MEDIUM RISK for entreprises
What to Watch?
Aerospace broadly accounts for 60% of transport equipment output while shipbuilding and rolling stock do 40%. Dominated by Airbus and Boeing, the aircraft sector enjoys large order books that should keep their production lines still busy for a decade.
Shipbuilding continues to cope with excess capacity and low steel prices enabling small players to come through. It resulted in a few high-profile shipbuilding groups’ restructurings aimed at cutting structuring costs, particularly across South (East) Asia.
Rolling stock equipment depends on countries’ infrastructure investments. But these latter depend too on the share of public funding that less-favored regions (or states) are ready to put in.
The surge in global mobility and the demand from clients in transportation account for the growth rate of 9% for transport equipment expected in 2018. More middle-term considerations are the rising share of households for whom air, sea and rail travels are affordable and the evolution of geopolitical tensions from today’s high-threat levels. The trouble is, this growing demand has been putting pressure on the upstream sector’s global supply chain in terms of capability to delivering or not supplying equipment at the right time.
Aircraft manufacturers: Ability to anticipate overcapacities in downstream airline industry
Shipbuilding: Dependency on variations in green taxation and in world trade growth
Rail equipment: Suffering from difficulties in public funding of infrastructure facilities
Contact Euler Hermes
Economic Research Team
Sector Risk Analyst