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Published: 24 March 2009      

Hub ports set to change Africa’s “milk run” model of container routes?

Transnet strategist Mervin Chetty argues the case for a container hub in South Africa

The chief strategist at South Africa’s Transnet Port Terminals says there is an opportunity for shipping lines and cargo owners to gain a cost advantage by consolidating traffic in South Africa for distribution to East and West Africa.

Container lines are rationalising port calls globally due to the financial crisis, diverting services between Asia and Europe by bypassing the Suez Canal and sailing around the Cape to avoid transit fees and increased insurance costs due to piracy.

Speaking at the TOC Asia 2009 Conference in Shenzhen, China earlier this month, Mervin Chetty, General Manager of Strategy, Safety, Health, Environment and Quality, argued that a container hub or relay strategy in Sub-Saharan Africa could lower the cost of trade for shipping lines and cargo owners.

“This would entail the move of Sub-Saharan Africa away from its current multiple gateway system of medium sized ports, towards the model of a transhipment hub with large gateway feeder ports. A hub in South Africa should offer large transhipment volumes as well as gateway volume to feed cargo to other destinations in Africa,” he said.

Transnet is developing its flagship container terminal at the Port of Ngqura (Coega), which lies midway between the Americas, Far East and Asia. The terminal will have an initial annual capacity of 800,000 TEU when it starts commercial operations in early 2010 and will ramp up to 2M TEU on build-out.

This is expected to decrease pressure on other busy South African container terminals in Durban, Pier 1 and Cape Town where Transnet has already seen a large increase in transhipment traffic as a result of vessels diverting from the Suez Canal.

Chetty said the benefits of such a hub model for Sub-Saharan Africa would include greater coordination of long term capacity planning, increased economic activity, employment opportunities and growth, as well as increased national trade competitiveness as a result of economies of scale, scope and density.

“For cargo owners, hub ports would offer savings in total yearly supply chain costs through increased shipping line competition and improved service levels and time, while greater maritime activity would improve access to regional and global markets,” he said, adding that shipping lines would see better vessel utilisation with fewer stops and increased port efficiency and speed at the hub.

In Durban an additional 600,000 TEU is being developed to bring the total container capacity of the port to 3.6M TEU by 2011, including Durban container terminal’s re-engineering project, which will increase the capacity of the Southern Hemisphere’s busiest container terminal to 2.9M TEU.

Cape Town’s container capacity will be increased from 700,000 to 1.4M TEU when RTGs are introduced as part of an overall five-year expansion programme. Together with the Ngqura developments, these advancements will boost South Africa’s container handling capacity by 32% over the next five years.

Elsewhere in Africa, the Port of Djibouti is creating an additional 3M TEU to achieve a total capacity of 3.4M TEU (DP World - Doraleh terminal), while in Dakar, Senegal an additional 1.5M TEU would bring total capacity to 1.75M TEU. Similar investments are being made throughout Sub-Saharan Africa in ports such as Port Louis in Mauritius, Mombasa in Kenya, Lagos in Nigeria, Walvis Bay in Namibia and Maputo in Mozambique.

“The call patterns of major shipping lines in Africa are currently dominated by a ‘milk run’ model with multiple calls traversing the various ports in the region, which can be costly and ineffective,” said Chetty, illustrating the route of one major shipping line.

He said the reality is that shipping lines are adopting asset utilisation and cost reduction strategies to improve their bottom line, with some restructuring of routes, and rationalising their current networks during this financial crisis.

Although Sub-Saharan Africa suffers from high sea freight rates and costs to export, South Africa, compared to its neighbours, is well positioned to feature as a hub due to the country having economies of scale and a network of infrastructure assets, concluded Chetty.


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  • Africa) Djibouti) Doraleh
  • Africa) Djibouti) Port developments
  • Africa) Namibia) Port developments
  • Africa) Nigeria) Lagos
  • Africa) Senegal) Dakar
  • Africa) South Africa) South Africa Port developments
  • Asia) Mauritius) Port Louis
  • Transnet Port Terminals
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