China Road Infrastructure Rebound to Outpace Ports and Airports


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.

Proshare Nigeria Pvt. Ltd.


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 As these holidays were withdrawn in May, usage of the national highways fell back below levels seen in 2019.

Proshare Nigeria Pvt. Ltd.


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.

Proshare Nigeria Pvt. Ltd.


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

Proshare Nigeria Pvt. Ltd.

Related News