Agenda Item 8.4: Trade and the crisisInfrastructure: Recent developments and outlook for traffic flows and capacities

Global Infrastructure Needs 2030/50

A project of the OECD International Futures Programme

Infrastructures Project

• Phase 1: Surface transport, water, electricity, telecommunications (completed 2007)

• Phase 2: Transcontinental infrastructures : ports, airports, rail corridors, oil and gas pipelines (on-going)

• Three time horizons: Short-term 2015; Medium-term projections 2030; Long-term scenarios 2050

Transcontinental Infrastructures

Short Term Outlook to 2015

John White and Barrie Stevens Advisory Unit to the Secretary-General

Current Situation and Outlook to 2015

• Financial and credit crisis – surprisingly sharp impacts on GDP growth, trade and transport demand in 2008-09

• The subsequent recession has been the most severe for decades – and different from previous downturns

• Recovery is underway - but the pace of recovery

uneven

• The Outlook to 2015 is still relatively uncertain – different trajectories in OECD and non-OECD

countries

World Economic Trends – and expected rebound

• Deep contraction in advanced economies in 2008-09

• Global recession expected to end in 2009

• Subdued recovery ahead for countries most affected

• Return to strong growth in emerging economies - 2010 onwards

Source: IMF October 2009

World GDP - % change

World GDP and International Trade Growth

Trade growth - historically 2 or more times GDP growth

Forecasts anticipate substantial trade rebound and growth from 2010 onwards

Impacts on traffic volumes, especially freight and energy

Overview of recent forecasts and projections

Aviation Outlook - Passenger Forecasts to 2013

Source: Airports Council International, August 2009

Strong air passenger growth to 2013 - growth above av. long term rate (4.7% p.a.)

Aviation Outlook - Air freight forecasts to 2014

World air cargo – forecast annual growth rates (%)

Source: Airports Council International Aug 2009

Projected Air Freight growth well above av. annual rate of 3.8% p.a. (1999-2008)

Maritime Outlook – Forecast growth in Container Port Handling to 2014

Source: Drewry, Oct 2009

World Container Port Handling - annual growth rates (%)

Recovery from 2009 fall – but container growth rates below previous trends (>10% pa)

Rail Outlook– Forecast Rail Freight Carriage 2015

Source: Infrastructure to 2030 report

Rail Freight carriage index levels – 2000 and 2015

Strong rail freight growth expected in many places – particularly China and India

Oil outlook – forecast growth in primary demand - 2000 and 2015

Source: IEA World Energy Outlook 2009 (Nov.2009)

Non-OECD regions – especially Asia and the Middle-East - account for all oil growth

Gas outlook – forecast growth in primary demand 2000 to 2015

Source: IEA World Energy Outlook 2009

Gas ‘glut’ with demand -3% in 2009 – but demand to grow 2.5% pa from 2010-2015

Impact on capacities

Aviation Outlook – Capacity Shortfall in Europe?

Source: Infrastructure to 2030 report

1. ACI 2008: Before the downturn, 93 airports (with 2/3 of world traffic) were already capacity constrained. In EU, over 60 airports not able to meet demand by 2015

2. Schipol [Director, A/P Development], Oct. 2009. There is ‘no airport capacity crunch in Europe’…..

Maritime – Container Flows and Port Capacity

Port Capacity Assessments

1. ESCAP, 2007: Substantial new capacity will be required in all major regions over period to 2015. ESCAP region will dominate the requirements for new berths during this period.

2. Drewry, Oct. 2009: Many ports have invested heavily in new terminals based on surge of post - Panamax tonnage. Neither the ships nor terminals are needed for several years.

Outlook – GDP growth vs World trade & transport(IMF October 2009)

IMF 2009: World Trade / Income Drewry, Oct 2009. GDP/container trade

• The ‘GDP to container’ trade multiple has typically been well in excess of 2.0

• Unlikely western govern-ments / consumers can fuel similar growth in future - serving to reduce the rate at which container trade growth can exceed global economic activity.

Source: IMF WEO 2009

Europe: Rail Outlook – Capacity Shortfall in 2015

Source: UIC Study on Capacity reserve, 2005.

Increased rail passengers & freight likely to expose EU capacity shortfalls over 2015-30

Oil outlook – Forecast growth in primary demand

In the oil and gas sector, most companies have announced cutbacks in capital spending - as well as project delays and cancellations. Falling energy investment will have far-reaching and potentially serious consequences.

Source: IEA WEO 2009

Gas pipelines – projected routes to Europe

Source: Infrastructure to 2030 report - TBA

Conclusions• Financial crisis and recession have taken the pressure

off capacity shortfalls in the short term - in all sectors.• However, growth in accordance with ‘Reference Case’

projections would see: a doubling of air passengers in 15 years; a tripling of air freight in 20 years; very large increases in port container handling; and increased demand for oil and gas, particularly during 2015-2030

- in all cases, the largest increases will occur in the Asia/Pacific region, led by China and India.

• The hiatus in investment in some locations will exacerbate the previously expected shortfalls – once world GDP and demand rebounds to earlier trend levels.