1 May 2024 (Lloyd's List) - THE rerouting of shipping around the Cape of Good Hope has had a significant impact on a number of African nations, but there are still opportunities available to countries on the continent.
UN Trade and Development head of trade and logistics Jan Hoffmann said that nations around the Horn of Africa had seen the most severe consequences of rerouting.
“Over 30% of the trade volume of Sudan, Yemen and Djibouti formerly went through the Suez Canal,” he said. “These countries are definitely negatively impacted.”
But even further down the east coast of Africa, the increased freight rates being driven by the Red Sea crisis were affecting other countries.
“Kenya tea exports, for example, have seen an increase in exports to Russia from $2,442 per feu to $6,513 per feu,” Hoffmann said. “This translates to higher prices for the tea exported, from $3.03 per kg to $4.10 per kg.”
It had not all been negative, however.
“The instability in the Red Sea is affecting the trade in our port facilities,” said Djibouti Port and Freezone project director Hamda Houssein Farah.
“In terms of ship calls we are seeing a little more than what we had one year ago. March 24 we had 126 ships call, five ships more than in March 2023.
This amounted to 110,000 containers in March, up more than 40% on last year.
“The reason is that we are at the gateway of the Red Sea. A lot of ships are not trading to the Red Sea so are dropping off at Djibouti, then feeder vessels are transhipping into the Red Sea.”
While carriers had piled on more capacity on key trade lanes between Asia and Europe, capacity calling at sub-Saharan Africa from the Middle East and
Indian subcontinent had increased, as those regions were dropped off the main trade routes.
This could open opportunities for southern Africa, Hoffmann said.
“There are now more ships coming to Africa,” he said.
“Containership calls at South Africa have increased from around five a week to 20 a week since the end of 2023.”
But many of these are calling for just bunkering or repairs, he added. And while it sounded like a significant increase, it paled in comparison to the number of ships that were diverting away from the Red Sea.
“So many ships are going by that are not getting any bunker services or loading or unloading cargo,” Hoffmann said.
“Most ships pass by. Ships have increased their speeds to compensate for the longer distances and are not stopping.”
There was not much that could be done in the short term to improve the situation, but longer term there was some hope, he said.
“This crisis is a reminder of many of the things we have been working on for many years. We cannot do anything about the distance or about global market rates, but we can do something about port reform, trade facilitation, transit and competition.”
He pointed out that in Europe it was far more common for importers and exporters to use ports in different countries, while this was seldom the case in Africa.
“In Europe, the biggest port for German cargo is Rotterdam, the biggest port for Polish cargo is Hamburg, the biggest port for French cargo is Antwerp,” Hoffmann said.
“We have a lot of inter-port competition, a lot choice that is good for trade competitiveness of European importers and exporters. We need more open trade in Africa to improve port competitiveness.”
Diversification and intra-regional integration would also help, he said, as these can reduce nations’ vulnerability and dependency on a few providers and trade routes.
Longer term, Africa stood to benefit from the biggest challenge in shipping, decarbonisation.
“This has cost implications, but it also provides opportunities, including for African countries, to become providers of alternative fuels,” Hoffmann said.
“If you motivate ships to pass by your countries and you provide alternative fuels, this would be a long-term opportunity and growth potential for Africa.”
