African ports thrive despite economic gloom: almost every sector in every country is suffering from the ongoing global economic crisis. Factories are being closed, GDP forecasts downgraded and belts tightened. Yet the African port sector is one of the few genuine examples of optimism, growth and new investment. Neil Ford reports.

Logistics in Africa

Many of the continent's seaports are bucking the global trend of weak economic indicators; trade volumes are rising, cargo-handling equipment is being upgraded and new ports are being constructed, as the world's biggest port operators compete to develop the most comprehensive African network.

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The continent's biggest economy, South Africa, is certainly playing a full role in port development. While the on-off saga over the Coega project's aluminium smelter has grabbed most of the headlines, transport utility Transnet has quietly got on with the job of constructing the port element of the scheme. Named Ngqura, the port is located just 20km from the existing port of Port Elizabeth in the Eastern Cape, but Transnet intends to give the country's first new port for over 30 years a distinctive role as a transhipment centre when its first phase is completed in October.

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Transnet Port Terminals' divisional executive manager for the container sector, Siyabulela Mhlaluka, says that most of the port infrastructure is now in place and the recruitment and training programmes are being completed.

More than R10bn ($1.15bn) has already been invested in the project and a range of cargo handling equipment ordered, including 22 rubber-tyred gantry cranes and six ship-to-shore cranes, which will ensure rapid container handling.

The container terminal will have an initial handling capacity of 800,000 TEU a year (20-foot-equivalent units, the standard size of container), although this will later be expanded to 2m TEU a year. It will be the only port in South Africa able to serve the new generation of Megamax vessels, which carry up to 9,000 TEU and have a draft of 16.5 metres, that are now becoming more commonplace in international shipping.

Another new container terminal has already opened this year at the port of Djibouti in the Horn of Africa. Dubai Ports World (DP World) has expanded its operations at the port with the construction of Doraleh Container Terminal, which is now the largest terminal on the east coast of Africa anywhere north of Durban.

Given Djibouti's limited domestic market and the port's ability to serve gigantic 15,000 TEU Super Post-Panamax vessels with a draught of 18 metres, DP World plans to develop the project as a transhipment terminal. As well as providing shipping services for landlocked Ethiopia, cargo from larger vessels will be unloaded there for redistribution to other ports in the region.

Although Doraleh has initial handling capacity of 1.2m TEU, the port has been developed to allow an increase to 3m TEU at a later date. Djibouti handled just 350,000 TEU in 2008 but had recorded average growth of 30% a year over the previous three years.

The company's chairman, Ahmed bin Sulayem, commented: "We have invested both financial and human resources in Djibouti over the past nine years as part of our long term commitment to our partnership here. That investment in efficient infrastructure has helped stimulate the economy and supported trade, which in turn has benefited our business." The existing container terminal is now to be converted into a bulk storage facility.

New terminals

In March, DP World also took control of the port of Algiers, now renamed DP World Djazair, as well as the port of Djen Djen, under 30-year concessions. The former already handles more than 60% of Algeria's external trade, while the latter will be positioned as a transhipment hub for the western Mediterranean.

DP World will expand Djazair from 500,000 TEU to 800,000 TEU. The company's senior vice president and director of the Africa region, Anil Singh, said: "We are always looking for opportunities around the world and this is one of those we have identified." Aside from Djibouti, other new port terminals could be developed elsewhere on the east coast of Africa. In April, the Kenyan government unveiled ambitious plans to construct a new port at Lamu at the centre of an integrated industrial and agricultural development. The government of Qatar has agreed to help construct the port on Lamu Island in exchange for 40,000 hectares of arable land. As in Madagascar and elsewhere in Africa, such deals have proved controversial but Nairobi is enthusiastic about the development of a new port to take some of the pressure off Mombasa.

Chirau Ali Mwakere, Kenya's Minister of Transport, commented: "Everything being equal, we should have the first ships calling at the Port of Lamu in Manda Bay by the end of 2011, when we shall have two to three berths ready to pick up or deliver cargo."

Such a deadline seems ambitious in the extreme, particularly as the government has not yet selected a development consortium. New road and rail links will be developed to connect the port to both Ethiopia and south Sudan. Mozambican transport utility, Corredor de Desenvolvimento do Norte (CDN), has revealed that it hopes to develop the port of Nacala as a regional transhipment centre.

Nacala has the deepest natural harbour in eastern Africa and has rail links with neighbouring Malawi that are in the process of being upgraded. CDN chief executive Fernando Couto stated that an unnamed investor is considering developing the project in Mozambique, Mauritius or the Comoros, suggesting that the new terminal would be intended to serve much of the western Indian Ocean. Construction work on a new terminal on the opposite side of Africa began last month. Bollore Africa Logistics is leading a consortium including APM Terminals and local firms Socotrans, Samariti and Translo in the construction of a new container terminal at Pointe-Noire, called Congo Terminal.

The new terminal should offer competition to the Cameroonian port of Douala for Central African trade. The government of neighbouring Democratic Republic of Congo also plans to expand its river mouth ports, while Luba Freeport is being developed in Equatorial Guinea to serve the oil industry, so port investment in the region has never been greater.

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Bulk challenges

The situation in the bulk sector is not quite as bright, largely because commodity prices have fallen over the past year. However, Emirates National Oil Company (ENOC) offshoot Horizon Terminals is investing $l50m in its Horizon Tangier Oil Terminal in Morocco, which is expected to be completed early next year.

ENOC's group chief executive Saeed Khoory said: "The outlook for the terminals market is good in the short to medium term but trading volumes have fallen, and traders are looking for terminals to store their products, so our tanks are close to 100% occupancy rates now."

On the other hand, new dry bulk terminals are likely to be thin on the ground. International prices for iron ore and other important African mining exports have fallen, but it is political instability that poses perhaps the greatest threat. The military junta that seized control of Guinea following the death of President Lansana Conte in December has threatened to cancel mining concessions, including Rio Tinto's $6bn Simandou project, which would have been the world's biggest iron ore project. With bauxite mining also under threat in the country, investor doubts could see port investment shelved.

Similarly, the overthrow of Malagasy president Marc Ravalomanana could curtail mining sector investment, particularly as the growing influence of foreign firms was one of the main causes of the political unrest that unseated the president. Rio Tinto is currently constructing the new port of Ehoala at Tolanaro as part of its $1bn QIT (Quebec Iron and Titanium) Madagascar Minerals ilmenite scheme, but the project's fate is unlikely to be determined until the political impasse is settled. Yet even in the dry bulk sector there are signs of new investment.

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Full use is finally to be made of South Africa's Waterberg Basin coal reserves, although it remains to be seen whether they will be exported via Richards Bay or Maputo. In addition, in spite of the economic crisis, Brazilian firm Vale has decided to proceed with the development of its Moatize coal reserves in Mozambique's central Tete province, providing a huge boost for the rejuvenated Indian Ocean port of Beira.

Nevertheless, it is the container sector that remains the driving force behind the African port revolution. The impending completion of the first phase of Ngqura is not so astonishing, given that the project has been many years in the planning.

Yet the fact that new port projects are being sanctioned now, even at the height of the economic downturn, highlights levels of optimism that seem unparalleled elsewhere in the world. It will be interesting to see how long this huge investment can continue but there is no doubt that the continent is finally gaining much of the transport infrastructure that it has long lacked.