Transportation | |
Transportation | |
810 VIEWS | |
![]() | |
PROSHARE | |
PROSHARE |
Monday,
May 18, 2020 / 02:24 PM / By Fitch Ratings / Header Image Credit: New York Times
China's road traffic levels appear to be recovering
from the shock of the coronavirus outbreak, even as air traffic lags and port
throughput faces additional looming challenges, says Fitch Ratings. This
suggests that toll road operators may outperform within the transport
infrastructure space, even though uncertainty remains over how operators will
be compensated for the recent holiday in toll road fees.
Transportation infrastructure assets - including toll
roads, airports, and ports - have been among the asset classes hit hardest
during the coronavirus outbreak, as global travel demand has slumped. China was
the first market to be affected by widespread lockdowns during the pandemic,
and has now begun the process of gradually restoring normal activity. Its
experience may provide insights as to how travel patterns may change in other
countries as their lockdowns are eased.
The most striking trend evident from China's transport data has been the strength of the rebound in road traffic. China began to ease its lockdowns in February, yet by March traffic on the national highway network was already 10% higher than in the same month a year earlier. Growth strengthened to 21% year-on-year (yoy) in April. The recovery in road traffic stood in contrast to the continued contraction in retail sales, which fell by 7.5% yoy in April, although fixed-asset investment and industrial production returned to growth within the month.
Much of the strength of the road traffic data over
March-April appears to have reflected the impact of the government's move to
wave toll fees on the highway network, which encouraged more cost-conscious
drivers to use it. As these holidays were withdrawn in May, usage of the
national highways fell back below levels seen in 2019.
It remains unclear how toll road operators will be
compensated for their revenue losses during the period of the toll holiday.
Fitch believes that an extension of concession lifetimes is the most likely
outcome. This would boost the long-term value of the road assets, but would
provide little relief to the liquidity pressures that toll road operators are
facing in the near term.
Road traffic between 6-16 May was down by 3.3% yoy,
although road travel at least appears close to a return to pre-coronavirus
levels. By contrast, air traffic remains much weaker. Air passenger and cargo
traffic in April was down by 70% and 62.4% respectively. The recovery path for
air passenger traffic from COVID-19 will be more extended than it was after
SARS. Lingering public-health concerns mean that it will take many months for
air passenger traffic to exceed its previous peak.
Bulk cargo and container throughput handled by Chinese
ports fell by 2.4% and 5% respectively, in March. The decline in port cargo is
set to steepen as recessions worsen in the US and Eurozone. There is also a
risk that US-China trade tensions could mount, delivering a blow to the recovery
prospects for port traffic.
Related News
1.
Ahead of
Tomorrow on WebTV: Discussions on COVID-19; Implications for Logistics
2.
Average Transport
Fare Paid By Commuters Within City Increased By 1.89% MoM in March 2020
3.
Average Fare
Paid By Commuters For Bus Journey Intercity Increased By 0.91% MoM in February
2020
4.
Lagos' Traffic
Congestion - Is There a Respite in View?
5.
Singapore's
Empty Airport Highlights Impact of Coronavirus on Asia
6.
Average Fare
Paid For Bus Journey Within City Increased By 1.47% MoM in January 2020 - NBS
7.
Average
Intercity Fare Increases By 1.43% MoM To N1, 666.57 In December 2019
8.
Transportation
Investments and Diversification of Nigerian Economy
9.
4.48m Passengers
Passed Through Nigerian Airports in Q2 2019 - NBS
10. Why an Effective
and Efficient Transportation System is Important for the Nigerian Economy
11.
Boeing 737 MAX
Suspension Highlights Global Aerospace Risks
12. Average Fare For
Intercity Bus Journey Increased By 0.37% MoM In November 2019
13. Adaptation of
Nigeria's Transportation Sector to Climate Change