Rekindling the flame
The rollercoaster West African port sector might be on the rise again, finds Stevie Knight
Historically, it used to be that containers moved across from Asia would land in Europe and then get transhipped south down the coast - that all changed when West African ports started pulling in their own calls.
That development is partly down to the cascading of larger ships displaced from the larger trades, explains Eleanor Hadland of AECOM. These vessels now promise to lift the entire West African region.
Lomé was the first to benefit. Back in 2014, MSC noticed Togo’s deepwater potential as a hub. Last year, joint venture partner China Merchants Port Holdings and TIL, the line’s port operator, achieved a 5.1% rise to 530,000 teu by running 13,000 teu vessels on MSC's Asia to West Africa Express and hosting feeder connections between Lomé and smaller facilities like Takoradi and Namibe.
This was just the beginning of a recovery for this concentrated private market and other projects were soon on the books. Abidjan on the Cote d’Ivoire has also captured attention, "now that there’s the kind of political stability that investors want to see before getting involved”, says Hans Ole Madsen of ICTSI.
Operated by the ever-present Bolloré and APMT (the pair having a history of West African collaboration), Abidjan already has a ro-ro terminal and 1.3m teu capacity but by 2019 it should have a second container terminal with a total quay length of 1.1 kilometres, 18 metres draft and an annual capacity of 1.5m teu supported by new kit and access deepening.
And there’s more to the picture than the waterside: “Bolloré especially hasn’t just bid on ports alone, but also rail and inland depots,” says Ms Hadland. In fact, Bolloré runs two dozen or so inland container depots in Africa in total. “The ports are seen as being part of delivering the total logistics service,” she says, “which offers a value-add for their users and the country as a whole."
However, a different kind of partnership also appears to be blossoming. Abidjan’s $1.12bn expansion is resting on an 85% loan from China with construction being carried out by China Harbour Engineering Company. It’s a deal the region will probably see more of: Bolloré seems excited by its new partner’s deep pockets and China, likewise, is delighted by Bolloré’s African reach.
Stop and go
But despite its potential, West Africa’s not had a clear run, being “stop-and-go regarding trade” points out Mr Madsen. Much of the region saw hydrocarbon wealth pumping up volumes. Up until five years ago, it looked like the ports would soon run out of capacity..
In some places, the scramble created issues. “In Nigeria you saw too many competing projects all seeking private investment at the same time... risking few getting across the finish line," says Ms Hadland.
More, much of the growth was predicated on a continuously rising oil price. “People saw increasing oil revenues and infrastructure plans were made accordingly,” adds Mr Madsen. So, when the bottom fell out of the oil market, it hit some countries particularly hard. Certainly Luanda, which accounts for around 75% of Angola’s traffic, saw a crash it hasn’t yet recovered from. “Between 2014 and 2016, Luanda’s container throughput almost halved,” explains Mr Hadland, its last figures coming in at 541,346 teu.
But despite the stalling of many of those original projects, Mr Madsen sees most West African countries coming back on track before oil reaches those $100 peaks again, if it ever does: “Looking over a 15- or 20-year time frame the oil price now isn’t bad...and do-able for the West African producers.”
Underpinning this is something more inherently stable than oil: a steady population growth is drawing in the boxes. As Ms Hadland says, “releasing constraints” is now the name of the game for ports like Tema, in Ghana.
Although the present operation has done its best to raise capacity with some success, “there’s a limit to what can be done for a port in the middle of a city” says Ms Hadland’s colleague Noel Cronje. The present ship size is limited to 4,250 teu; since Tema handles nearly 70% of Ghana’s trade, it's more than a little cramped.
As a result, there’s a new $1.5bn facility barely a kilometre away being developed by a joint venture that includes Ghana Ports Authority, APM Terminals and Bolloré Africa Logistics - the same team that’s been working the old port. Phase 1, (due again around 2019) is the first stage of a project that, when fully developed, will provide 17 berths and importantly, a 3.5m teu box capacity with an upgraded motorway and port road links.
“The 19 metre deep access, 16 metre draft quay, while not quite as capable on the berth as you’d see on a Europe-Asia hub port, is still definitely a step change – and although they aren’t on any West African route yet, Tema’s future-proofing itself to handle 18,000 teu vessels,” Mr Cronje explains.
However, the private sector is shouldering more of the investment than might be expected. As the port isn’t getting much financial help from the state, the joint venture partners themselves are financing everything from land reclamation, channel dredging and breakwater construction to the topside facilities. This has resulted in a long, 35-year concession “as the risks are that much higher” says Ms Hadland. Given the relative dearth of public funds, it’s a pattern she is expecting to see replicated.
Delays and frustration
Not all ports have seen a straightforward development. Nigeria’s Lagos terminals look like fast running out of space so a 90 hectare new port and free zone, 65 kilometres away at Lekki, was going to be the answer. Sadly, after five years of delays, one of the main partners, ICTSI, pulled the plug in frustration that its 2.5m teu capacity box terminal seemed little closer to realisation.
This was seized on by some Nigerian maritime groups that have been gunning for the port authority’s ‘new broom’, managing director Bala Usman, a charismatic shipping outsider whose anti-corruption and modernisation reforms have been rattling established interests (and according to local media, uncovering $31m worth of fraud) this last year.
Despite Madsen underlining that “the decision to withdraw from Lekki was purely down to delays in development”, it must have been with some relief that DP World showed interest in its own $1bn project at Lagos. Details are a little hazy at present, but it should embrace both greenfield and brownfield container and bulk terminals. This will add another node to its West African venture, complementing the box terminal, logistics and economic zone in the new Port Du Futur, Senegal.
Yet another facility aiming to entice bigger ships and take the pressure off Lagos is Badagry. APMT, already resident in Apapa, Lagos, has got together with TIL to build a 1.8m teu site with 2.6 kilometres of quay and depths for 12,000 teu ships. Eventually it will be deepened to 17 metres to take on 18,000 teu vessels, all supported by a free zone and linked to the city by a 10-lane motorway.
Too many cooks?
Will all this development result in overheated competition? Not necessarily says Ms Hadland. "Although ports might be geographically fairly close, they are often sitting on their own, separate corridors," she says. For example, while Togo’s Lomé is not so far from Tema on one side and Cotonou and Lagos on the other, they are all positioned on quite distinct, if parallel routes with few points of crossover. It may be a hangover from colonial days where there was little concern further than extracting cargo, but so far it’s been quite handy for market differentiation - although it's broadly recognised this will have to change.
Still, it should be noted these new port facilities are also looking hard at the landlocked areas behind them: DP World for example wants to raise the old port of Dakar into an international hub, using 1,800 kilometres of the inland Niger River to connect Mali’s local farmers and businesses.
The Mali plan, says DP World “will include a transportation and logistics strategy with electronic customs processes”. And while Dakar is looking at Mali, so is Abidjan; both the Cote d’ Ivoire port and Tema are looking at moving more cargo for Burkino Faso and Niger.
Of course, Nigerian ports want to cater for Niger too. These are large areas, and Mr Cronje points out when it comes to developing the hinterland “no-one wants to fall behind in the race”.
However, on the coast it’s much better to be one of a string than putting out your wares alone. As Ms Hadland puts it: “It’s no good being the only port in an area that can attract deeper draft vessels, you just won’t get your investment back. But if you’re part of a network, then you start to get a build-up of interest. Everyone gains.”
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