The trend for up-sizing on North-South routes, most visible on Far East-Latin America trades over the last couple of years, has not bypassed African trades, with a number of services to West Africa recently reorganised. Despite a variety of infrastructure challenges, the average size of vessels calling at African ports continues to increase, supported by notably robust trade volume growth.
The largest container capable ships calling in Africa, along with the largest trade volumes, unsurprisingly come from Asia, as displayed in the Graph of the Month. The average capacity of these ships is now almost 4,000 TEU, compared to just under 2,000 TEU for those coming from Europe, and 1,333 TEU for those steaming from North America.
Spate of New Services
Improvements in port infrastructure, along with strong volumes and stable freight rates (according to the SCFI, Shanghai-Lagos freight rates have remained between $1,800-2,100/TEU since August 2012), have recently stimulated a round of service upsizing on the Far East-West Africa trade. Small Post–Panamaxes (up to 5,800 TEU) along with gearless Panamaxes and 4,500 TEU ‘Wafmaxes’ (wide beam designs that are the largest geared containerships in world) have been deployed in the place of 2-3,000 TEU geared vessels. However, as internal infrastructure (road and rail connections) is often poor, ships must continue to call at a number of less developed ports along the coast. As such, smaller geared vessels will still be required to operate regional transhipment services from larger hub ports.
Strong Volumes Driving Demand
Far East-Africa trade volumes increased by 7.2% last year to reach 3.7m TEU, while Europe-Africa trade expanded by 6.9% to 1.9m TEU. Overall, North-South trade involving Africa grew by 5.6% in 2013 to 9.2m TEU, and is projected to expand by a further 6.9% this year and 8.0% in 2015. This growth is likely to drive ongoing demand for vessel upsizing or more services on African trades.
However, the 3-7,999 TEU orderbook is at its smallest level since 1999. While there are a large number of Panamaxes and small Post-Panamaxes still deployed on the mainlane trades, the majority of ships cascaded down are likely to be conventional Panamaxes. These relatively deep draft and gearless vessels are likely to remain sub-optimal for port calls at a number of smaller African facilities, in the short term at least. Smaller geared tonnage may well still be in demand for coastal trades, yet the orderbook for these vessels is also historically thin.
In today’s charter market environment, with Panamax rates still relatively low, further deployment of such tonnage on African trades may seem tempting, compared to employment of both smaller ships and more expensive larger tonnage. However, the long term trend has been for significant up-sizing on this fast growing North-South trade.
Source: Carbon Positive
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.