23-10-2018

Dynamar: “West Africa (worldwide) Container Trades”

Dynamar B.V. of Alkmaar, The Netherlands, has recently issued another report in its Container Markets and Trades series: the fifth biennial edition of the “West Africa (worldwide) Container Trades”, author: Darron Wadey. Salient details and some of the interesting findings of the study are discussed in this review.

West Africa publication highlights:

- West Africa full container volumes forecast to reach 4.3 million TEU by 2021

- Container volumes have barely grown in 2013-2017

- Economic times have been difficult, but recovery is underway

- Capacity, carriers, services, sailings, all came down in 2016, but are all growing again

- West African annual growth rate for container cargoes is estimated at 5% until 2021

- Lomé (Togo) is now the major West African container port, surpassing Lagos (Nigeria)

- Average vessel capacity has grown, with the largest vessel calling now 13,600 TEU

- The three largest carriers serving West Africa have a share of more than 75% of trade capacity

A Sub-Saharan container trade specialist

The West Africa Container Trades studies alternate with similarly structured Dynamar-reports on the East & Southern Africa Container Trades. Although both cover Sub Saharan Africa, very different trades are concerned.

West Africa

West Africa comprises twenty-five different nations, big and small, onshore and offshore, including five landlocked countries. The total region encompasses around 9,700 kilometers of coastline and a land area of 12.75 million square kilometers. It accommodates over 535 million people, has a trade value of USD 294 billion and a GDP estimated at USD 802 billion.

The area is divided in three coastlines: North Atlantic-Mauritania to Liberia, Gulf of Guinea-Ivory Coast to Gabon, and South Atlantic-Congo to Angola. Each area has its own characteristics. For example, Gulf of Guinea and South Atlantic are heavily involved in the oil and gas sectors. This is clearly reflected in their economic performance.

The Gulf of Guinea region makes up for a share of 65% of population, 71% of GDP,  63% of trade and 56% of container throughput. It also houses the largest ports in terms of throughput, which are located in Togo, Nigeria and Ghana, in that order. 

On the way to maturity

West Africa is clearly moving into the direction of maturation, certainly if compared to East Africa. The ships are bigger, there are more carriers and there is a substantial presence of international port operators. In 2017, 285 box ships sailed the seven intercontinental trade lanes to West Africa. Deployed by twenty-four different operators, their average capacity was 3,300 TEU. The biggest ship, measuring no less than 13,600 TEU, is operated by MSC in a hub and spoke service, connecting Lomé with a large number of regional ports by feeder.

Amazing terminals

West African terminals and ports have benefitted from foreign investment by terminal operators and carriers driving growth. For that reason they are generally well equipped. Foreign terminal operators include APM Terminals, Bolloré, China Merchants Ports, DP World, ICTSI, Portek, TIL Group (MSC) and various carriers, such as CMA CGM in Cameroon and Nigeria, Grimaldi in Nigeria, and NileDutch in Angola.

Together, these companies are involved in an amazing number of no less than thirty terminals with another five under development.

Promising then and again?

West Africa crude oil production shrank in 2015 and 2016 when the average price of crude oil plummeted. As a consequence, between 2013 and 2017, West African merchandise trade value shrank by one third to USD 294 billion. In particular Nigeria and Angola suffered, with both countries heavily dependent on the Oil & Gas industry. The only region to show absolute growth over the period was the North Atlantic region, generally the poorer cousin. Overall, West African container volumes have grown by 1.4% only in 2013-2017 period.

However, there is hope for West Africa again and the carriers serving its trades. The price of crude oil is on the rise, bringing investors back. As such, after a massive two year dip, West Africa is poised for strong growth yet again. This should also translate into increased container volumes, forecast to grow by 5% until 2021.

Buzzword: consolidation

Partly in line with the global consolidation trend, the number of vessel operators reduced by five over the last two years. Twenty-four liner carriers are active now, with Maersk Line still in the lead, although MSC is hot on its heels on the back of significant growth.

‘New’ entrants to the market include CoscoSL and ONE. By their powers combined, China Shipping and Coscon became Cosco Shipping Line, and MOL, NYK and “K” Line joined forces with to become ONE. Hamburg Süd is now part of Maersk, UASC was absorbed by Hapag Lloyd, and Hanjin fell prey to the poor market conditions, filing for bankruptcy. Only two carriers left West Africa relatively unscathed, moving on to potentially greener pastures in other parts of the world.

In all, nowadays there are fifty-four container services connecting with West Africa, down from seventy-one(!) in 2014.

Bigger, better?

Lomé in Togo has become West Africa’s major port, surpassing Lagos. A key development backing Lomé was the commissioning of Lomé Container Terminal. It handles close to 890,000 TEU per annum, close to 75% of Lomé’s total throughput of 1.2 million TEU. The establishment of Lomé Container Terminal is part of a greater trend in West Africa, which sees more and more carriers becoming involved in ports and terminals. After all, carriers must go somewhere using their oversized ships.

Within the next year, over a dozen West African ports will be able to handle vessels of more than 6,000 TEU, or even as large as 10,000 TEU. However, Lagos lags behind, despite being the largest port in the region’s largest economy. It was the highest ranked West African country in 2015 but is now only fifth in terms of liner connectivity. Chronic hinterland congestion threatens its development.

Direct and indirect

While direct connections remain the core of the container services to West Africa, feedering or relay via Mediterranean hubs remains resilient. Containers originating from Asia, Europe and the Americas reach their West African destination -and vice-versa- with transhipment at a Mediterranean hub, generally Algeciras or Tangier-Med.

Maersk Line and sister Safmarine initiated Algeciras-West Africa transhipment links in the early 2000s already, operating eight relevant services in 2004. Interestingly, despite the emergence of very capable terminals across West Africa, there has been no substantial decrease in indirect traffic via the Med. Even today, an estimated 25% of all West African container volumes runs via a Mediterranean hub.

Source: Press Release

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