Tuesday, November 12, 2024

Supply Lines: Widening trade in Africa

Unloading wind turbine blades around 80 meters (263 feet) in length at a former whale and seal hunting outpost on the coast of Namibia is on

Unloading wind turbine blades around 80 meters (263 feet) in length at a former whale and seal hunting outpost on the coast of Namibia is one of the more remote examples of growing opportunities found by Africa Global Logistics on the continent. 

"That's quite a challenge in a place like Luderitz," Koen Rombouts, AGL's managing director for the southern African corridor, said in an interview last week, describing the project location that's lined with sand dunes with minimal infrastructure in place. 

In addition to supporting the construction of renewable energy stations, AGL — a unit of MSC Mediterranean Shipping Company, the world's largest container shipping line— will also service the oil and gas industry using the harbor, along with Walvis Bay, the main port further up the coastline. (Read the full story here.)

AGL will invest as much as 40 million euros ($43 million) by 2030 to build warehouses and buy heavy equipment in Namibia, where TotalEnergies, Shell and Galp Energia SGPS have made offshore oil discoveries in the past couple years.

A number of MSC units already have existing operations there — from trucking equipment to mines in the region and bringing minerals back, to operating the main container terminal, where it's widening and deepening the port.

"It's a very good example of what our group today is capable of — seeing what's at stake in that country and what's to come," Rombouts said.

Read More: Scramble for Critical Minerals Spurs an African Rail Revival

Angola's Port of Lobito is another growing export hub in southern Africa that's drawn investment from the US and European Union as part of a corridor to export copper and cobalt. AGL started operations at the terminal in March and has an investment plan of 200 million euros for the facility and region, according to its website. 

"Our main driver in many places in Africa is connecting the hinterlands to the ports," according to Rombouts, adding that the Lobito corridor "has started out better than expected."

Still, what's moved to that port in Angola by rail might end up at a million tons a year, a small fraction of what South Africa's state-owned Transnet SOC moves by train, he said.

Transnet Decline

A decline in performance by Transnet, whose rail volumes plummeted to 150 million tons last year from 226 million in 2018, has boosted the expansion of nearby ports. Mozambique in January approved an extended deal for DP World, Grindrod and other operators to run the port in Maputo along with a $2 billion upgrade.

Transnet needs partnerships to boost volumes and AGL would be interested in participating on the rail corridor running from Durban to Johannesburg, Rombouts said. Another possibility would be involvement in mineral shipments that move on the railway network including coal, iron ore and manganese.

Read More: DP World Plans $3 Billion Investment in African Ports by 2029

Some of Transnet's efforts to bring in partners haven't gone as planned. A process to sell almost half of the main container terminal in the southeastern city of Durban has been held up by a court challenge by Maersk. Philippine billionaire Enrique Razon, who chairs International Container Terminal Services, which won the bid, said on Monday that it was "well-run, rigorous and transparent."

In the meantime, AGL is watching Transnet developments and weighing potential participation, Rombouts said. "We're identifying opportunities," he said.

Related Reading:

Paul Burkhardt in Cape Town

Click here for more of Bloomberg.com's most-read stories about trade, supply chains and shipping.

Charted Territory

US Census Bureau, Bloomberg Economics

Trade war analysis | US President-elect Donald Trump loves tariffs. But he also loves deals, is less concerned with national security issues than many in Washington and isn't universally hawkish on China. Does that mean the US and China can reach a grand bargain that will reduce economic tensions? Bloomberg Economics thinks not, and a sweeping agreement that avoids new US tariffs or rolls back export controls is unlikely. Click here to read the full report on the Terminal.

Today's Must Reads

  • Trump has threatened tariffs of 60% or more on goods from China and a universal 10%-to-20% levy on imports from all countries. But those vague campaign promises still need to be fleshed out and rolled out.
  • The president of the National Retail Federation said tariffs proposed by President-elect Donald Trump could cost Americans up to $80 billion. Former Chicago Fed President Charles Evans says the prospect of higher tariffs would make it hard for the Fed to interpret inflation data.
  • India's Finance Minister Nirmala Sitharaman said that the nation may ease some import taxes as long as the move doesn't hurt local companies.
  • The UK is in the final stages of negotiating a free trade agreement with a group of oil-rich Middle Eastern nations including Saudi Arabia.
  • Business groups are urging Justin Trudeau's government to put an end to labor strife at Canada's largest ports, as it did with railways in August, to avoid chaos in the country's supply chains. 
  • A deputy German economy minister is in Taiwan this week for talks with officials and executives and will visit TSMC to strengthen cooperation in the semiconductor sector and increase global supply chain resilience.
  • Watch Bloomberg host Haslinda Amin as she explores maritime innovations across Asia and Europe. This episode of "Momentum" highlights how places like South Korea, China and London are leading efforts to decarbonize shipping with more eco-friendly alternative fuels and potential solutions to improve fuel efficiency.

On the Bloomberg Terminal

  • Brazil is a relatively closed economy, but still could take a hit if  Trump follows through on his universal tariff threats. Bloomberg Economics' model suggests a larger toll than other emerging-market economies.
  • Container shipping rates between China and US could get a short-term boost ahead of new tariffs that may come into effect once Trump's second term starts on Jan. 20, according to Bloomberg Economics.
  • Run SPLC after an equity ticker on Bloomberg to show critical data about a company's suppliers, customers and peers.
  • Use the AHOY function to track global commodities trade flows.
  • See DSET CHOKE for a dataset to monitor shipping chokepoints. 
  • For freight dashboards, see {BI RAIL}, {BI TRCK} and {BI SHIP} and {BI 3PLS}
  • Click HERE for automated stories about supply chains.
  • On the Bloomberg Terminal, type NH FWV for FreightWaves content.
  • See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.

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