Morocco invests in urban transit solutions, high-speed rail and road works

 

Large public investment in Morocco’s physical infrastructure in recent years has contributed to the expansion of domestic transport and logistics. The construction of 1800 km of new expressways, expansion of the rail network, and development of logistics and industrial zones has led to a sharp rise in the number of active companies in transport and logistics. Currently, the sector directly contributes €3.6bn, or 4%, to the country’s GDP, and provides jobs to approximately 1m people. It generates about 15% of budget revenue and accounts for 40% of national energy consumption.

Depending on the year 20-25% of the state’s investment budget is absorbed by transport and logistics projects. Public investment in the sector was low between 2012 and 2016 but increased substantially in 2017 and 2018, in line with efforts to enhance the kingdom’s competitiveness. Although the direct contribution to GDP is small, the indirect role of transport and logistics in the economy is much larger. In fact, it is the key enabler for trade; manufacturing depends on the import of raw materials and export of processed goods, while agriculture requires transportation to move produce from the fields to the national and international markets. Shipments flowing through the country require one or more different modes of transport both domestically and internationally.

Public-Private Partnerships

The government has a significant presence throughout the various transport subsectors. Public companies not only drive forward sector strategies but are substantial investors in transport infrastructure. This is reflected in the relatively low participation rate of foreign investors in transport and logistics, with foreign direct investment (FDI) in the sector constituting less than 3% of total FDI. However, considering the government’s budget deficit, financing via public-private partnerships (PPPs) offer an interesting opportunity and some efforts have been made to encourage them. PPP contracts in Morocco are governed by Act No. 86-12, which was promulgated in 2014 and subsequently updated to allow legal entities created by local authorities, as well as national entities, to engage in PPPs.

The revised law also allowed for the creation in 2016 of a National Commission for PPPs, which is tasked with establishing a national PPP strategy. Although some projects, such as the Casablanca Technopark, are being carried out under the PPP model, there is further potential to expand their use, particularly in transport development, including of roads, bridges and airports. In a 2018 report, officials identified 60 potential PPP projects that could be realised in the near future, of which 26 were in the transport sector. One notable development that is set to be carried out as a PPP is the new port of Kenitra Atlantique, a two-phase project estimated to cost Dh7.7bn (€692.5m). Other potential PPPs include construction of six new marinas on the coast of the Tangier-Tétouan-Al Hoceima region and a new Dh809m (€72.8m) airport specialising in business aviation at Tit Mellil. According to local press reports, pre-feasibility evaluations for these projects are due to be submitted in 2019.

Public Transport

Robust population growth of around 4% per year, coupled with increasing urbanisation, are key contributors to growing congestion in the kingdom’s cities. Part of the government’s strategy for minimising traffic involves improving public transport services. Planning for urban transport is conducted by the municipal authorities. Casablanca, the kingdom’s commercial capital and most populated urban centre, has a strategic development plan in place which aims to both expand and improve the tram and bus networks, and implement video-surveillance technology to monitor traffic levels. Work to expand the city’s tramway system, which was inaugurated in 2012, began in 2016 and was completed in January 2019. A new 22.5-km line – T2 – was built to connect Aïn Diab in the northwest and Sidi Bernoussi in the north-east, with 33 stops in nine districts, which are populated by an estimated 9m people. The project cost €340m and included related infrastructure works and maintenance, and construction of a warehouse for storing and repairing technical equipment.

A second project to extend the T1 line by 1.8 km was also completed around the same time at a cost of €46.3m. The line now includes 37 stations. Ticket prices for the trams will be 40% subsidised by the city and will remain at Dh6.00 (€0.54) each. An additional two lines, T3 and T4, are also in the pipeline and are scheduled to be completed by 2022. The 14-km T3 line will link the Salmia neighbourhood to the Casa Port area, while the 12-km T4 line will connect the Attacharouk neighbourhood near Tit Mellil to Mers Sultan. In addition to the tramways, Casablanca has plans to update its bus system, which is currently run largely on an informal basis. Two new routes are expected to be operational by 2021.

The authorities envisage that the public transport network will eventually consist of four tram lines covering around 73 km; two bus routes covering 22 km; five maintenance centres; and 147 passenger stations – an overall projected investment of Dh16bn (€1.4bn), according to officials.

Traffic Management

Meanwhile Agadir, which is located on the southern Atlantic coast and has a population of around 452,500, is developing its first bus rapid transit system, scheduled for completion in 2019. The city is also planning to equip 18 intersections with smart technology. The Ministry of Transportation and Logistics (Ministère de l’Equipement, du Transport et de la Logistique, METL), also plays an important role in efforts at the national level to combat congestion. In 2017 it launched a new national travel mobile application called MarRoute. The app provides commuters and passengers on public transport with the latest information regarding traffic and road conditions across the country. The application is free to download and populated by announcements by municipal governments, but also serves as a two-way participatory service for users to share their traffic concerns.

Road Network

As of 2014 Morocco had approximately 11,265 km of highways and national roads as well as 9173 km and 22,048 km of regional roads and provincial roads, respectively, according to Autoroutes du Maroc, the Moroccan Highway Administration and the METL. Since that time many new road projects have been launched, further expanding the country’s road network.

In 2016 the METL announced that €3.9bn had been approved for investment in a new rural roads programme, and in 2019 construction is expected to finish on the 148-km Taza-Al Hoceima Expressway. The three-phase project represents an investment of Dh135m (€12.1m) and is part of the Dh6.5bn (€584.6m) Manarat Al Moutawassit development programme, which aims to improve socio-economic conditions in Al Hoceima. Other road developments carried out under the scheme include seven new routes between Targuiste and Cala Iris, and five roads between Issaguen and Khlalfa. “Connecting the upcoming port of Nador West Med with the northern main cities is a main priority as it will be a determining factor in the sustainable development of areas like Fez and Meknes, for instance. The focus is also to develop highways where traffic is most likely to evolve rapidly,” Anouar Benazzouz, managing director of Autoroutes du Maroc, told OBG.

Elsewhere, efforts are being focused on traffic circulation and road safety. Municipal authorities in Casablanca are redeveloping the Sidi Maârouf junction into a multi-level interchange which includes an underpass, two roundabouts, slip roads and a cable-stayed bridge with capacity for 17,000 vehicles at peak times. There are also plans to implement a series of tunnels and beltways to enhance safety in other regions of the kingdom, especially in areas within the Atlas Mountains, which are particularly vulnerable to road accidents.

Road Freight

Road cargo transport constitutes the major mode of domestic transport of goods in Morocco. It accounts for more than 75% of freight transported, excluding phosphates. The National Transport and Logistics Company (La Société Nationale du Transport et de la Logistique, SNTL), a stateowned entity, is the largest freight carrier in the kingdom. SNTL transports approximately 20,000 tonnes of goods across the country each year and, since 2014, has had an annual turnover of between Dh700m (€63m) and Dh900m (€80.9m). It employs approximately 800 persons and has a total storage capacity of some 210,000 sq metres.

Passenger Rail

The first public railway in Morocco was established in 1908 between Casablanca and Berrechid. The following decades saw the addition of thousands more km of track so that by 2017 the national network consisted of 120 rail stations and covered a distance of some 3600 km. The Moroccan National Railways Office (Office National des Chemins de Fer, ONCF) is the both the operator and the body in charge of railway development.

The ONCF’s goal is to modernise rail lines and rail stations across the kingdom and expand several networks around large urban centres. In November 2018 it inaugurated its flagship high-speed railway project. Called the Ligne à Grande Vitesse, or LGV, the line runs between Casablanca and Tangier via Rabat, and has reduced travel time between the two cities from four hours and 45 minutes, to two hours and 10 minutes. It is Africa’s first high-speed rail and took seven years to build. The project cost an estimated Dh22.9bn (€2.1bn) and was majority-funded by the governments of Morocco and France, with Saudi Arabia, Kuwait and the UAE holding a minority interest. Further down the line, the ONCF hopes to establish a second high-speed train link between Casablanca and Marrakech. By 2030 it also hopes to issue tenders for links between Tangier and Agadir, via Rabat; Casablanca, Marrakech and Essaouira; and Casablanca and Oujda via Meknes and Fez. Furthermore, in January 2019 the Arab Maghreb Union announced it was relaunching a project to build a high-speed railway between Morocco and Tunisia, via Algeria. Currently in the preliminary studies phase, the proposed rail link would cost around $3.8bn and could greatly increase economic activity between the Maghreb countries.

Rail Cargo

Beyond passenger travel, the kingdom’s rail network is also important for freight, transporting 8000 tonnes each day on average. About 70% of cargo goes to or from the ports, and there are dry docks in Casablanca, Fez and Marrakech. Although 75% of goods are transported through the road network, phosphate – which is primarily produced by the formerly state-owned firm OCP – is predominantly transported via rail.

Between 2012 and 2016 the total volume of bulk cargo carried by rail declined by almost 40% to 25m tonnes, according to a report on business opportunities for Dutch businesses published in 2018 by the Ministry of Foreign Affairs of the Netherlands. After increasing between 2012 and 2014, the number of containers transported by rail also fell to less than 20,000 twenty-foot equivalent units in 2016.

With the aim of increasing freight volumes and reducing its dependence on phosphate, the ONCF has been expanding its horizons to other market segments, signing a contract with car manufacturer PSA Group, producer of Peugeot, for the transport of cars from their new factory at Kenitra. The facility is expected to enter into operation in early 2019. “The PSA Group’s Kenitra plant is giving a major boost to logistics surrounding the automotive sector. The vehicles storage segment in particular is experiencing 15% growth,” Alexis Rhodas, managing director of logistics company GEFCO Morocco, told OBG. Additionally, in order to strengthen freight connectivity between the kingdom’s cities, in January 2018 the ONCF purchased a total of 30 electrical locomotives from the French manufacturer Alstom. However, logistic platforms close to the train lines will also need to be improved.

Airports

Airport traffic has been steadily increasing since 2014 on the back of tourism growth. In 2017 airport throughput grew by 11.63% to more than 20m passengers – which was the highest number ever recorded – and in 2018 rose by an additional 10.43% to 22.5m, according to the Moroccan Airports Authority (Office National des Aéroports, ONDA). International travellers, which account for some 90% of total throughput, rose by 9.97% to 20m. Europe, the largest source market, saw growth of around 11.55% during that year and accounted for 78% of total international flights, while the Middle East, North America and South America expanded by 6.23%, 11.69% and 18.93%, respectively.

The increase in passenger traffic is partially the result of the open skies agreement signed with the EU in 2004. Following this, the number of air routes rose from 159 to 306, and 73 international destinations were added. The number of operating airlines, meanwhile, increased from 24 to 52, and several low-cost carriers (LCCs), such as Ryanair, Air Arabia and Transavia, entered the market. LCCs now hold a 38% share of combined seat capacity. In 2018 Ryanair added nine new air routes, including two flights from Bordeaux, France, to Marrakech, and one between Brest in north-western France and Fez. In the same year, a number of national carriers also added new routes. For example, Oman Air launched a Muscat-to-Casablanca flight, Bahrain introduced a Manama-to-Casablanca flight and Air Europa launched a service between Madrid and Marrakech. Additional routes are expected to open in 2019, including two new Royal Air Maroc services between Casablanca and Miami and Boston in the US. Of the country’s 13 airports, the largest is Mohammed V Airport in Casablanca, which has undergone various expansions over the years. In 2004 it accounted for 37% of flights, whereas now it accounts for 43%. In 2018 passenger throughput stood at an estimated 9.7m and, following the inauguration of a new $2bn terminal in January 2019, is expected to increase to 14m. The country’s second-largest gateway, Marrakech Menara Airport, is also set to expand, with construction under way on a 67,000-sq-metre terminal. The $138m project will raise annual capacity from 6m to 9m passengers.

Air Freight

Similar to the expansion in passenger travel, air freight activity also increased in 2018, by approximately 7.18% to 88m tonnes, according to the ONDA. However, air freight volumes are still low compared to regional and global benchmarks. For airlines in Morocco, and Africa as a whole, cargo remains a secondary activity, with the continent accounting for just 1.9% of international market share. Casablanca ranked sixth in Africa in terms of the volume of air cargo carried after Cairo, Johannesburg, Nairobi, Addis Ababa and Lagos.

Out of all the African airlines transporting cargo, Royal Air Maroc ranked seventh in 2016, carrying approximately 52 freight tonne km (FTK). This is a modest amount compared to South African Airways, which transported 741.8 FTK, or Ethiopian Airlines, which carried 1490.4 FTK. In order to boost air cargo activity further, measures need to be taken to ensure that air freight a lucrative, safe and efficient business, in addition to an economically viable one.

Ports

Morocco has 35 commercial ports, of which 11 operate internationally. The total market size of the kingdom’s maritime transport sector is currently estimated at around €750m, or roughly 1% of GDP. Measured by annual turnover, terminal operators Marsa Maroc, APM Terminals Tangier, Eurogate and Somaport are the largest maritime companies. Nearly all of the country’s foreign trade –98% – arrives by sea, making investment in ports crucial for wider economic growth. Over the past decade the government has invested substantially in expanding and modernising its ports. In 2017 some Dh1.9bn (€170.9m) was spent on port projects, according to data from the National Ports Agency (Agence Nationale des Ports, ANP). The high level of investment provides attractive business opportunities for foreign companies. Efforts have also been made to improve efficiency. In 2015 PortNet, Morocco’s national single window for foreign trade, was launched, which digitised and streamlined all Customs clearance procedures for trade through the country’s ports. While cargo can now pass through Customs more quickly, for some stakeholders there are still too many procedures. “Although there was net progress in the border clearance process through dematerialisation, there are still a significant number of controls via hard copy documents, which make storage costs high and lead to delays in transport times which can last up to a month, not mentioning it increases the cost for final consumers,” Özgür Kasalı, general manager of container transport company Arkas Maroc, told OBG.

Throughput

While more could be done to speed the flow of traffic through the ports, activity has increased in line with investment. For example, total cargo throughput, excluding trans-shipment, increased from 67.9m tonnes in 2013 to around 77.4m tonnes in 2016, according to the ANP. This represents average growth of around 4.3% per year. Commercial cargo expanded by a more robust 8% to 83.8m tonnes. Key to the strong performance is the Tanger-Med Port, which came into operation in 2007. Originally built to handle 3m containers per year, in 2017 it handled some 3.3m.

Port development is being guided by the National Port Strategy 2030, which aims to invest approximately Dh74bn ($6.7bn) in expanding infrastructure and streamlining operations. It groups the kingdom’s ports into six geographic regions: the east, where Nador Port is located; the north-west, which is home to Tanger Port and Tanger-Med Port; the Kenitra and Casablanca area, where the Casablanca, Mohammedia and Kenitra ports are based; Doukkala Abda, which is home to the Jorf Lasfar and Safi ports; and Dar Souss-Tensift, where Agadir Port is located.

Outlook

The transport sector is vital to the overall economy. Large-scale investments are visible in public transport, roads, railways, airports and ports. However, in order to secure growth going forward, more needs to be done to facilitate private investment, which remains low. Although the number of projects under way indicates that the kingdom’s transport sector will see strong growth over the coming years, there are various issues which could potentially impact its performance. One significant barrier is energy efficiency and environmental sustainability. The sector is the kingdom’s main energy consumer, accounting for 38% of total consumption.

To improve energy efficiency and reduce the carbon footprint not just of its transport systems but across multiple sectors, the government has established a roadmap for a greener economy (see Energy chapter). In the transport sector, the strategy aims to expand sustainable transport systems; aid the sector’s transition to a low-carbon model; and support the National Sustainable Mobility Roadmap, which targets 23% energy savings in the transport sector by 2030. Promoting the sustainable development of transport, particularly within urban centres where emissions are high, will be essential to ensuring the sector’s value continues to be maximised.

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The Report: Morocco 2019

Transport & Logistics chapter from The Report: Morocco 2019

The Report

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