Shift in focus: New trends in ports and shipping lead to an increasingly price- conscious and competitive regional market

According to the US International Trade Commission, in the decade to 2018 container trade in West Africa grew more than in any other region around the world, doubling over the period to more than 5m twenty-foot equivalent units (TEUs). Côte d’Ivoire has seen its share of this boom, with the number of container ships calling at the country rising from 485 in 2018 to 504 in 2020.

New Facilities

Given the trend towards containers, the two main ports – the Autonomous Port of Abidjan (Port Autonome d’Abidjan, PAA) and the Autonomous Port of San-Pédro (Port Autonome de San-Pédro, PASP) – have focused on investing in new facilities and capacities for this versatile type of cargo. The PAA is seeing solid progress in the development of the new Côte d’Ivoire Terminal (CIT), with construction expected to wrap up by the end of 2022. The 37.5-ha CIT, a joint venture between French Bolloré Ports and Dutch APM Terminals and built by China Harbour Engineering Company, will be the port’s second container terminal and on completion will add a 1100-metre quay to the facility. The quay will have two 300-metre rail tracks and reefer plugs for up to 1100 containers. Simultaneously, thanks to a €90m loan from the Japan International Cooperation Agency, a new grain terminal and storage area is under construction at the PAA. The PASP also has a new general cargo facility in operation, with plans for an extension to the port’s existing MSC container facility under deliberation as of mid-2022.

The hope is that these new developments will help Côte d’Ivoire compete more effectively with regional rivals, all of which have seen major investment in recent years, supplying local markets and landlocked countries. However, recent shifts in global trade patterns and supply chains pose challenges to all of West Africa’s ports. “We are at the beginning of a migration from past to future,” Koen de Backker, managing director of the CIT, told OBG. “Global manufacturers are looking for ways to outsource goods and components from more remote areas and ensure their supply chains,” he said.

Container To Bulk

While global trade slumped in the initial stages of the Covid-19 pandemic, the recovery saw a surge in demand, ratcheting up freight rates for containers in particular. For example, in 2020 China-Africa rates were around $2000-2500 per TEU, doubling to $4000-5000 in 2021. The rise in costs fuelled a move away from containers and towards break bulk, reversing the trend of previous decades. This has been experienced sharply in West Africa, where profit margins on individual shipments have long been low, meaning hikes in costs have significantly impacted profitability.

Indeed, the number of container ships arriving at Côte d’Ivoire’s ports fell from 504 in 2020 to 458 in 2021, while dry bulk carriers and break-bulk carriers rose from 105 to 151, and 94 to 116, respectively. In addition, slow turnaround times at ports and bottlenecks have added to costs. In the second quarter of 2022 pandemic restrictions caused delays at ports of origin in China and India, further hampering competitiveness. While these issues may be temporary, concerns over efficiency and congestion remain.

On de-bottlenecking, the location of the PAA and the PASP within already congested industrial and commercial areas adds constraints to entering and exiting these ports, and to the amount of space available for warehousing and storage. With the move from containers to bulk, finding storage for items like grain and other food products has become challenging. Given volatile global commodity prices, the value of cargo on board can differ from ship to ship, creating uncertainties in pricing all along the supply chain. Consequently, government plans to improve road and rail infrastructure to alleviate bottlenecks have been widely welcomed by sector players, as have been calls for more digitisation and automation of Côte d’Ivoire’s ports.

Indeed, with an increasingly price-conscious and competitive regional market, progress on de-bottlenecking and ensuring transparent, IT-based systems at the country’s ports will be crucial in the coming years.