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West African box growth dips as oil prices slump

WEST African container trades are no longer enjoying growth in container volumes following annual increases of between 5 per cent and 10 per cent during the years from 2010 to 2014, IHS Media reported.

West African box growth dips as oil prices slump

WEST African container trades are no longer enjoying growth in container volumes following annual increases of between 5 per cent and 10 per cent during the years from 2010 to 2014, IHS Media reported.

West African box growth dips as oil prices slump
11 November 2016 - 07:21

West African box growth dips as oil prices slump
WEST African container trades are no longer enjoying growth in container volumes following annual increases of between 5 per cent and 10 per cent during the years from 2010 to 2014, IHS Media reported.
Oil prices have slumped in recent years and the region's container import volumes has also dipped. Last year, west African import volumes dropped 9 per cent and this year, they can be expected to contract by a further 5-6 per cent, according to market leader Maersk Line/Safmarine.
Maersk Line senior director for the west Africa trades Mads Skov-Hansen said that these average figures hid much sharper contractions in some countries, notably in Angola and Nigeria, while, in some other countries such as Ivory Coast, Ghana, and Senegal, growth had continued.
"We have to go all the way back to the global crisis to see something like this," he said. "It's very sharp, very dramatic."
The Far east-west Africa trades have been the hardest hit, which Mr Skov-Hansen said had seen import volumes fall by 14 per cent last year, compared with 4 per cent in the Europe-west Africa trades, which include transshipments from other regions via the Mediterranean.
The two trades are very differently configured. On the Europe-west Africa trade, Maersk Line continues to use 2,500-3,000 TEU vessels, as well as less frequently baby-panamaxes with capacity up to 4,300 TEU. These take account of the size limitations which still apply at most west African ports.
The Far east-west Africa trade uses larger vessels. Mediterranean Shipping Company (MSC) has introduced vessels of more than 9,000 TEU on the route and is even believed to be testing 13,000 TEU vessels. However, MSC is serving only the Togolese port of Lom?directly with these vessels, with cargo transshipped onward via other services using smaller vessels.
CMA CGM has also increased the size of its vessels serving west Africa. According to line trades analyst Alphaliner, the French group currently operates three 8,500-9,200 TEU vessels and has a fourth on the way on one of its Far east-west Africa loops.
Maersk Line says that it has no plans to follow suit. It is currently using the 4,500-5,000 TEU WAFMAX vessels it introduced in 2011-12 and plans to continue doing so for the foreseeable future.
"We can serve most of the markets a lot faster and in a more reliable manner than if we had to transship the cargo," Mr Skov-Hansen said. "We believe that, commercially and financially, it makes sense for now to maintain this approach to vessel size."
The west African export trades present a very different picture than the import trades. They are driven more by the markets for such commodities as cocoa, cotton, and timber than by oil prices and, for the time being, cargo volumes are continuing to grow.
Mr Skov-Hansen said that west African export volumes had increased by 15 per cent in 2015 after 8 per cent in 2014. This year, however, he expects them to show more modest 1-2 per cent growth.
According to Mr Skov-Hansen, the prospects of the West African container trades hang principally on the evolution of world oil prices. While these continue to be uncertain, the outlook remains negative.
"We have seen some recovery," he said, "but we don't believe it is enough to really change the negative outlook next year."
In the longer term, however, he believes that market fundamentals offer reasons to be optimistic.

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