A boost from post-pandemic demand but higher costs ahead

Last update – December 2022
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  • Transportation benefits from pricing power, given its important role in ensuring global trade, tourism and professional/daily mobility
  • Shipping benefits from two factors: 1) bunker fuel is cheaper than car diesel or jet fuel, as it is not refined, and 2) it has a larger transport capacity as today’s largest vessels can transport up to 23,000 containers. Thanks to this, 80% of world trade is transported by sea.
  • Rail transportation companies are state-owned in most cases, which gives them relatively easy access to financing (vs airlines which have a low credit profile)
  • Higher fuel prices (bunker, diesel and kerosene) have been weighing more on operating margins.
  • Increasingly criticized sector due to its negative environmental impact, especially airlines (anti-flying social movements).
  • Capital-intensive sector as companies need to purchase an expensive fleet (airplanes, buses, trucks, ships etc), which also must be renewed and have high maintenance costs
  • Transportation companies are highly leveraged as they need to rely on a huge amount of debt in order to acquire and expand their fleet
  • Road transport companies face a high labor cost (vs maritime) that is not proportional to transport capacity. While a ship can transport 15,000 containers on average, a truck only carries 1.
  • Road transport is also dependent on government budgets for investments in road infrastructure. In developing countries, the road network is not fully developed so companies do not have easy access to all regions (limiting expansion). In other geographies, the toll system is too expensive.
Maria Latorre
Allianz Trade