business

Maersk Sees 10% East African Freight Growth as Harbors Develop

A.P. Moeller-Maersk A/S freight volumes will probably increase by as much as 10 percent in the East African region this year, helped by accelerating economic growth and improved efficiency at major ports.

“In East Africa, we are seeing increased political stability, a growing middle class, infrastructure development and oil resources that will drive growth,” Steve Felder, the Danish shipping company’s managing director for the region, said by phone from Johannesburg on Monday.

Governments in Kenya and Tanzania have been increasing investment in harbors as cargo volumes grow. Kenya’s Mombasa port, the biggest in the region, competes with Dar es Salaam in neighboring Tanzania. Kenya’s economy is expected to grow by 6.9 percent this year and Tanzania’s 7.2 percent, according to the International Monetary Fund, compared with a sub-Saharan Africa average of 4.5 percent.

“We are currently seeing 24 berth moves per hour at the Mombasa container terminal, which has potential to double with on-going investment in hardware, deployment of better I.T. solutions and training,” Felder said. “Productivity in the private terminal at Dar es Salaam has greatly improved over the past year to 33 berth moves per hour.”

Maersk, based in Copenhagen, shipped 380,000 20-foot equivalent units in the region last year, about 35 percent of the total market, according to Felder. The company operates the world’s largest shipping container line, and employs almost 10,000 people in more than 40 African nations.

Productivity Issues

About 65 percent of Maersk freight in East Africa goes through Mombasa, while Dar es Salaam handles the bulk of the remaining 35 percent. The shipping line also serves smaller harbors like Zanzibar and Tanga. East Africa, excluding the Horn of Africa, accounts for 15 percent of Maersk freight on the continent, according to Felder.

“Like most emerging markets, the region still faces productivity issues at ports relative to other regions,” Felder said. “Customers in East Africa need predictable and reliable supply chains in order to enable them to reduce buffer inventory levels and improve trade competitiveness.”

Maersk plans to boost port efficiency further by pushing for digitalized-documentation processes to speed up transactions and lower logistical costs, Felder said.

“The idea is to use our expertise around processes and systems around the world to help enable trade,” he said.

Kenya is to announce an operator for its second container terminal this year, ahead of completion in 2016. Maersk’s handling unit, APM Terminals, is among 19 shortlisted bidders, the Kenya Ports Authority said in February.

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