2015 Shipping Investment Review By Continent: Africa
Analysts forecast that Africa will experience annual growth of 6 percent (yoy) and that most African countries will achieve “middle income” status by 2025.
After decades of stagnation in Africa, analysts forecast that the African continent will experience an annual growth rate of 6 percent (year-on-year) between 2015 and 2023. Moreover, the World Bank expects that most African countries will achieve “middle income” status by 2025.
Albeit a very positive outlook for the continent, in order for African countries to meet their potential, many logistical obstacles will have to be overcome. Perhaps the most significant of which is the absence of infrastructure, and much needed investment in shipping ports and terminals.
Leading shipping nations, like China, have recognized the need and are making the necessary investments. For example, soon to be one of the biggest container ports in Africa, a $380 million state-of-the-art deep-water container port is being constructed in the Togolese capital of Lomé. The facilities will be operated by Global Container Limited, in partnership with China Merchant Holdings.
As well, in December 2015, Chinese officials announced an investment of $60 billion to fund African development projects, debt relief, and to boost agriculture on the struggling continent. Over the next three years, Chinese investors are expected to make significant investment in factories, as well as build roads, shipping ports, and railways.
One of the biggest infrastructure challenges for shipping lines and terminals has been the introduction of much larger container ships to the steadily expanding West African trade. Because of this remarkable growth in the region, there has been a constant need for in investment into terminal projects, particularly those with deep-water berths.
In an effort to increase capacity by 11.5 million TEU a year, investments have been made to accommodate vessels from 7,000 to 19,000 TEU, as well as fund the development of (at least) six new shipping ports, with container capacities of 1 million TEU or more. For example, the West Africa Container Terminal (WACT) has made a N29 billion investment to improve port infrastructure at the Onne Port; in Rivers State in [South] Nigeria.
West Africa Container Terminal is determined to becoming the new hub of economic activities in Nigeria, being the gateway to major markets in Onitsha, Kano, Abuja, Nnewi, Enugu, Aba, Ogidi and Port Harcourt which will in-turn boost the nation’s economy.- Managing Director, West Africa Container Terminal (WACT)
The Suez Canal in North Africa currently handles 7 percent of global maritime trade, and is regarded as an important waterway that links the Mediterranean Sea and the Red Sea. To meet rising demand, a new project to construct a second Suez Canal waterway will double the capacity of the existing canal, and almost triple Egypt’s revenues in fewer than 10 years; rising to $13.2 billion in 2023. Moreover, the new parallel canal is expected to cut the average transit time for shipping vessels from 22 hours to 11 hours, and include six new shipping ports, as well as an industrial park.
The continent’s economic and consumer outlook, coupled with the support of investors — mainly from China, makes Africa an ideal region for further investments in the shipping industry and related sectors. This confidence in the cargo transportation industry’s growth is supported by leading container shipping companies and terminal operators from Europe and Asia, who have been scrambling to establish themselves a foothold in the prospering continent.
