Agenda Item 8.4: Trade and the crisis Infrastructure: 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 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 Global recession expected to end in 2009 Subdued recovery ahead for countries most affected Return to strong growth in emerging economies 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 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. ( )

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 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

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 Schipol [Director, A/P Development], Oct 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 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 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, Increased rail passengers & freight likely to expose EU capacity shortfalls over

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 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.