African air cargo tonnage up 8% in first half of 2024

https://www.logupdateafrica.com/air-cargo/african-air-cargo-tonnage-up-8-in-first-half-of-2024-1352559?infinitescroll=1

Tonnages from all the main world origin regions in Q2 this year were higher YoY, with Asia Pacific up 18%, Europe volumes up +7%, Africa origins up +6%. In comparison, there were +5% YoY increases from North America and Central & South America (CSA).

Global air cargo demand in the first half of 2024 (H1, 2024) was up, YoY, from all the main world origin regions, with Asia Pacific and MESA origins topping the growth list at +19% each, and there were single-digit percentage increases from Africa (+8%), Europe (+7%), CSA (+5%) and North America (+2%). Tonnages were up by +12% in the first half of 2024 compared with the equivalent period last year, according to preliminary figures and analysis from WorldACD Market Data, with +11% year-on-year (YoY) growth in the second quarter (Q2) following on from the +12% recorded in Q1. The preliminary figure for June of +9%, YoY, was slightly below the average YoY full-month tonnage growth figure so far this year, with strong YoY growth continuing from Asia Pacific origins but with demand from Middle East & South Asia (MESA) origins dropping back somewhat from the highly elevated tonnage growth levels experienced in the first quarter. Tonnages from MESA origins in Q2 were still significantly higher (+13%) than the equivalent period last year, but that growth figure was well below the +27% growth recorded in Q1, from a region particularly affected by the disruptions to container shipping caused by the attacks on vessels in the Red Sea.

Tonnages from Asia Pacific origins in Q2 were up by +18%, YoY, similar to the +20% YoY growth recorded in the first quarter of this year. Indeed, tonnages from all the main world origin regions in Q2 this year were higher than the equivalent period last year, with Europe volumes up +7%, Africa origins up +6%, while there were +5% YoY increases from North America and Central & South America (CSA). On the pricing side, average global air cargo rates of US$2.39 per kilo for the first half of 2024, based on a full-market average of spot rates and contract rates, were down by -8%, YoY. That decline was partly due to a tough comparison in the first quarter with the elevated average rates ($2.76/kg) still present in the market in Q1 last year. However, average rates of $2.46 per kilo in Q2 this year have risen back to +2% above their levels in the same period last year, thanks to significant YoY rises from Asia Pacific (+10%) and from MESA (+47%) origins, or at least on key lanes.

Whereas global average rates in the first four months of 2024 were down compared with last year, by May they had moved back into positive territory (+2%), with the gap widening to +9% in June, when they averaged $2.52 per kilo. Looking at the last full week (week 26, 24-30 June), average global rates dropped very slightly (by -$0.02) to $2.51 per kilo, WoW, according to the more than 450,000 weekly transactions covered by WorldACD’s data. But that figure was up, YoY, by +9%, and well above pre-Covid levels (+41% compared to June 2019). Meanwhile, total worldwide tonnages in week 26 rebounded by +3% after losing around -5%, in total, across the previous two weeks – mainly to and from countries with predominantly Muslim populations, linked to the Eid al-Adha annual festivals and holidays, which this year took place between 16 and 20 June.

How Tanzania can unlock $5.5 Billion unrealized export potential

  • A five-year export update and trade analysis has pinpointed the reasons behind Tanzania’s failure to supply various international markets with its agricultural produce, mineral products, and manufactured goods, while also suggesting potential solutions.

Tanzania has a $5.5 billion unutilized export potential for its products, according to the International Trade Centre (ITC) export potential map.

The center’s analysis shows there are several markets, such as South Asia and the Middle East, the European Union and West Europe, Eastern Africa, Southern Africa, Southeast Asia, North America, and Central Africa, which Tanzania can export more.

CMA CGM vessel in container stack collapse sails from South Africa

Photo: SAMSA

The 18,000 teu CMA CGM Benjamin Franklin that lost 44 containers in severe weather off South Africa on 9 July has now continued on its voyage to Europe.

The South Africa Maritime Safety Authority (SAMSA) confirmed on Thursday the container ship had departed Algoa Bay following works to strengthen the vessel’s hold.

The incident where the vessel occurred early morning on 9 July in the Indian Ocean and CMA CGM Benjamin Franklin reported a collapsed container stack. The vessel diverted to Algoa Bay where a damage assessment could be carried out in sheltered waters.

Related: CMA CGM ship loses 44 containers in South African storm

“The ultra-large container vessel, the CMA CGM Benjamin Franklin has left Algoa Bay. She sailed on the evening of Tuesday, 16 July 2024. She had been anchored in sheltered waters in Algoa Bay since last week, undergoing a comprehensive assessment while her cargo was being secured. The vessel had reported a collapsed container stack and the loss of 44 containers at sea,” SAMSA said in statement.

“The vessel was cleared to sail, after the South African Maritime Safety Authority (SAMSA) assessed a cargo securing plan that was received from the Owners, to secure the damaged cargo stacks. After the cargo stacks were secured in Algoa Bay, the Owners identified a suitable weather window to conduct the passage around the Cape of Good Hope.”

By Thursday morning the vessel was reported to be passing St Helena Bay heading to Europe.

Containerships that would normal transit the Suez Canal on voyages between Asia and Europe have been diverting via the Cape of Good Hope to avoid attacks by the Houthi on commercial shipping in the Red Sea.

Over three dozen containers lost overboard are believed to be on the seabed at depth of more than 500 metres outside of South African waters.

“A navigation warning to all vessels operating in the area remains active, advising them to navigate with caution. Vessels and the public are urged to report any sightings of the lost containers to the relevant authorities by contacting the Maritime Rescue Coordinating Centre (MRCC) on telephone number 021 938 3300 with the position, number, and colour of the containers if observed,” said SAMSA.

RED SEA CRISIS 

Attacks on Red Sea shipping bankrupt Israeli port

The economic effects of the Houthi strikes against Red Sea shipping became evident with the Port of Eilat’s request for financial assistance from the Israeli government following an 85% decline in volumes.

Nick Savvides | Jul 10, 2024

Eilat is situated on Israel’s southern coast on the Red Sea, linking the country to Asia and the Indian Ocean without the need to transit the Suez Canal, but its volumes had been in decline since a Q4 2022 spike saw the facility handle 124,000 tonnes, doubling its Q1 levels that year.

However, in a meeting with the Knesset’s Economic Affairs Committee on 7 July, CEO Gideon Golbert said there had been no activity at the port for eight months and no revenues coming in.

Related: Red Sea diversions hit Greece container volumes

The port mainly handles bulk cargoes, potash and car imports as well as some containers is considerably smaller than the country’s Mediterranean ports of Ashdod and Haifa, but the effects of the Houthi attacks have clearly affected the Israeli trade.

On a broader scale the Houthi actions have diverted hundreds of container vessels every week on a much longer journey, some 4,000 miles longer, around the African cape to Europe, increasing the fuel costs, and emissions, with the first increment of the EU ETS introduced in January this year.

Related: Suez Canal revenue drops by almost half due to Red Sea crisis

Conversely the Middle East conflict has given a significant boost to the secondhand container ship market, reports Alphaliner.

“Container sale and purchase deals surged again in the first half of 2024, as carriers and NOOs reacted to the red-hot charter and freight markets. After a slump in transactions in the second half of 2023, more than half a million teu of container tonnage changed hands in the first six months of 2024,” said the analyst.

As vessel operators “sought every available ship” in order to effectively meet the demand for the services travelling around the Cape of Good Hope and to maintain weekly schedules.

According to Alphaliner 141 ships of 572,600 teu were traded between January and June, an average of 23 units per month, compared to 15 sales per month H2 2023.

Carriers initially believed that the disruption to Red Sea shipping would be short lived and did not respond immediately to the surge in rates in late 2023.

“Despite the influx of a massive 1.6 million teu in newbuilding capacity in the first half of 2024, carriers sought even more tonnage in the second-hand market in order to plug schedule holes and capitalise on firm rates.”

Alphaliner also reported that virtually every available ship is now deployed in gainful employments with the idle fleet falling to 0.4% in May, and, while the idle container fleet increased minimally over the last six weeks, the number of unemployed ships remains below 1% of the total fleet.

Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited.

Source: https://www.seatrade-maritime.com/ports/attacks-red-sea-shipping-bankrupt-israeli-port

Container shipping market outlook for H2 2024

Spot container freight rates have surged to unexpected highs in the first half of 2024 due the Red Sea crisis, what will happen in the remaining months of the year.

Marcus Hand | Jul 18, 2024

In a five-part series mid-year we take stock of shipping markets in the first six months of the year and look ahead to the remainder of the 2024 with experts Maritime Strategies International (MSI).

In this second part the Seatrade Maritime Podcast talked to Daniel Richards from MSI, about the developments in the container shipping market and the outlook for the remainder of the year.

In a five-part series mid-year we take stock of shipping markets in the first six months of the year and look ahead to the remainder of the 2024 with experts Maritime Strategies International (MSI).

In this second part the Seatrade Maritime Podcast talked to Daniel Richards from MSI, about the developments in the container shipping market and the outlook for the remainder of the year.

You can listen to the full interview as a podcast in the player above

Why have spot container rates risen much higher than expected?

“There’s no doubt that the scale, in particular, of the spot market increases, has been stronger than the consensus, and certainly we expected,” Richards explains.

The delayed and secondary impacts of Red Sea diversions via the Cape of Good Hope have been a lot greater than expected for which MSI sees a mix of drivers, and these include:

  • Trade data has been better than expected.
  • Demand growth at 6% in the first five months is not much better than MSI had been expecting but he notes, “there is some possibility that volumes have been brought forward as container shippers are trying to anticipate and avoid delays and supply chain problems”.
  • The need for additional vessels for African Cape diversions has prevented the addition of extra capacity on unaffected trades.
  • Port congestion initially in certain Mediterranean has seen containers piling up in storage yards and congestion spreading to Southeast Asian hubs such as Singapore and Port Klang.

So, it’s all combining to take effective supply out of the system. And I think this really points to the final driver, though, which is simply that freight markets now just seem to be far more volatile than they were in the period before the pandemic,” Richards says.

“It does seem that for a select number of shippers, they are willing to pay the premium rates to get their stuff loaded, and that’s leading to far more explosive responses in the market.”

Will freight rates hit the levels seen at the height of the pandemic?

Richards says much depends on how long the crisis lasts. “You need to see really sustained strength in the spot markets in order for that to filter through to the new contract negotiations when they come up, generally towards the end of the year and towards the end of Q1 and Q2 on certain trades.”

He explains, “So assuming that there is some normalisation, some softening in the spot markets in the second half of the year, as you move beyond peak season, as new capacity continues to come into the market, then we would expect that lines won’t be in quite as strong a position going into doing the next round of contract negotiations with shippers.

“But really in the very near term, certainly further increases are plausible, and for the moment, the market seems fairly unconstrained in terms of how high or how much shippers have seemed to be willing to spend.”

What happens if there is a ceasefire in Gaza and the Houthis stop attacking vessels in the Red Sea?

“We would expect the market to weaken, and generally speaking, the prevailing rate levels you’ve saw towards the end of 2023 are what we’d expect if you were to see the sailings to resume through the Red Sea, and for that to remain the case,” Richards says.

However, there are questions as to whether the Houthi would stop attacks if there were a ceasefire in Gaza and could be relied to do so on a ongoing basis. There is also a question as to how different lines would react and whether all would decide to return to the Red Sea immediately or adopt a wait and see approach. But a much weaker market would be expected.

Africa’s Critical Mineral Race Heats Up

Competing railway corridors pit the United States against China; Kenya faces a violent crackdown on tax protests.

The highlights this week: Protests in Kenya turn violent, Ghana reaches a debt deal, and Namibia decriminalizes homosexuality.

Can the Lobito Corridor Counter China in Africa?

The U.S. government is helping to revive a railway line linking critical mineral mines in Zambia and the Democratic Republic of the Congo to the port of Lobito in Angola. The corridor is a key to the Biden administration’s plan to counter China in Africa. (Chinese companies have made extensive infrastructure investments in all three countries.)

The end goal of the Lobito Corridor is to create an efficient route for exporting critical minerals to the European Union and the United States. Last week, Italy announced a $320 million investment in the project as part of Prime Minister Giorgia Meloni’s bid for African resource access, named the Mattei Plan for Africa. A consortium of European companies—Mota-Engil, Vecturis, and Singapore-based Swiss commodity trader Trafigura—have won a 30-year concession from the three African nations to operate the railway.

Freight Management Mistakes and How to Avoid Them

The United States has committed $250 million, mostly in concessionary loans to the Africa Finance Corp., which is spearheading the project, but that transaction has yet to receive final approval. Other major funders include the African Development Bank ($500 million). The Lobito project is ultimately expected to cost $2.3 billion.

Congo is the world’s largest producer of cobalt, accounting for about 70 percent of production globally. Congo and Zambia are Africa’s main copper producers; meanwhile, Angola has 36 of the 51 minerals that are critical to green energy technologies. Belgium and Portugal built the original rail line between 1902 and 1929, but it collapsed following a civil war and Angola’s 1975 independence from Portugal.

However, once the roughly 800-mile line is built, it could still be accessed by Beijing’s state mining companies for export. So far, only the Canadian firm Ivanhoe Mines has committed to using the railway.

Meanwhile, China has proposed rebuilding and running a rival railway, the Tazara line—which is 300 miles shorter than the Lobito Corridor—as a faster way to transport critical minerals from Congo and Zambia. Tazara, first built by Chinese leader Mao Zedong’s government in the 1970s, runs from Zambia to the Indian Ocean port of Dar es Salaam in Tanzania and is just one part of China’s infrastructure investments in Africa over the past four decades.

“The reality of the Lobito Corridor development is that it may be coming too late in the day … since most of the supply has already been locked in by China,” wrote Evans Wala Chabala, a policy consultant and former chief executive of the Securities and Exchange Commission of Zambia.

Congo, which sells most of its raw minerals to China for processing, hopes that the Lobito Corridor will also draw investments in a battery precursor plant that could cost just one-third of an equivalent plant in China or the United States.

However, Kinshasa is contending with ongoing violence in the eastern region of the country as well as a lack of specialized workers; the most likely candidates to risk such a project would be Chinese operators. Experts believe that Chinese mine operators would be able to use the corridor for export.

“With the EU and the US lagging in terms of EV [electric vehicle] technology, it is very likely that the DRC and Zambia will end up looking to the East for the capacity and capability building of EV battery value chains,” Wala Chabala noted.

“Just compare the number of essential EV players in China to that of the United States. Whereas only a handful of B-level companies meet Tesla’s dominance in the United States, China has powerhouses in BYD, Geely, XPeng, Nio, Chery, and others” Jorge Guajardo wrote in Foreign Policy.

Some analysts argue that the Lobito Corridor is little more than a minerals extraction project, and that the United States needs to look beyond that to outmaneuver China. “Washington’s attempt to borrow a page from Beijing’s book could prove to be a day late and a dollar short at a time when the nature of the relationship between Beijing and African capitals is changing,” wrote Chris O. Ògúnmọ́dẹdé, an analyst studying African politics.

Beijing is attempting to build local value-added chains. Zimbabwe, Namibia, and Nigeria, in which Chinese companies have a monopoly, have restricted the export of raw lithium in favor of processing it locally in Chinese built refineries. To be fair, Washington has also pledged along with China to help Zambia add value to raw minerals and create jobs in EV battery manufacturing.

Yet “one of Beijing’s considerable advantages over its rivals is its ability to get the private and public sectors to align with its geopolitical and strategic objectives,” wrote Christian Géraud Neema Byamungu, an expert on China-Africa relations.Success hinges on whether the U.S. government and EU leaders can convince private companies to compete against state-owned Chinese companies that face little regulation and accountability.

Why EA Commercial and Logistics Centre crucial

DAR ES SALAAM: THE East Africa Commercial and Logistics Centre Project being implemented at a cost of 110 million US dollar (about 275bn/-) at Ubungo District in Dar es Salaam has reached 80 per cent and is expected to strengthen trade and accelerate the growth of the entire Eastern Africa economy.

EACLC Project General Director, Ms Cathy Wang made the statement yesterday shortly after hosting the Tanzania Investment Centre’s (TIC) Board of Directors’ Chairman, Dr Binilith Mahenge who was accompanied with other TIC’s officials to inspect the progress of the notable business hub project.

Ms Wang said the project, funded by China’s private investors, which officially kicked off in April this year has reached 80 per cent, where about 70 million USD (about 175bn/-) has already been invested, noting by December this year the structure of the centre will be completed while overall completion that entails decoration is expected by June 2024.

She said upon starting its operation by the mid of next year the project will promote business development by ensuring local industries from Tanzania and neighbouring countries including Rwanda and Burundi enjoy widened accessibility to China’s market through the integrated logistics services with end-to-end supply chain.

Ms Wang said the move targets in enabling Tanzania’s goods producers to fully tap the China market assisting the country to achieve the semi-industrialisation goal come 2025.

She said the EACLC will also cut importation cost of manufactured goods in Tanzania by accommodating major China’s wholesale companies that will enable among other retailers to obtain immense brands from the Asia’s highest tech country here in Dar es saalam.

Capacity

“We are going to accommodate more than 2000 shops and offices here in the same building, we will accommodate shipping lines, clearing agencies and with operation the commercial hub will create about 50,000 direct jobs and 15,000 indirect jobs,” Ms Wang said.

Adding “We have already created 1500 job opportunities at the site during construction”

She said the EACLC will observe a two-way trading model by promoting export and import in two countries while also catalysing the entire East Africa trade and productivity.

Ms Wang said over time the EACLC is set to adopt e-commerce to enable citizens order their goods online, anywhere and anytime urging Tanzanians to get prepared for the opportunities to come.

She thanked President Samia Suluhu Hassan for smoothing the investment environment through setting favorable policies for setting business in the country under the One Stop Centre.

For his part, TIC’s Board of Directors Chairman, Dr Mahenge was pleased with the progress of the project attributing its high pace to conducive political and economic stability in Tanzania championed by Head of State Dr Samia that instill high morale to investors.

He said the project will reduce a huge amount of Tanzania’s foreign currency spent on importing goods directly from China but instead obtain the goods in Dar es Salaam.

Red Sea Crisis and implications for trade facilitation in Africa

Written by Céline Bacrot and Marc-Antoine Faure, Article No. 118 [UNCTAD Transport and Trade Facilitation Newsletter N°101 – First Quarter 2024]

The end of 2023 and the first quarter of 2024 are marked by major disruptions to global maritime trade flows as ships entering the Gulf of Aden and sailing through the Red Sea and the Suez Canal continue to face attacks by Yemen-based Houthis.[1]  This new wave of disruption follows the unprecedented global logistics crunch caused by the COVID-19 pandemic and its fallout in 2020-2022 and the war in Ukraine since 2022. It also compounds the challenges caused by the reduced ship transits in the Panama Canals resulting from the impact of drought on water levels.

Security threats in the Red Sea have caused a significant redirection of ship arrivals and transits culminating in far-reaching global trade and transport repercussions. Ships across all shipping segments on the Asia-Europe and Asia-Atlantic trade lane have diverted their initial trajectory and started sailing around Africa’s Cape of Good Hope. As a result, ships are now travelling longer distances and facing higher operational costs. The rerouting of vessels is creating pressure on the supply side. The 12 days in additional sailing time for a vessel going from Shanghai to Rotterdam[2] are driving up costs and extending delays.

The Red Sea crisis has also impacted African ports and causing congestion as rerouting entails the need for more vessels to call at African ports including for bunkering services. Yet, these ports are not always fully prepared to service additional ship calls and cater to larger vessels.  

The disruption in the Red Sea and increased shipping traffic around Africa underscore the need for African countries and ports to scale up ongoing efforts aimed at implementing trade facilitation measures, taking up digitalization and mainstreaming green processes to reduce port congestion and expedite the clearance of goods.

The 2020-2022 upheaval in global logistics and the war in Ukraine have exposed the vulnerability of extended supply chains to disruptions and exposed instances of ill preparedness. The Red Sea crisis and the Panama Canal situation are further emphasizing the need to strengthen transport and trade in the face of disruption and consider how to respond, cope, recover and adapt to the new operating conditions.

In this context, a key question arises:  Can African countries leverage the current disruption and explore how, by improving their trade facilitation environment, they can take advantage of the business opportunities that may arise from the additional traffic passing through their ports?

Put differently, could the additional port calls that are currently mostly motivated by bunkering activities stimulate maritime trade? Could the additional port activities motivate additional imports and exports?[3]

In times of crisis, as shown during the COVID-19 pandemic and the war in Ukraine, strengthening the trade facilitation ecosystem is key to keeping trade flowing by reducing port congestion and building the resilience of the border agencies. While, at this stage, it is difficult to measure the long-term impact of the Red Sea crisis on the African economies, it is likely that the unexpected increase in shipping traffic around Africa and higher demand for port and bunkering services will impact port activities and performance. Increased port calls that boost the maritime business could stimulate African economies while at the same time incentivise implementation of trade facilitation measures to expedite the clearance of goods. Examples of such measures include the digitalization of trade procedures and investment in hinterland infrastructure and services along transport and trade corridors.

Short-term Impact and Windfall Effects

The Suez Canal is a global strategic waterway that enables the crossing of 10% of global seaborne trade by volume[4] and 22% of containerized trade flows.[5] The Red Sea shipping crisis is putting considerable strain on international trade, regional stability, and economic recovery, against a backdrop of inflationary pressure and macroeconomic uncertainty.[6]

For African trade, the disruption of the Suez Canal is of significant importance since the European market is the most important trading partner accounting for 26% of all imports in terms of value into African countries, and the first destination market for 26% of all African exports in terms of value.[7] Foreign trade for several East African countries is highly dependent on the Suez Canal. It is estimated that approximately 31% of foreign trade by volume for Djibouti is channelled through the Suez Canal. For Kenya, the share is 15%, and for Tanzania it is 10%. Foreign trade for the Sudan depends the most on the Suez Canal, with about 34% of its trade volume crossing the Canal.[8] As of today, the disruption of the Suez Canal has created shortage of not only perishable but also and normal containers due to the increased cargo delivery time such as such as avocado in East Africa but also tea and coffee supply chains.[9]

Rerouting vessels around the African continent add about 12 days to the ship journey on a route from Asia to Europe and acts as a negative supply shock equivalent to a roughly 30% increase in transit times. Extended travel distances and transit times are estimated to cut effective global container shipping capacity by around 9%.[10] Indeed, a round trip between India and Europe, for example, takes 56 days and 8 ships. If the journey takes 63 days, an extra ship will be needed.[11]The reduction in vessel transits through the Suez Canal is massive, with a fall of 42% compared with the peak in 2023.[12] The shift from the Gulf of Aden to the Cape of Good Hope is therefore striking: the tonnage of ships entering the Gulf of Aden fell by more than 70% between the first half of December 2023 and the first half of February 2024. Meanwhile, by the first week of March 2024, the gross tonnage of vessels arriving at the Cape of Good Hope has increased by 85% (7-day moving average) compared to the first half of December 2023).