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Mar 04, 2011

Transport firms more upbeat about prospects, global survey shows

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Port|PricewaterhouseCoopers|Road|Asia|Latin America|China|USD|Logistics|Transport|Transport Infrastructure|Infrastructure|Klaus-Dieter Ruske|Peter Kauschke
Port|Road||||Logistics|Transport||Infrastructure|
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The number of trans- port and logistics (T&L) industry CEOs upbeat about their companies’ prospects for revenue growth has jumped from last year’s 31% to 60%, according to PricewaterhouseCoopers’ (PwC’s) fourteenth annual global CEO survey.

South African CEOs also participated in this survey.

“This number is a very positive one,” says PwC T&L global industry leader Klaus-Dieter Ruske. “One reason for this is increased efficiency as companies cut costs during the economic crisis.”

Around 90% of CEOs report that they have implemented cost-reduction initiatives in the past 12 months.

Most CEOs expect growth to come primarily from emerging markets, with their expectations placed on Latin America, Asia and China.

More than 70% of CEOs say that they are changing their strategies to respond to the growth potential in emerging markets.

At least 60% of CEOs see growth in the African T&L market over the next 12 months, as they expect their customers to grow, says PwC T&L global business development and marketing’s Dr Peter Kauschke.

Another shift in the T&L market is that 40% of industry CEOs plan to complete a merger or acquisition in the coming 12 months.

In fact, 27% of CEOs see mergers and acquisitions as the main opportunity to grow their businesses in the next 12 months.

This could be because many companies now have cash on their balance sheets, following two years of preserving liquidity and improving efficiency.

A separate PwC analysis of the top ten global T&L companies shows that the average amount of cash available on balance sheets in the third quarter of 2012 was nearly $3-billion, up from an average of $2-billion five years ago.

T&L CEOs are also signifi- cantly less concerned about protectionism in 2011, and only 37% have expressed concern, compared with 66% last year.

When it comes to infrastructure, T&L CEOs see quite a shift in strategy ahead as current investments into transport infrastructure are viewed as insufficient to close all bottlenecks.

“If you look globally, $41- trillion is needed over the next 20 years to build and maintain the [global] infra- structure network. We see insufficient development of transport infrastructure. We think only $20-trillion will be spent,” notes Ruske.

He says government is not able to fund this backlog and that more of the responsi- bility for new infrastructure will shift towards the private sector. However, this will promote the argument for road tolls and congestion charges, which will have a cost impact on the T&L industry.

It is then also perhaps no surprise that 50% of T&L CEOs indicate that they are worried that inadequate infrastructure could prove a threat to growth.

Edited by: Martin Zhuwakinyu
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