Drewry: West Africa improving but more to do

Drewry: West Africa improving but more to do
Volumes are up 3.2% year-on-year

The Asia-West Africa is growing at its fastest pace since late 2014 but the African region still has a lot of ground to recover, according to Drewry.

Container throughput in the southbound Asia to West Africa trade grew by 7% in the third quarter of 2017, but is some way off replicating its annual record of 1.5m teu, which was achieved in 2014.

For the first nine months of the year volumes are up 3.2%, sitting at slightly more than 900,000, but even if current growth rates were to be retained the annual figure would only reach around 1.2m teu.

If that was to be the case, volumes for 2017 would be less than those of 2012.

Drewry said: “The outlook for this trade is much brighter than it has been for the past two years, but there is still a long way to go to recover all of the lost ground.

“At this juncture, the prospects for 2018 appear to be similar to this year, with some modest growth potential.”

Due to the boost in volumes a number of operators introduced additional capacity during the last few months, with total capacity expected to jump 13% year-on-year in December.

Maersk reintroduced a fortnightly service that had been suspended since February and also created a new weekly loop.

Cosco and Gold Star Line also briefly ran a new fortnightly service, although this was pulled after a small number of voyages, probably due to a 25% drop in spot freight rates following the injection of additional capacity.

MSC cut the westbound Durban slots from its Africa Express service, meaning these slots are now designated for West Africa trade.

However Drewry said the trade is ‘highly exposed’ to the sudden changes in oil market as oil exporting nations such as Nigeria and Angola are highly dependent on foreign exchange earnings to fund imports.

The consultancy agency said the rise in container volumes could be partly attributed to the rising oil market, but also to recoveries elsewhere following the Ebola crisis.

However it was also noted that the IMF cited the recovery of oil production as a one-off factor and also highlighted risks to future growth from rising public debt, per capita income declines and low international currency reserves in many sub-Saharan African countries.

Drewry said: “With limited progress in diversifying the oil-dependent economies the flows of containers will continue to be linked to that often volatile market.”