Economy, policy uncertainty threaten ports projects

Global seaborne trade volume to hit 10.6b tonnes in 2017
A number of ports development projects across Africa may be pointing to a positive outlook for capacity expansion in the region, but the myriads of uncertainties in economic growth become a limiting factor.

The United Nations in its new report tagged: “Review of Maritime Transport 2017,” is optimistic that the projects, when realised, would aid trade facilitation in the region.

However, projects such as the $1.5billion Lekki Deep Seaport in Nigeria, and the proposed $2.5billion Badagry Deep Seaport are currently facing challenges ranging from economic considerations to inconsistency in policies.

The United Nations Conference on Trade and Development (UNCTAD) report noted that container port volume in Africa dropped by 1.2 per cent in 2016, but will grow by 1.1 per cent in 2017, and by 2.5 per cent by 2018.

It, however, forecast that world seaborne trade will increase by 2.8 per cent in 2017, with total volumes reaching 10.6 billion tonnes.

Projections for the medium term also point to continued expansion, with volumes growing at an estimated compound yearly growth rate of 3.2 per cent between 2017 and 2022.

UNCTAD noted that against the situation in some regions, the projected demand is expected to surpass planned capacity growth (East Coast of North America, China and Oceania).

“Capacity expansion is expected to outweigh demand growth in Northern and Western Africa, Southern Asia and the Gulf Coast of North America, sighting Drewry Maritime statistics.

“Assuming all planned projects are implemented, it is likely that capacity growth in Africa and Southern Asia will be significant. In Western Africa, for example, a sharp increase in port development projects is being observed, fuelled mostly by Chinese investment in African infrastructure projects.

“Several projects are under way, and others are in the pipeline. Dredging works are in progress at ports such as Abidjan, while ground and soil improvements are being carried out in Lomé. In some cases, new greenfield sites have been selected to boost capacity, as illustrated by the $1.5billion project in the Port of Lekki, Nigeria.

“The expansion project of Tema Port, estimated at $1.5billion, is expected to reach completion by the end of 2019, while the Takoradi Port expansion project of $197 million is well under way.

“Similarly, the Ghana liquefied natural gas import terminal project ($500million) and the Atuabo Freeport project ($700million) are in the final stages of construction. A $690million expansion project is being implemented in Dar-es Salaam Port (Port Development West Africa, 2017).

“Other important developments include the Mombasa–Nairobi Standard Gauge Railway, which opened in May 2017, and the Lamu Port–South Sudan–Ethiopia Transport Corridor project.

“However, many projects are uncertain, given the overall economic situation and obstacles to container trade growth. While some projects are likely to go through, others may require further backing, especially from carriers,” the report said.

It noted that cargo dwell time in sub-Saharan Africa are unusually long, compared with performances in other regions such as Asia and Europe, where cargo dwell times in large ports are usually under one week.

The average cargo dwell time in most ports in sub-Saharan Africa is estimated at 20 days.

Cargo flows are set to expand across all segments, with containerised and major dry bulk commodities trades recording the fastest growth. Uncertainty and various positive and negative risk factors are shaping the world economic and merchandise trade outlook.