Europe, North America and an increasing number of markets in the Far East are saturated, experiencing only modest growth rates. In contrast, Africa, the Indian Subcontinent and Latin America are the future candidates where the music will be played. Hapag-Lloyd is reacting to this development.
It is from this forward-looking perspective that the Hamburg, Germany-based shipping line has started to reshape its scheduled services by establishing sub-hubs along the African coasts.
Why this has become a major point on H-L’s agenda is explained by Chief Operating Officer Tony Firmin, who puts it straight: “Africa is on its way to becoming one of the world’s leading food producers and exporters!” They’ve got the land, they’ve got the natural resources and if well managed the continent’s agricultural commodities will nourish an increasing number of people not only inside the continent but also abroad. A general trend, whose contours become increasingly visible, despite a lasting blurriness.
Offering the African market new transport options
But what’s often missing are adequate means of transportation to forward temperature sensitive African produce to high price level consumer markets, such as the United Arab Emirates. “During a recent meeting I was asked by a forwarding agent if we were able to set up a reefer ship operated cool chain for pineapples from Ghana to Dubai,” Mr Firmin exemplified. There is huge demand in the UAE for these tropical fruits, the agent said, but complaining in the same breath that all attempts have failed since there is no operator of reliable and steady ocean transports from the Gulf of Guinea to Dubai. Consequently, the Ghana harvested fruits are flown to the UEA, upping their prices remarkably. Mr Firmin’s reaction: “An unexpected statement which drew our attention to this issue. It has the potential of becoming an interesting business case, whose pros and cons we have meanwhile started to evaluate.”
Chocolate made in Ghana
A similar example is the German-Ghanaian startup fairafric that produces organic chocolate in Ghana and is shipped to the European consumer markets. Although the export volume is still modest, it’s a path-breaking project because the chocolate is manufactured locally. “Compared to the simple export of the beans as done for centuries, this way five times more money per ton of cocoa beans flows into the country when we realize the production on site,” illustrates fairafric founder Hendrik Reimers. Meanwhile first European shops selling organic products are offering the Ghana-manufactured chocolate to their clients.
‘The Times They Are a-Changing’, as Bob Dylan sang, this is also happening in Africa. States Mr Reimers: “What are the benefits of billions in development aid if all people in Africa have to live off the depletion of raw materials and do not carry out value creation themselves? A system like this can’t work! Ghana is very well developed in the African context, there is the legal certainty, and the country is very safe. And they have world-class cocoa.”
Tema becomes sub-hub
Surely a perspective business case, among others, for shipping lines like Hapag-Lloyd. Their management’s reaction to this trend: Five 3,000 TEU vessels were chartered for a weekly call at Tema, a deepwater port in Ghana, connecting the harbor with the ports along the North Range, but also Dakar, Tangier and Abidjan. “Due to the dynamic economic development in the area we decided to develop Tema as sub-hub,” states Mr Firmin. Adding to this that H-L’s next step could be deploying feeder vessels.
As does Tangiers …
Tangier in northern Morocco has become another hotspot within the shipping line’s network, playing an increasingly important role for transshipments steamed between North and South America, Europe and Asia. According to reports, H-L intends investing in a large terminal run by German operator Eurogate together with local handler Marsa Maroc (50/50%). According to Eurogate, their turnover at Tangiers leapt in 2017 by a stunning 23 percent to almost 1.4 million TEU.
… and Jeddah
Third in line as distribution centre is the port of Jeddah at the coast of the Red Sea. Four Hapag-Lloyd leased 1,700 TEU feeder ships connect Jeddah with Mombasa and Dar Es Salaam in East Africa but also call at Indian ports on a weekly cycle, lasting 28 days per vessel and rotation.
“The global trade flows are changing, this impacts our network and operational strategy,” concludes COO Tony Firmin of H-L.