Rising oil, growing middle class, lower slot costs spur West African prosperity
 As oil prices rise from 2014 lows, there is more European interest in West Africa as re-generating petrodollars increase the flow of containerised consumables into the coastal nations of the Bight of Benin over 2,000 miles from Senegal to Cameroon.
While much attention has been focused China's Belt and Road Initiative, its African activity has largely been in eastern and southern Africa. Meanwhile, European forces have been active making deals in West Africa.
Like book ends on each side of the Bight of Benin are Cameroon's Port of Kribi in the east and Senegal's Port of Dakar in the west with lots of rival ports in between.
Marseilles-based CMA CGM has the Port of Kribi in its sphere of influence. The French shipping giant's Kribi terminal is jointly run Bollore Transport & Logistics of France and China Harbour Engineering Co (CHEC), a subsidiary of China Communications Construction Company (CCCC), providing infrastructure construction, such as marine engineering, dredging and reclamation, road and bridge, railways, airports and plant construction.
CMA CGM is deploying direct services in Kribi to northern Europe, the Mediterranean and Asia such as its ASAF rotating through Qingdao, Xingang/Tianjin, Busan, Shanghai, Ningbo, Guangzhou-Nansha, Tanjung Pelepas, Singapore, Pointe des Galets, Cape Town, Pointe Noire, Kribi, Luanda, Cape Town, Port Kelang, Singapore and back to Qingdao.
There are also new multimodal opportunities from Kribi to reach inland destinations in Cameroon, Chad and Central African Republic.
Queen Margethe II of Denmark has also been visiting the region, leading a business delegation on a three-day visit to Ghana that included a visit to the Port of Tema. That revealed Danish shipping giant Maersk interest as well as its global port operator APM Terminals involvement.
So far, on Ghana's Tema port project, 70 acres out of 168 have been reclaimed from the sea for the construction of terminals. Nearly two kilometres of a three-kilometre breakwater has also been built. The expanded facility at Tema port will have 17 berths, an annual handling capacity of 3.5 million TEU and able to dock 13,000-TEUers at full build-out next year.
While Danish royalty has been schmoozing with Ghanaians, Belgium's Port of Antwerp has been chatting up the Senegalese at the western end of the West African range.
Rather than going to enormous oil-producing Nigeria with its enormous problems, each of the rival shipping interests are building other centres much in the same way and for the same reasons they fled New York for New Jersey or abandoned London for Felixstowe in rural Suffolk.
Nor can we overlook the doings of the Mediterranean Shipping Co (MSC) in Togo's Port of Lome with its new Terminal Investment Limited (TIL) hub that handled 500,000 TEU in 2016.
In addition, MSC recently signed a 35-year concession agreement with Cote d'Ivoire's second port of San Pedro, to upgrade and operate its container terminal.
MSC has reportedly stated that that the improvements would allow vessels of up to 14,000 TEU to berth at the facility. Abidjan is already established as a hub port in Ivory Coast, and San Pedro will join it, indicating that MSC is not going to rely on Lome as a single hub in the region.
It is hard to discern where the rivalry lies and where it does not because there is overlap as well as the lack of it, in their joint and rival ventures. Thus it is important to realise the scale and scope of the competing hubs.
First, there is a vast distance between one end of the Bight of Benin to the other - 2,000 miles. At the western end there is Dakar, which provides the shortest transit to South America from anywhere in Africa, admittedly 3,300 miles to Sao Paulo, Brazil the nearest big port. While this is a dormant trade of late, it holds great promise. This contrasts with the Cameroon Port of Kribi at the eastern end of the Bight of Benin with its 4,200 miles to Sao Paulo. Thus, the two ports do not compete in this area.
What emerges in West Africa are distinct and discrete trading opportunities. One is the traditional trade, somewhat neglected by importers and exporters worldwide. Until recently it has been served by small, heavily manned, geared vessels. But in recent years game-changing cellular vessels have steadily increased in size as have port facilities that service them.
This trade is likely to be combined with South American transshipments, coming or going to and from north Europe or to or from Asia. Some lines will pick up or drop off cargo at wayports like Algeciras or Tangier, picking up or dropping off boxes that are bound for Africa or cargo from Africa bound for Europe or Asia.
Africa is a major exporter of fruit and vegetables to Europe. In the other direction, fast-growing African countries such as Ghana, Kenya and South Africa import high-tech goods, agricultural products and machinery plus the less glamorous high volume, but low-end consumables Asia is famous for.
And if global economic trends continue, the ranks of the middle class rise, the reefer sector is betting that demand for transport of perishable goods will increase.
These two factors, the resurrection of oil prices and the rising numbers of the middle class worldwide will be followed by increasing demand for perishables. Long thought of as the domain of the air freight and the affluent, new maritime reefer technology, plus the doubling sizes of containerships has brought slot costs and retail fresh fruit prices down to make mass distribution of perishables economical.
This Med-West African trade is multi-faceted, though the greater the peregrination involved with each box, the cheaper the commodity it contains must be. That is about the only commonality shared by this dry container traffic.
Once there is the traditional way, a sort of international cabotage from one sliver-like nation along the coast to the next by an often geared ship. But that is now being revamped by the major carriers and port operators. The new way involves creating hub and spoke operations at Senegal's Dakar, Ghana's Tema, Ivory Coast's Abidjan, Togo's Lome and Kribi port in Cameroon. On the face of it, it seems like a situation that would produce overcapacity and invite rationalisation if the dreams and schemes of port planners are not realised.
The idea is to end the coastal cabotage and replace it with bigger ships up to 14,000-TEU in two or three years, and have old geared vessels cascade down to enlarged feeder fleets that would reach up and down the coast and serve river ports along the way with imports in and exports out the same way.
Thus, big box ships, of only 8,700 TEU today, though more typically 5,000 TEU at best, to serve hubs and feeders, the spokes with exports and imports, coming and going. One also sees problems with reefer repositioning, but that's tomorrow problem.
The new dimension to be exploited is today's lack lustre Latin American trade with Africa, particularly, but not only, in perishables.
Trade between Africa and South America has been minor importance. What's traded is petroleum, grain, iron ore, coal and sugar by sea, mostly by non-liner charter shipping services.
The dire shipping shortage for non-bulk cargo becomes plainly evident from time to time with a drought of reefer boxes that regularly arrives and causes a build up of fruit and other perishables at Brazilian ports with inevitable spoilage.
A scarcity of maritime transport explains this as freight rates are low. But there appears to be potential to reduce shipping costs in Africa and South America if only ports were modernised.
Not surprisingly, Maersk, MSC and in the past, Hamburg Sud, relocated containers other ports where rates were higher. As to be expected, the greater the need from Brazil's biggest fruit producers, the more severe the shortage, in what had become a seasonal affair.
If only there were the available capacity and proper port facilities with efficient cargo handling, is the cry of the ancient shipper. But those are precisely the concerns that are being met today. Each of these ports is being dredged to dock mega ships up to 14,000 TEU, and with Dakar's 18 metres alongside, the sky's the limit.
National governments are generally obliging - though there have been difficulties in Ghana - and things are going ahead in these smaller countries with few objections. There's still some way to go to match Mumbai's 42 moves an hour, but dockside productivity is headed in the right direction. Certainly, there is no ILA or ILWU to deliberately slow things down.
If oil prices stabilise to the point to make West African imports affordable, the accompanying increase in middle class consumers in Africa, and in the world as a whole, combined with the reduction of slot costs, mega ships and expert cargo handling, makes the future look hopeful for all. |
