Transport: Clogged ports invite competition
Inefficiencies in Nigeria’s Lagos and Port Harcourt harbours have
created an environment in which its West African neighbours are now
jostling to pick up the slack
Although West Africa has not been entirely spared by the global shipping slowdown, annual growth rates above 10% are still expected in its major ports for 2009. As competition heats up between ports vying for the status of regional hub, port operators are raising capacity to take advantage of delays at Nigeria’s ports.
Although ports in Ghana, Togo and Benin achieve the same average efficiency as Lagos’s terminals – 20 to 25 moves per hour – they cater to the overflow of traffic from Lagos because of chronic congestion there. Container traffic into West Africa’s largest port complex at Lagos has doubled from 2003 to 2009, reaching more than 700,000 twenty-foot equivalent units (TEUs) a year by 2008, underpinned by high oil prices and demographic growth. Volume growth in Lagos’s five ports reached 34% year-on-year in 2008, although this dropped off to 14% in the first half of 2009.
Attempts to develop Nigeria’s eastern ports – Port Harcourt with its terminals concessioned to APM Terminals and Intels, and Calabar’s operated by Eurogate and Intels – have been unsuccessful owing to volatility in the Niger Delta. Container traffic at APM Terminals’ Port Harcourt concession declined from 2.5m containers in 2006 to 1m in 2008. Importers prefer to ship goods through Lagos, which is dredged to over 10 metres. Intels’s terminal in Port Harcourt remains healthy, catering to the group’s oil-and-gas free zone in Onne, which remains the oil and gas hub in the Gulf of Guinea despite growing regional competition.
The Apapa terminal traditionally handles two-thirds of the container traffic into Lagos, while the four Tin Can terminals (operated by Grimaldi, Bolloré/Zim, Eurogate/MSC and Sifax Nigeria) handle one-third. Congestion caused the Tin Can terminals to receive half of the incoming traffic in the first five months of 2009, but traffic flows have reverted to trend in the second half of the year.
APM Terminals expects sustained growth at Apapa, part of its network of concessioned ports in Côte d’Ivoire, Cameroon and Angola. Container traffic at Apapa grew from 409,751 TEUs in 2007 to 542,379 TEUs in 2008. The group has invested $1.2bn in Apapa since 2005 and is investing an additional $70m by the end of 2010 to expand capacity to 1.2m TEUs per year. APM is still only exploiting about 67% of its concession area.
The Tin Can Island International Terminal, a 15-year $83m joint-venture half the size of Apapa, operated by Bolloré and the Zim shipping line, is the country’s second-busiest terminal on Tin Can Island. The operators are investing an additional $45m in upgrading equipment and expanding capacity at the terminal.
Grimaldi’s Tin Can terminal is said to be the most cost effective of the Lagos terminals and is structured as a $60m, 25-year build, operate and transfer terminal rather than a concession. Grimaldi has given exclusive use to its shipping line, and berth utilisation remains around 55%.
Efforts to expand Lagos’s port capacity have spurred Lagos state government to seek private-sector involvement in the development of a new deep-sea port in Lekki, east of Lagos, which will also serve the planned Lekki Free Zone. Costs discussed for the 1m TEU port are estimated at over $1.3bn, although the time frame for tendering remains unclear, with APM and Bolloré said to be involved in the talks.
The search for extra capacity in Nigeria is linked to dwell times at the terminals, which stand at an average of 35 days, with peaks of up to 200 days – compared with three days at Japan’s ports. Long dwell times have constrained improvements in efficiency. Average moves per hour have risen from six to about 20 at the APM Terminals concession since the start of operations in 2007 – about the average for West African ports.
Improvements are constrained by slow administrative procedures – there are 36 procedures for clearing customs in Nigeria, compared with nine in Togo and seven in Ghana – and poor port-access infrastructure. The only dual-carriageway access road to the Lagos ports remains in poor condition, with no significant plans to upgrade it. Meanwhile Chinese, Indian and British expressions of interest in rehabilitating the rail link to the port have been rebuffed.
France’s Bolloré Group has cemented its position in recent years. Although it lost control of the Dakar port, it remains an operator in Côte d’Ivoire, Togo, Benin, Nigeria and Cameroon. Bolloré won the Cotonou port concession in September, promising to invest $256m over the 25-year concession period and pay $200m in concession fees during the first eight years. The deal is part of Benin’s port-reform programme to position the country as a gateway for containers into the region. Estimates put transit container traffic through Benin’s port to Nigeria at about 25% of total annual traffic. Bolloré hopes to increase container traffic from 312,000 TEUs a year in 2008 to 1m TEUs by 2030.
The group has also had success in Togo. Accused of tax fraud by the government, the Spanish Progosa Group, which had held the Lomé port concession since 2001, lost it to Bolloré in May. Togo is also planning for the construction of a new g250m port, starting in 2010 with five berths, to handle 1.5m TEUs a year.
Ghana prepares for oil?
Ports in Ghana have also captured some of the Ivorian transit trade since 2004 and may yet rival Nigeria’s as hubs for the Gulf of Guinea’s oil and gas industry. The larger Tema port, operated by a consortium of Bolloré, Bouygues, Maersk, Sutton and the Ghana Ports and Harbours Authority (GPHA), already caters to significant transit trade from landlocked neighbours.
Container traffic at Tema, dredged to 11 metres, has grown from 197,700 TEUs in 1999 to 555,009 TEUs in 2008 and is expected to reach more than 1m TEUs before 2020. The GPHA has moved faster than its Nigerian counterpart in reducing port congestion through the upgrading of supporting transport links. The government will begin work on a six-lane carriageway out of Tema port in 2010.
Ghana’s second and older port at Takoradi also registered the 10% to 15% year-on-year container growth recorded by Tema. Takoradi is expected to serve Ghana’s emerging oil industry, with GPHA investing $50m to develop an oil service terminal at the port.