. Including 2010, the five-year average will be 16.0%.

 

Argentina's total trade (imports + exports) fell by 13.3% in 2009, with imports dropping proportionately by the greatest amount. This year, we see a modest recovery, with the combined total up by 3.6%. In the medium term to 2014, exports will grow by 5.0% per annum, imports will lag a little with growth of 4.2%, and the average for all trade will be 4.6%, lower than what has been experienced in recent years. The risks to our Argentina shipping and port projections are on the downside. The main risk is that the current government's pre-election 'borrow and spend' strategy will come unstuck, unleashing a financial crisis at some point before next year's presidential elections; such a crisis would inevitably lead to lower growth or an outright 'double dip' recession which would hit trade and freight demand.