General stagnation was the depressing order of the day for container throughput in West African gateways in the period 2013 – 2017. Dynamar’s Dirk Visser and Matthieu Neering are nevertheless optimistic that a strong surge of up to 5% annually is coming.
Anyone seeking to analyse the trades to and from West Africa, as Dynamar has done, has to be prepared to assess a rather fragmented region. It is made up of 25 nations, including five landlocked countries, with the remainder sharing a coastline of approximately 9,700 km. The region’s around 535 million inhabitants generate GDPs that come to a total of approximately USD 802 billion for the whole area, with its annual trade worth an estimated USD 294 billion.
So why did the containerised goods trade in the region only grow by approximately 1.4% annually in the years from 2013 to 2017? Why should the region’s future be rosier than that of other areas in Africa? Dynamar’s Dirk Visser and Matthieu Neering have tried to find some answers.
Mature markets and the will to invest
“West African markets have reached a degree of maturity in their development that is significantly higher than in East Africa,” says Visser. His proof includes larger ports and vessels. In 2017 alone 285 containerships operating in seven intercontinental routes called at West African destinations, including one 13,600 teu unit that connected Lomé to regional ports and was operated by MSC.
There are many international players that have invested in West African terminals and ports. APM Terminals, Bolloré, China Merchants Ports, DP World, ICTSI, Portek, for example, are driving modernisation of the facilities forwards. The same applies to various carriers and their subsidiaries, such as the TIL Group (MSC), CMA CGM in Cameroon and Nigeria, Grimaldi in Nigeria and Nile Dutch in Angola. Unfortunately, however, good handling opportunities do not necessarily result in more cargo, as is well-known.
Oil price and volume growth
The oil price is the key, Neering has established. “When the crude oil price collapsed in 2015 the value of West Africa’s trade between 2013 and 2017 fell by one third, to USD 294 billion.” Now the two analysts believe that the recovery in oil prices is likely to trigger a hefty upsurge of approximately 5% annually through to the year 2021 in the volume of containerised goods traded. This would drive the total up to approximately 4.3 million teu in the three years to 2021.
Ongoing consolidation in the shipping industry has left its marks on the region too, however. There are currently around 54 container services destined for West African ports; in 2014 there were no less than 71 services. Larger containerships are also entering this regional market. Sometimes it is the carriers themselves that are investing, as mentioned above. From 2019 onwards roughly a dozen ports in West Africa are set to be ready to welcome calls from vessels with capacities of 6,000 – 10,000 teu.
All that glitters is not gold, however. The Nigerian port of Lagos, the largest port in the region’s largest economy, illustrates some of the challenges the region’s centres face. “In 2015 Nigeria was the West African country thought to have the greatest potential – but in terms of liner services it is only ranked fifth.” The lack of links to and from the hinterland is threatening developments. Ports and terminals alone will not bring home the bacon.