CMA CGM’s recent reshuffling of its West Africa services with a focus on transhipment at Tanger Med illustrates why Nigeria is so keen to tackle mainline vessel congestion more seriously.Nigeria’s decision last week to approve the building of a new port at Lekki, 65km to the east of Lagos, underlines its concern over
the increasing proportion of cargo carried by feeder vessels due to unacceptable delays suffered by mainline services.
The $1.4 billion project involves a deep water port to be developed by the Tolaram Group, a Singapore based family owned international conglomerate. In a joint venture with the Nigerian Ports Authority (NPA) and Lagos State Government, the 90-hectare port complex will be part of Lagos Free Trade Zone, and will include dry bulk, liquid bulk and container terminal facilities. International Container Terminal Services Inc (ICTSI) holds a 20 year sub-concession for the container terminal which will have an ultimate capacity of 2.5 million teu per annum with a quay length of 1,200 metres. The initial draft will be 14 metres, but significantly has potential to be deepened to 16.5 metres.
Lekki is not the only major new port project being pursued by the Nigerian Government. The Badagry port project, located 55km west of Lagos, will have a container terminal with at least 14.5m draft and one million teu p.a. capacity initially, as well as bulk, roro, general cargo and offshore oil support facilities in a Free Trade Zone. The consortium behind the project includes APM Terminals, MSC-affiliated Terminal Investment Limited (TIL), infrastructure investor Macquarie and local partners. APM Terminals recognises that there are limits to the capacity expansion which it can make at its existing terminal in Lagos (Apapa), hence the longer term interest in Badagry which, in APMT’s view, will have better inland connections/access than Lekki. The Lekki project now appears to be more advanced in terms of permissions from the government, although both sets of promoters are talking about 2016 as possible operational start dates.
This may seem like a lot of capacity expansion for a country that currently only sees just over one million teu of port traffic per annum. However, Nigeria is a wealthy country and has a very large population (170 million in 2012 making it the most populous country in Africa, accounting for approximately one sixth of the African population). Based on population, the table below illustrates the huge potential for container volume growth by comparing Nigeria with selected emerging and mature economies. The scope for growth is there, although it will be a long term trend rather than overnight.
Comparison of teu per capita, selected countries, 2012
Source: Drewry Maritime Research
Moreover, Nigeria’s port market has seen double digit average growth over the last ten years, and even in the global financial crash of 2009, volumes only dipped slightly. At the same time private terminal operators have made substantial investments in improving facilities particularly at Lagos (Apapa), the country’s main container port complex.
Development of Nigerian container port volumes 2003-12 (million teu)
Source: Drewry Maritime Research
Growth rates at Nigerian container ports, 2003-2012
Source: Drewry Maritime Research
Development of Nigerian container port volumes 2003-12 (million teu)
APM Terminals is the country’s main terminal operator at present, with facilities in Lagos and Onne (Port Harcourt) which accounted for around 65% of the country’s throughput in 2012. The company has invested over $200 million in enhancements at its Nigerian terminals since 2006, with another $100 million to be spent by the end of 2014. The other main terminal operator in Nigeria is the Bollore Group at Tin Can Island (Apapa), where China Merchants Holdings International also has a stake in the terminal. Bollore accounted for around 32% of Nigerian container port throughput in 2012.
Despite the investments and expertise of these terminal operators, port congestion remains a serious issue. The blame game is being played with fingers pointing in different directions, but delays in customs scanning and clearance of containers, along with the systems and activities of other government agencies appears to be the main issue. Resultant container dwell times in the terminals are very long by world standards plus there is a high level of physical examination of container contents.
Our View
Nigeria has potential for substantial growth in container traffic, and in the long term both the Lekki and Badagry port projects are likely to be needed. This new capacity will be a big step forward in addressing the perennial problem of congestion in Nigerian ports. However, the full potential of the new facilities will not be realised unless there is also significant improvements to customs and bureaucratic procedures in the country.
Source: Drewry Maritime Research