ISSUE 2 2010


WEST AFRIcA


West Africa remains a demanding place for ship operators, but there are signs of improvement, says Safmarine’s expert for the region. East and West Africa trades director Dirk Geens believes that the congestion and waiting times that the region was notorious for are now largely a thing of the past. But there are still limits on the size of ship that can operate into many ports, and probably will be for the foreseeable future. Container operators still


need to be quite clever in their operations, ensuring that ships discharge a sufficient number of boxes at one of the deeper- draught ports first before negotiating one of the shallower ones. Some of the larger ports in the region were dredged about ten years ago, and there are projects to treat others such as in Cameroon, but even maintaining dredged areas is a challenge, and even more so now that money is very tight. Nevertheless, the programme did allow ship sizes at the more major ports to be increased to around 3,500teu nominal capacity, though in practice vessels only load to around 2,000teu or so. And some ports are still very restricted. For example, the entrance to the port of Monrovia is a very tight 80 metres (because of silting) and part of the berthing area is also inaccessible, blocked by the wreck of a former Torm Line vessel. (The vessel sank in an accident and the Liberian civil war has prevented work to remove it.) Many operators such as Safmarine split their West Africa


services into different strings, depending on the capacity of the ports they serve. Safmarine and its sister company in the AP Moller group, for example, operate no fewer than 10 separate services from Europe to the region, quite a large number considering the size of the trade. Transhipment within West Africa is not currently a viable option, so all services operate at least as far as the hub ports of Algeciras in southern Spain and/or Tangier. Safmarine and Maersk Line decided to add a second


Angola service added Lisbon and Leixoes, opening up a link between Portugal and its one- time colony. One other major service change is that, following reorganisation of some mainline routes, there is now a direct link from India and Jebel Ali via Algeciras to Abidjan, Tema and Lagos and then back to the Middle East. Freight rates from Europe


to the region are quite high – around $1,000-2000 - but so are costs, says Dirk Geens. “Sometimes it’s difficult for shippers to understand – there is no comparison between the costs per container of an Asia/ Europe service using 11,000teu vessels and a Europe/West Africa service using ships of 1700 nominal teu.” Add to this the fact that large numbers of ports need to be served, in many cases for quite small volumes of containers and often using ships as small as 1100teu and the imbalance of trade, and clearly shipping lines are not getting rich in West Africa. Nevertheless, the prospects


Dirk Geens


European hub port to maximise connecting possibilities and also to provide additional resilience in case of operating problems, says Dirk Geens and in fact most West African vessels now call in both hubs. Some Safmarine services are extended to north-west Europe – for example the WAF6 service that links Felixstowe and other continental ports via Algeciras to Abidjan, Doula, Cotonou and Apapa. Fairly recently, the WAF5


for growth are better than they have been some time. While the Nigerian Delta region’s troubles continue, and there has been violence in inland parts of Nigeria as well as in Guinea, overall the region has been remarkably stable. Even where there is known violence, as in the Nigerian Delta, it has not affected container operations significantly, says Dirk Geens. “Obviously, we are watching the situation very carefully, but the service to Onne (about 50km from Port Harcourt) has been


All things to all shippers


In addition to container services, Safmarine also operates multi- purpose vessels (MPVs) into West Africa. These service the oil and gas industries, along with mining and civil engineering projects, as well as other cargoes that do not conveniently fit into a standard ISO container. These include many of West Africa’s exports such as cocoa and timber. Ports served on the two strings – Opex with three dedicated vessels and Ace with five - include Aberdeen in the UK as well as others on the north-west continent along with a large number in West Africa itself. The Aberdeen call was introduced about three years ago in response to customer demand, says Safmarine’s director of multi-purpose services, Greg Ulicki. The service was improved


in 2009, when Safmarine took delivery of new long-term chartered tonnage which has improved schedule reliability, at least as far as port conditions in West Africa allow. Safmarine has purchased


two new MPV vessels already in production; the first of these is due for delivery in July 2010 and the second is also expected to be delivered to Safmarine before the end of the year. An additional four MPVs are being specially built for Safmarine in China, with provisional delivery dates ranging from November 2010 to May 2011. These will be the first new MPV


tonnage to be wholly-owned and managed by Safmarine in over a decade, although their deployment has not yet been decided, says Greg Ulicki. However,


he adds: “Our investment in new, owned tonnage is not only proof of our commitment to the West African MPV trade, but modern vessels also have a lower environmental impact.” Unlike containers, it is not


really appropriate to talk in terms of changes to schedules, because


29 Draught limits tax operators’ ingenuity


going in every week – and in fact other operators have recently started services there, so I don’t think there’s any reason to be over-concerned.” Countries like Liberia and


Sierra Leone are not considered stable by underwriters – which is why war risk premiums still apply, another reason why shipping to the region is relatively expensive – but even there the situation is vastly better than it was a few years ago. In Lagos, Nigeria’s commercial


capital and largest city – West Africa’s largest, in fact – terminal and berth congestion has eased at both Apapa and Tin can Island. Apapa terminal is now managed by another sister company, AP Moller Terminals. Road congestion is more of


an issue in Lagos, and indeed the poor state of the roads is perhaps the most pressing issue facing West Africa. One reason why shipping services to the region call at such a wide range of ports is because it is difficult


or impossible to reach them overland from the nearest major port. Rail links are virtually unknown and those that do exist tend to run inland from ports rather than linking the major settlements, most of which are strung out along the coast. In Angola, where until not so


long ago waiting times at ports could be 30 days or more, delays have been slashed. “There have been improvements to the terminal in Luanda and it’s generally better organised,” says Geens, adding that the last significant problem port, Pointe Noire in the Republic of the Congo, now also runs much better, while Tema in Ghana and Abidjan in Cote d’Ivoire “have been working well for some time.”


Privatisation and liberalisation


have vastly improved the working of many ports in the region. Next on the list is likely to be Monrovia. If the improvement in the political situation can be


maintained, that might foster conditions in which trade can start to grow again, Dirk Geens believes. “There is no doubt that 2009 was a very difficult year, though in fact it was trade from the Far East and the Middle East to West Africa which bore the brunt of the decline. For example from some Asian countries to the region it was down 10-20%, whereas from Europe it was perhaps only 3-5%. What actually happened in the recession is that trade from Asia and, to some extent, South America, which had been growing quite strongly, was badly hit, whereas Europe was not affected very much.” Asia is the main source of manufactured goods, many of them considered luxuries in this still poor region, whereas most of what is imported from Europe are food, raw materials and the other essentials of life. It’s mostly raw materials


that flow northbound from West Africa to Europe, though oil now accounts for a large chunk of the region’s earnings, so the container trade is quite imbalanced. So far, West Africa has struggled to develop a manufacturing-exporting-base and what little manufacturing there is in the area is almost exclusively for the local market. But with its teeming population, greatly improved education standards and relative closeness to Europe, there is no reason why West Africa could not at some time develop into one of the world’s commercial hubs – provided, of course, that all- important political stability can be maintained.


the MPV service is closely aligned to the needs of its customers - port calls, routings and vessel size are adapted to requirements. Ulicki says: “Because of the volatility in the market we will keep adjusting the services, as we’ve done in the past, to meet customer demand.” Business to the West African


‘niche’ ports is mainly linked to long-term projects, and


these have not been as severely affected as container trades in other parts of the world, although there has been a slow- down in new projects being signed. Some were postponed or cancelled and business conditions were, on the whole, volatile. Ulicki says: “We might see


a temporary decline in project volumes in the next couple of years. It is important to note that the volume that is being carried now are for projects signed two or three years ago, so we will most likely only see the full impact of the 2009 recession on the breakbulk sector in a couple of years from now.” However, while the prospects


for 2010 are difficult to predict, he continues, “we do not expect business conditions to significantly worsen in 2010. We also expect demand for breakbulk services to fluctuate, as they did in 2009.”


Breakbulk services also continue to be influenced by container freight rates. When rates for container services are low, some shippers temporarily shift their business away from MPV to container services. “However, most return because of the distinct advantages of MPV services. Shippers are increasingly realising the value of not only basing decisions on freight rates – other factors, particularly service flexibility, are very important in the project cargo business.” Another advantage is being


able to ship containerised and non-containerised cargo on one vessel, at the same time and with one transportation document. Safmarine points out that its MPV service is global, allowing customers to ship all cargo needed for a single project from diverse locations around the world, using a single shipping line.


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