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.

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.