Hutchison Ports’ deal with Egypt poised to boost African trade

The long-term US$730M investment by Hutchison Ports and the Egyptian Government in a new container port near Alexandria marks yet another milestone in Africa’s growing role in the container trade.

Located inside the Abu Qir naval base, the greenfield project aims to capitalise on Egypt’s growing export cargoes. With a draft of 18 m, the world-class terminal will be capable of handling mega-vessels and ultimately 2M TEU off a total quay length of 1,200 m, according to Hutchison Ports group managing director Eric Ip. Hutchison has negotiated a concession period of 38 years. Construction is expected to start in 2022.

The new terminal will, however, be chasing Tanger Med, the leading container port in Africa. In 2019, the port handled 4.8M containers, up a staggering 38% on the previous year and comfortably ahead of its nearest competitor, Egypt’s Port Said with 3.86M containers.

While opening a second terminal in 2019 helped boost traffic, it is a telling statement about the boom in African container trade that in 2019 Tanger Med overtook the ports of Colon in Panama, Seattle and Savannah in the USA, Felixstowe in the UK, Santos in Brazil, Mundra in India and Vancouver in Canada.

As Tanger Med group development director Ahmed Bennis told a conference in October, the port is building on connections with 180 other ports as it pushes digital solutions through the wider Tanger Med port community system.

In a remarkably short time, Tanger Med has shown how important ports are to the continent. “In Morocco, Tanger Med has grown in a decade to become a world-class port hub with a powerful industrial centre,” said a report by the Africa Forum released in October.

And as the report explains, other giant-sized investments are in the pipeline in sub-Saharan Africa, notably Abidjan’s second terminal known as TC2 that will handle 1.5M TEU on completion, Nigeria’s multi-purpose deepsea port at Lekki (up to 2.7M TEU), and the MPS2 expansion at Tema in Ghana (up to 3.5M TEU).

The ports are also opening up vital logistical links inland. In October, Mozambique’s president Filipe Nyusi suggested landlocked Malawi should develop bilateral co–operation and transit its goods through rail corridors to the port. In the same vein, Nigeria’s president Muhammadu Buhari issued an instruction in late 2020 for the country’s rail network to connect with all its ports, mainly to cut chronic congestion of the road systems, especially around busy ports like Lagos.

Hub wars

However, it is not always plain sailing in a region of what are known as ‘hub wars’. As the report warns, there are risks of overcapacity as too many container terminals aim to serve as hubs on the big container routes into the Asia-Pacific.

“Transhipment hubs are by definition few and far between” the report explains. “In the long run just four to five ports on the continent will be able to lay claim to this designation, given that a majority of the spots have already been taken by the likes of Tanger Med, Port Said and the Port of Durban.”

Algeria’s ill-fated Djen-Djen port project serves as a warning. An ambitious plan, it ran into stiff competition between neighbouring countries and had poor connectivity. “Successful projects are built step-by-step,” notes the report.

Meanwhile, Bolloré Ports keeps the faith in ambitious plans in Africa despite a long-running dispute at Cameroon’s Autonomous Port of Douala (APD) that has seen a series of legal victories in the French group’s favour, the latest in mid-November 2020.

Meanwhile, Bolloré Ports keeps the faith in ambitious plans in Africa despite a long-running dispute at Cameroon’s Autonomous Port of Douala (APD) that has seen a series of legal victories in the French group’s favour, the latest in mid-November 2020.

In the most recent decision, Bolloré Ports comprehensively won on two counts at the ICC arbitration tribunal following the requisition of the personnel and assets of its subsidiary DIT, the port operator, in late December 2019.

First, the tribunal ruled that the previous port operator DIT should be allowed to participate in a tender process for the container terminal concession that was launched nearly two years ago, but from which it was excluded. Also, APD was ordered to pay damages to DIT.

The latest decision follows a protracted battle in the Cameroonian courts that have repeatedly ruled in DIT’s favour on the irregularity of the tender procedure as well as on the illegality of the public company that the port set up to operate the terminal, Bolloré Ports points out.

The dispute began when APD ordered the requisition of DIT’s employees and assets in late December 2019. As the operator of container terminal at the port since 2005, DIT had invested heavily in equipment and infrastructure that led to a three-fold improvement in its performance, with 350,000 TEU crossing the port in 2019.

Not daunted, Bolloré is pushing on with other projects in the region where it invests an average €250M (US$296M) a year, the company told Container Shipping & Trade. The latest project is the development of a second container terminal at the Port of Abidjan in partnership with the government. A Fr262Bn (US$472M) project, work is in progress and should take another 18 months, says the group. When the new terminal is up and running, it will take ships with a draught of 16 m and handle over 1.5M TEU a year.

Simultaneously, Bolloré Ports continues to invest in another subsidiary, Conakry Terminal in Guinea. Since the group began operating the terminal in 2011, it has pumped €145M (US$172M) into the business. The MPS2 expansion at Tema is another of the group’s projects. And looking ahead, Bolloré tells the magazine it expects to complete a terminal at Port Said, the first dedicated to the automotive sector, by 2021.