Most of Africa’s trade is carried out via sea routes. Geopolitical conflicts, however, including the war in Ukraine and attacks on commercial shipping vessels in the red sea, have caused detours and delays, impacting on maritime trade to and from Africa.
This new wave of disruption follows the unprecedented global logistics crunch caused by the COVID-19 pandemic. According to United Nations Trade and Development (UNCTAD), this compounds the challenges caused by reduced ship transits in the Panama Canals where water levels have been impacted by drought.
During a panel discussion at African Energy Week (AEW): Invest in African Energies 2024, sponsored by logistics and port operations company Africa Global Logistics (AGL), valuable insights were shared on how to mitigate some of the impacts of supply-chain disruptions and how to proactively navigate the evolving logistics landscape in Africa.
Ashutosh Singh, Head of Energy Transition at S&P Global Commodity Insights, set the tone of the discussion as the panel moderator. Panelists included Thomas Bonnetain, Oil&Gas Director at AGL; Dennis Malkoc, Business Development Manager at global shipping company Universal Africa Lines Netherlands B.V; Leonid Shlyakhturov, Executive Director of “FESCO Integrated Transport”, Rosatom; and Björn Larsson, Senior Project Manager at international subsea services company DOF Subsea.
Unpacking some of the more recent supply chain disruptions being experienced, Bonnetain noted a surge in the cost of international transport to bring material into Africa and much longer lead times to bring equipment to project sites. Disruption of the Suez Canal has led to the rerouting of vessels around the African continent, causing delays at African ports due to a rise in demand for port services. This results in increased project costs and causes project delays in Africa, said Bonnetain.
Active in 47 African countries, AGL operates in energy, mining, and power generation sectors across the continent. Bonnetain said Africa is in desperate need for investment to modernize its logistics network and build capacity at ports, on road and via rail. To assist the modernization of Africa’s logistics infrastructure, AGL has an over $500 million investment plan each year, and is a primary player in public-private partnerships in Africa to help the continent’s much needed transformation, Bonnetain said.
AGL has also invested in the Port of Lobito – the second largest port in Angola – to increase the attractiveness of the terminal and to contribute to the economic and social development of the region. “We are at the heart of African transformation,” Bonnetain said.
Speaking on some of the challenges faced at African ports, Malkoc said that commercial ports owned and operated by local port authorities “are a big concern for us”, citing delays and quay congestion resulting in higher cargo costs. This is due to a lack of investment and organisation at the port, he believes.
Offering a practical example of how Africa could reduce supply chain disruptions and make trade more efficient, Shlyakhturov used China and Russia’s cross-continental collaboration as a model that Africa could adopt to improve both regional trade as well as cross-continental trade. He said trade between China and Moscow is supported by five diversified routes between the countries including road, sea, and rail trade routes.
Elaborating on how to streamline trade with Africa, Larsson said the harmonization of regulatory frameworks along shipping routes, specifically for the movement of equipment, personnel, oil and gas and energy products via sea, would go a long way.
The panel discussion formed part of AEW: Invest in African Energies’ ‘Energy Transition Summit’. The summit aims to address African countries’ diverse challenges and opportunities, by highlighting the critical pathways to achieve a balanced and equitable energy future in Africa.
AGL is a Diamond Sponsor of the AEW: Invest in African Energies 2024 conference, which is being held in Cape Town this week.
Distributed by APO Group on behalf of African Energy Chamber.