Challenges Confronting The African Port Sector

Africa’s Growing Importance in Global Supply Chains

Over the past few years, African countries have been recording impressive growth rates, propelled by favourable demographics and abundant natural resources. As globalisation increases African trade with other countries – and as other countries too realise Africa’s potential as home to a young and aspirational population and the predominant source of Critical Raw Materials (CRMs) – crucial for the transition to green energy – there has been increasing focus thereupon from major economies and multinational corporations looking for new forays into new markets. 

African countries are concurrently becoming cognisant of the broader benefits accruing to the economy and populace from engaging in international trade and consequently attempting to leverage their abundance of natural resources and position as the leading source of CRM’s to build bilateral trading and economic relations with more countries (as opposed to a situation where they relied extensively on one or two major trading partners, such the US or China).

There is also considerable emphasis on boosting intra-African trade, through the creation of the African Continent Free Trade Agreement (AfCFTA), which is intended to create a framework for supporting greater trade amongst African countries (the rationale is that intra-regional trade generally has lower TCO and transit times, as distances involved are lesser than in inter-regional trade, as also the fact that deeper trading relations and economic ties foster better bilateral relations. That is the reason why most countries form regional trading blocs, prime examples being the European Union and ASEAN.

Importance of the Ports Sector in Boosting International Trade

The ports sector plays a vital role in enabling the growth of international trade for countries/ regions, as it connects the sea and land transport modes, acting as gateways for exports and imports.

Smoothly functioning and efficient ports have a force-multiplier effect, as they can accelerate cargo movement, handle higher volumes of cargo (with the same capacity), reduce logistics costs, and make exports competitive.

In the African context, considering the number of landlocked countries and the greater proportion of trade with other continents, ports assume even more significance, as these countries have to rely on seaports for trade connectivity.

The African ports sector has, however, not developed in tandem with the steady economic progress made by most countries on the continent. Investments and improvements at most African ports have thus far been incommensurate with the anticipated growth in cargo volumes.

This is because the African ports sector, as a whole, faces certain challenges and is constrained by systemic and external factors that hinder its functioning and efficiency. 

Challenges faced by the African Ports sector

While there do exist localised challenges in each country and region in Africa, there are several challenges that are common to the entire ports sector, which we will understand in this article:

1. Port Infrastructure

Poor infrastructure has been a recurring theme at ports across Africa. While some countries have focused on modernisation of their ports sector and others have plans to do so, generally speaking, the infrastructure at most ports and terminals across Africa is old and/ or inadequate.

In terms of the port/ terminal structure itself, this is manifested in the form of poor berth conditions, piles being corroded, etc. Container handling equipment is generally quite old and, hence, not energy-efficient and also suffers from a lack of timely maintenance. 

2. Limited capacity

Due to a lack of expansion programs and investments, cargo handling capacity at several ports in Africa has not been augmented for many years, thus failing to keep pace with even the natural growth of cargo (let alone a spurt in volumes arising from rapid industrialisation, demand spikes or additional transhipment volumes). 

The inability of the port sector to handle incremental cargo impacts volumes, as when manufacturers are unable to smoothly export their merchandise, they will scale down production levels to meet only the domestic demand and as much cargo as the ports can handle. Thus, the limited capacity at ports acts as a supply chain bottleneck and creates a disincentive to ramp up production levels or invest in new manufacturing capacity. 

3. Shallow Draught

While some ports in Africa, by virtue of their location, enjoy natural deep draught, most ports have shallow draught. In certain cases, regular dredging can ensure a deeper draught, but this is very expensive, and local port authorities/ governments do not possess the financial resources or technical expertise to maintain draught at desired levels.

This has a bearing on the size of vessels that call at the port, as bigger vessels, which require deeper draught, can not call there. The inability of African ports to accommodate larger vessels weighs upon African trade and supply chains, particularly at a time when the continuous upsizing of container ships has resulted in the cascading of vessels to secondary and tertiary trade lanes.

Container carriers are compelled to serve African markets with smaller vessels, thus restricting the shipping space/ capacity available to exporters and importers. 

4. Non-availability of skilled manpower

Availability of skilled manpower to handle the diverse aspects of port operations is a common challenge in most African nations. This is the result of both the comparatively low overall education ratio and skill sets specific to port operations. 

While maritime training colleges and institutes are common in the US, Europe, Asia, etc, there is a dearth of academic institutions imparting quality maritime training in the African continent.

There is also a general lack of awareness of the ports and maritime sector as a career, wherefore youth are not motivated to join the sector (and even if they wish to, they can not avail of the requisite training). 

For port operators, the implication is that they have neither the skilled manpower to manage operations efficiently nor a steady talent pipeline to meet future needs. 

5. Poor productivity and low efficiency levels

Due to the above-mentioned factors, productivity and efficiency levels at most African ports lag far behind those at their peers in other regions. 

While there do exist notable exceptions, such as the Tanger Med port in Morocco, this is more the exception rather than the rule.

The poor track record of African ports was vividly illustrated in the World Bank’s latest Container Port Productivity Index, where most African ports fared badly.

Even ports in South Africa, the continent’s largest and most industrialised economy, fared very poorly, with Durban, Coega, Cape Town, and Port Elizabeth ranked right at the bottom. 

Conversely, only 4 African ports are ranked in the top 100, symptomatic of the larger malaise afflicting the sector.

6. Chronic Congestion and Long Vessel Turnaround Times

Sub-par productivity and efficiency levels directly translate into vessel congestion, prolonged handling times, and delays in cargo evacuation. 

Congestion has been witnessed at ports across all regions in Africa, such as Mombasa in East Africa, Apapa and Conakry in West Africa and Durban in South Africa.

Causes range from poor infrastructure and efficiency levels, insufficient capacity and onward inland connections (for faster evacuation of cargo), seasonal surges, diversion of cargo flows, civil unrest, etc.

Inadequate investments in capacity, equipment, and people adversely affect vessel turnaround times, which are higher than in most other countries/ regions.

While ports across Africa exhibit differences in this respect, with transhipment hubs like Tanger Med performing far better than other African ports, when viewed as a whole, this does remain a concern for African ports.

7. Inefficient Customs & Border-Clearance Processes

As is the case in most developing countries, customs processes and government procedures have not been streamlined to ease the movement of goods past international borders. 

The style of functioning of Customs in most African countries is characterised by excessive bureaucracy and tardiness. 

There is also excessive reliance on manual processes, hindering cargo movement and adding to the time taken for customs clearance. 

An example is the scanning of import and export containers at the port of Dar es Salaam, where physical scanning of all containers is mandatory, adding significant time to the export and import cycles. 

Given the limited number of scanners available and frequency of breakdowns, it often takes more time than anticipated, impeding cargo flows and creating a queue of trucks (which further block traffic and worsen the overall situation). 

The solution is to implement a Risk-based scanning model, wherein AI is used to identify high-risk containers (based on past records and details of origin/ destination/ commodity/ shipper/ consignee, etc). The system then flags such containers, which are sent for scanning (instead of scanning all containers). 

The advantage of this risk assessment-based method is that the vast majority of compliant cargo is cleared quickly, without compromising on security.

Another example is Border check posts between countries, where red tape can delay the clearance of each consignment that passes through. 

8. Poor Hinterland Connectivity (Roads and Rail)

Though several ports exist along the African coastline, providing conduits for the exchange of cargo, accelerated movement of cargo to/ from the final origin/ destination needs Rail and Road connectivity.  

Africa has the largest number of landlocked countries, comprising a significant hinterland, which are served by maritime ports in neighbouring countries. 

Besides plying cargo to domestic hinterlands, there is also the need to cater to transit cargo originating from these landlocked countries. For the first and last mile delivery of both domestic and transit cargo, robust rail and road connections are an imperative. 

In most African countries, existing rail connections date back to colonial times, when rail tracks primarily served the purpose of transporting natural resources. In recent years, these rail lines have fallen into disuse or are not maintained, which, combined with the lack of new investments, has rendered this transport mode unviable.

In this scenario, the majority of cargo is transported by road, putting more pressure on this mode. Road connectivity, while better than rail in the African context, still lags far behind the levels seen in developed nations or manufacturing-oriented economies. 

Due to this, any efficiency gains at ports are negated by the poor condition of the rail and road network, creating additional bottlenecks upstream and downstream.

9. Limited Technological Adoption and Digitalisation

Globally, the adoption of technology in the ports and shipping sectors has not been as widespread as in the financial or manufacturing sectors.

This has, however, been changing as Carriers and port operators are investing heavily in systems and software to automate and optimise most operational aspects.

The cost of deploying technology is, however, quite high, and most African countries and port authorities are unable to allocate the resources necessary for a comprehensive digital transformation, as well as being hampered by limited ICT infrastructure.

While private port operators have taken the lead in this regard and some governments have also undertaken initiatives to digitise and automate some tasks, the current level of technological adoption lags the global standard.

This implies continued reliance on manual methods for processing and sharing information, vessel and berth planning, and decision making – a suboptimal approach in today’s times.

10. Lack of resources

Most governments and port authorities are constrained by a lack of funds to embark upon port modernisation and expansion programmes. 

The cost of expanding a container port/ terminal can easily exceed $100 million, while constructing a greenfield terminal can involve hundreds of millions of dollars. 

To take a recent example, DP World’s proposed expansion at its container terminal at the port of Maputo in Mozambique, to enable the port to accommodate post-Panamax vessels, by deepening draught to 16 metres, doubling capacity to 0.53 million TEUs and extending the berth length to 650 metres, is expected to cost $165 million.

For developing a new container terminal, costs can vary significantly depending on the proposed capacity and infrastructure; however, amounts involved are substantial in either case. 

An example is APM Terminals $550 million investment for a 30-year concession to develop the Laldia Container Terminal in Chattogram, Bangladesh.

Even port modernisation projects can involve significant expenditure, as seen in the case of the port of Cotonou, Benin, where the African Development Bank has committed to EUR 80 million to modernise facilities and extend the infrastructure of the port.

The bottom line is that while the investment is high, there is no guarantee of generating an acceptable ROI, as the success of the new or expanded port will depend on international trade flows and the port’s ability to attract incremental cargo volumes.

The amounts involved would render it beyond the capacity of most governments to fund such ambitious projects on their own, making these projects contingent on the availability of private sector players or DFIs.

11. High Operational Costs

Inefficiencies in port operations add avoidable operational costs, increasing the TCO or landed costs for exporters and importers. This makes it more expensive to use the port concerned, hindering volume growth and also eroding profit margins.

In the long run, this could undermine the financial viability and operational sustainability of such ports.

12. Security and Political Stability 

Several African countries have experienced civil unrest and violence, as well as terrorism and armed conflict. 

Since supply chains thrive in stable environments, any deterioration in security levels has the effect of diverting trade flows away from the country’s ports.

An example is the civil unrest in mid-2024 in Kenya, which caused diversions to nearby ports. 

While the example given above is transient in nature (port operations stabilised post return of normalcy), in the case of countries beset by ongoing violence or terrorism, the consequences on port performance and volumes can be structural in nature.

Political instability, violent protests and military conflicts can hurt cross-border trade. 

In November 2024, post-electoral violence in Mozambique had repercussions for the broader trade in the Southern African region, with South Africa being forced to close its border crossing with Mozambique, effectively halting cargo movement. 

In Western Africa, grappling with ISIS and Al-Qaeda-linked insurgency and having witnessed military coups in the last few years, economic activity and trade flows have been impacted. An example of which was the border shutdown between Niger and Benin post the 2023 coup in Niger.

Future Outlook for the African Ports Sector

Considering the litany of woes afflicting the African ports sector, it is no surprise that the sector is also characterised by underinvestment and underperformance. 

However, as recognition grows about the role of ports in the overall supply chain and as critical nodes for transfer of cargo between the sea and the land modes, there is greater focus on developing world class ports (or at least elevating infrastructure, productivity, and efficiency levels at par with similar ports worldwide, with the ability to cater to current volumes and also projected cargo growth.

Towards this end in view, most African countries have embarked upon a series of initiatives for the development of their ports, including expansion and modernisation programs, infusing capital needed to improve infrastructure, acquiring modern cargo handling equipment, investing in technology, and exploring the PPP model to attract private players.

Private port operators desirous of expanding their global footprint, too, have evinced keenness on acquiring port and terminal assets in various countries in Africa. 

Foremost amongst these is APM Terminals, which, with the group’s typically foresighted approach, has been investing in ports and terminals for many years now, especially in the West Africa region. 

Another Container Carrier with a sizeable presence (largely built inorganically) across African ports in MSC, now the world’s largest container shipping line. It acquired Bollore Group’s African terminal assets and also Africa Global Logistics (AGL), whereafter their ports and terminal assets were consolidated under AGL.

The Chinese are also prominent players in this sector, who have for the better part of the past two decades been steadily acquiring port assets in various African countries, under the Belt and Road Initiative (BRI), to complement their investments in mining and other infrastructure projects, with a pit-to-port approach. Also, for the Chinese, geopolitical considerations are equally important, wherefore there is also considerable focus on dual-purpose ports, i.e. ports which can be used for both trading and military purposes.

Amongst latter entrants, DP World is aggressively expanding on the continent, with investments across ports and other elements of the supply chain.

Other players, such as Abu Dhabi ports, are eyeing port assets as well as ancillary logistics sectors, while ICTSI has established their presence in South Africa, with a successful defence of its concession for Pier 2 in Durban (fending off a legal challenge from APM Terminals).

India’s Adani Ports Group made its initial foray with a 30-year concession to operate the Container Terminal 2 at the port of Dar es Salaam in Tanzania.

This heightened focus on African ports is a testament to the latent economic potential in African countries, which will inevitably translate into internationally traded volumes, thus increasing the market size of the ports sector.

African Governments, too, are adopting the PPP model to develop their ports, recognising that these national assets need private sector investments and expertise to truly support their ambitions of playing a greater role in international supply chains.

With the rapid pace of these positive developments, it would not be too sanguine to expect that the African ports sector, though currently beset by a multitude of challenges, will in the forthcoming years witness significant improvement in its infrastructure and operational performance, benefitting African exporters, importers, and consumers alike.

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About Author

Jitendra has over 20 years of international experience in the Container Shipping, Ports and Logistics industry, spanning 3 diverse geographies, wherein he has been involved in the commercial and strategic aspects of the container business.

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