Friday, April 27, 2018 7:30PM / PwC
Africa, despite its enormous size, still represents only a small portion of world trade. Exports are largely commodity based and include oil, coal, iron ore, ferrochrome, precious metals, cocoa, palm oil and timber. Yet, Africa is growing and many of its larger economies are beginning to diversify away from a traditional commodity focus. Ports represent the gateways for these commodity exports, but as countries grow and develop, ports are also essential for sustaining and improving more robust and diverse growth in African economies through the import and export of manufactured goods and other products.
Ports are a vital part of the supply chain in Africa with each port having a far-reaching hinterland often spanning a number of countries. Ports have thus become a natural focus for regional development.
A number of global port logistics trends have emerged in the last decades, including the emergence of ‘hub’ ports, which facilitate dominant volumes of global trade in and out of a region. In Africa, the trend is gathering some momentum but is constrained by lower volumes of cargo relative to other parts of the world, poor port performance, hinterland dominance focused on certain ports, and global shipping routings that have not replicated the hub-and-spoke model more commonly found in other parts of the world.
Other trends such as improved intermodal facilities, enhanced back of-port logistics and closer linkages to railway networks are common but are also less well developed than in other parts of the world. A number of corridor-based initiatives focused on improving the hinterland flow of goods both by road (the dominant mode) and by improvements in the railway network can be found across Africa and these are tending to focus on the higher-volume ports. Examples include improvements to the Gauteng-Durban corridor, initiatives to enhance trade between Rwanda, Burundi and Dar es Salaam and between Uganda and Mombasa. In the west similar trends are emerging between the landlocked countries of Mali, and Burkina Faso, and the Ports of Tema, Abidjan and Dakar.
Africa’s trade with China is growing. China imports commodities such as oil, iron ore, copper and other metal ores from Africa and as the region has developed, China has benefitted from exporting growing volumes of mostly manufactured products. China has also become a significant investor in African infrastructure projects and our research has identified increasing opportunities for China to play a stronger role in port investments.
We believe that the global transportation and logistics industry can no longer afford to ignore developments in Africa and that logistics service providers and ports in particular, will continue to play a key facilitating role in enabling economic growth across sub-Saharan Africa.
Global production networks will increasingly drive port efficiency to integrate all components of the global logistics and supply chains. Ports will therefore come under increasing pressure to respond to the needs of shipping lines, logistics providers and multinational manufacturers as they seek to drive efficiencies throughout the value chain. Ports investment decisions, which in the past have been driven largely by supply-side factors, are likely to be increasingly dictated to by demand-side requirements.
There remains a strong case for Africa to focus on investment in ports. Developing port infrastructure ahead of demand, focusing on the ports with the greatest volume potential (the ‘hub’ ports of the future) and improving their overall functioning so that through productivity gains they are increasingly attractive as destinations for global trade.
Increased volumes of trade and more productive and attractive ports will accelerate changes in global shipping routes serving Africa. As in other parts of the world, this will lead to increased integration with global shipping and trade routes, partly through the allocation of larger vessel sizes – reducing transit times and reducing the unit cost of transport to and from the continent.
Whether you represent government, port authority, port operator, shipping line or logistics provider, we are hoping that our assessment of sub-Saharan ports will help you better understand where the greatest opportunities lie in these rapidly changing gateways to Africa.
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