Industry Trend Analysis - Urban Cable Car Systems To Proliferate - SEPT 2017

BMI View: Cable- propelled transit (CPT) offers an affordable transit solution for cities in Latin America and we expect projects to continue to proliferate over the coming years . The systems not only reduce the spatial impact of providing new transport to unconnected communities, but are also suited to the region's topography. This trend will offer international CPT companies a new and potentially vast revenue stream.

We expect cable propelled transit (CPT), more commonly known as cable car systems, to be an increasingly utilised solution in addressing Latin America's urban transportation needs. Following the opening of the first line of Medellin's Metrocable CPT system in 2004, cities across the continent have moved to begin developing their own urban CPT systems. As of August 2017 Colombia, Venezuela, Brazil, Bolivia and Mexico all have functioning CPT systems and we expect that these prominent projects will spur further opportunities across the region.

Latin America - Completed CPT Projects
Country Project Opened
Source: National Sources, BMI
Colombia Medellin Metrocable K Line 2004
Colombia Medellin Metrocable J Line 2008
Colombia Manizales Cable Aereo 2009
Venezuela Caracas Metrocable 2010
Brazil Rio de Janeiro Complexo de Alemao 2011
Bolivia La Paz Mi Teleferico Phase One 2014
Colombia Cali MIOCable 2015
Mexico Ecatepec - Mexicable 2016
Colombia Medellin Metrocable H Line 2016
Bolivia La Paz Mi Teleferico Blue Line 2017

CPT systems will continue to appeal to policymakers in the region for a number of key reasons.

  • CPT systems are uniquely fit to the topography of many Latin American cities characterised by neighbourhoods built on the slopes of hills and mountains.

  • CPT systems provide an attractive solution for the challenge of providing transportation infrastructure to the region's numerous unplanned and often illegally-constructed neighbourhoods where roads are scarce and most other solutions would involve the relocation of a large number of families in order to cut through the neighbourhood.

  • Also importantly, cable car systems are generally less expensive on average than other modes of urban transport and produce less carbon emissions, making them a particularly attractive solution in light of most Latin American governments' commitments to reduce greenhouse gasses and address public health issues.

Our positive outlook on CPT's is supported by a strong pipeline of new projects currently under construction or being planned across the region (see table below).

Latin America - CPT Projects Under Construction and Proposed
Country Project Status
Source: National sources, BMI
Colombia Medellin MetroCable M Line Under Construction
Colombia Bogota TransmiCable Under Construction
Bolivia La Paz Mi Teleferico Phase Two Under Construction
Ecuador Quito Quitocables Line 1 Under Construction
Ecuador Guayaquil Aerovia (Duran -Guayquil) Financial Close
Colombia Medellin MetroCable P Line In Tender
Chile Teleferico Bicentenario In Tender
Brazil Salvador, Bahia Proposed
Bolivia Sucre Proposed
Bolivia Oruro Proposed
Bolivia Potosi Proposed
Guatemala Guatemala City Aerometro Proposed
Colombia Soacha Metrocable Proposed
Costa Rica San Jose Proposed
Chile Iquique-Alto Hospicio Proposed

Sector Open For Business

The proliferation of urban CPT projects in Latin America will support an increased role for such projects in the revenue stream of major international cable car developers, traditionally dominated by tourism and winter sports-related projects. Given their strong involvement in the development of CPT systems regionally and globally, French company Poma and Austrian-Swiss company Doppelmayr will be best placed to benefit from such opportunities. That said, given the significant difference in project technicals to the traditional CPT company focus, we expect there is substantial room for other companies - particularly domestic contracting companies with experience of regional topography and conditions - to form partnerships with a larger international firm.

Project Development Risks

While the CPT solution to transport needs will be attractive, we note that there remain key hurdles the projects will often have to overcome. First, local opposition remains a threat, particularly from intermediate neighbourhoods that benefit less from projects being built and are less inclined to accept the negative impact of a CPT project on their privacy. This has been a problem for the development of Line 1 of the Quito Cables project in Quito, Ecuador where opposition from residents of El Condado district has slowed down the construction on a key intermediate station in the line.

Financing also remains a challenge for infrastructure projects in the region given the limited resources available to Latin American governments in light of weak commodity prices. We have seen this risk partially play out with several projects not moving forward within the timeframe pledged by governments, with the Soacha Metrocable project in Colombia being one example of this. That project, originally set to launch in 2014, has remained in the planning stages given limited revenue available. Overall, however, we believe that the relative cost effectiveness of CPT projects compared to other modes of urban transport will keep it an attractive option.