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Why it’s vital to invest more in ports

While global container volumes were on course for a record year in 2017, according to the Drewry container forecast report released last week, sub-Saharan Africa needed to invest more in port infrastructure, Transnet National Ports Authority group chief executive Siyabonga Gama said.

Gama was addressing experts and investors involved in logistics, liner shipping, ports, terminals, inland transport and equipment manufacturers at the inaugural Terminal Operations Conference Africa at the Inkosi Albert Luthuli International Convention Centre in Durban on Tuesday.

“The report predicts that world loaded container traffic would this year break the 200 million TEU (20-foot equivalent unit, a measure used for capacity in container transport) threshold for the first time ever.

“This increase in container traffic is on the back of an improving global macro-economic narrative, with the International Monetary Fund making a marginal but improved forecast of 0.1% to its 2017 and 2018 world gross domestic product forecast. This follows similar incremental improvements made over the past year.”

The TNPA said southern Africa’s container traffic accounted for almost 40% of Africa’s total container volumes.

From 1985-2010, Durban, the largest container port in southern Africa, experienced an average year-on-year growth of 8% in container traffic.

Other countries in the region have planned major capital expansion programmes designed to leverage vital trade routes between Africa, Europe, Asia and Australasia.

Challenged

Gama said the flip side of this, however, was that over the past few decades, the sub-Saharan Africa container market had been challenged by slow development of quality port infrastructure prompting long ship waiting times before berthing.

“African ports have remained under-developed in comparison with others around the world. This can only be changed by adopting an integrated development system that supports collaboration as well as the financing of infrastructure to fuel economic growth,” said Gama.

He added that the high dependence on external trade meant that productive and efficient ports were critical for Africa’s growth and development.

“All those present today have a vested interest in ensuring our countries optimise freight efficiency and bring products to market faster across the continent and for less cost.

“The cost of moving goods is still very high and it is passed on to the customer and impedes Africa’s ability to give better choices to consumers. Investments in infrastructure can assist us to realise the economies of scale necessary to bring down costs and create cost effective paradigms of growth.”

Gama said poor infrastructure had severely impacted intra-African trade, which the continent’s economic outlook report put at 16%. “This is a vast improvement but compared with trade within Europe at 60%, and trade within Asia and North America, both at 40%, you realise the potential for us as Africans to trade among ourselves remains.

“With distances between ourselves being shorter, this points to the opportunity for new African industries to emerge. We must invest in energy, infrastructure and telecommunications to create vibrant African economies.

“The combination of years of under-investment and exploitation has meant that African ports, roads and railways were mainly designed and built to facilitate transportation of raw materials and resources to markets outside the continent. This has also been affected by a dismal investment in energy resources on our continent.”

MEC for Economic Development, Tourism and Environmental Affairs Sihle Zikalala said the conference presented the province with an enormous opportunity to consolidate its position as the gateway into these markets through developing a rigorous maritime industry that services the region.

“The gateway status does not imply the province acting as a transmission belt of imports, but it also entails increasing our exports to both the region and the rest of the world.

“Worryingly, 60% of trade through Durban port leans towards in-bound trade. This entails that the port is inclined towards imports. This augurs ill for sustainable economic development in the province and the country at large.
Source: Daily News

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