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Author: John Muchira, feature writer
The Middle East is on tents. A year after Israeli Hamas escaped from war, hostilities in the region are spreading rapidly. There are fears of all-out war after Israel expanded its strikes and incursions into Lebanon and Syria, and then Iran launched its first airstrikes on Israel.
When the crisis erupted on October 7, 2023, the world held on, hoping it would only last a few months. However, the emerging reality is sending new waves of chills, particularly through the spine of the global merchant shipping industry. So far, the industry has suffered unprecedented collateral damage, the primary of which is a disruption of travel across the Red Sea, one of the world’s most pivotal maritime straits.
For the past year, Iran-backed Houthi rebels in Yemen have directed missile and drone attacks on commercial shipping in the Red Sea, a critical conduit for 30 percent of global container traffic worth more than 1 billion dollars. More than 80 ships were targeted, two of which were sunk by the attacks while four seafarers succumbed. A ship was also seized. A U.S.-led coalition prevented more casualties by intercepting missiles and drones while many also failed to achieve their goals.
The Houthi attacks have caused a fundamental change in global trade. Ships from all segments on the Asia-Europe and Asia-Atlantic trade lanes were forced to avoid the Suez Canal and the Bab El-Mandeb Strait, diverting the shipping path around the Cape of good humor from Africa. The impact for Egypt, which depends largely on the Suez Canal as a major source of foreign exchange, has been devastating. By 2023, the canal had generated a record $9.4 billion in revenue, but over the past eight months, revenue has plunged 60%, or more than $6 billion.
Play a bigger role
The Middle East crisis has come as a blessing in disguise for African ports. For many, diversions via the Cape of Bood Hope route were exactly what the continent’s ports needed to play a larger role in the global merchant shipping industry. Rerouting has seen ships traveling longer distances, adding an average of 14 days for a ship sailing from China to Europe. The additional 11,000 nautical miles not only disrupted global trade, but added operational costs for the liners.
Africa must be aware of the risk of overinvestment to avoid creating white elephants seeking short-term gains
Estimates show each diversion adds about $1 million in fuel costs, with more insurance premiums and security measures. “The risks in the Red Sea are not short-term; They are now entrenched in shipping logistics forcing long-term adjustments,” explains Bilal Bassiouni, head of risk forecasting at South Africa-based Pangea-Risk. For African ports, especially those strategically located on the shipping route around the Cape of Good Hope, the Red Sea diversions should have presented an opportunity for a boom in offering resupply and relief services. Durban, Cape Town and Gqeberha in South Africa, Toamasina in Madagascar, Port Louis in Mauritius, Maputo in Mozambique and Walvis Bay in Namibia are among the ports that have the potential to seize the moment.
Data shows that in the six months to May, maritime trade through the Cape of Bood Hope route had increased by 125%. The number of container ships and LNG tankers using the route increased by 260% and 180% respectively. Although not directly on traditional shipping routes connecting Asia and Europe, other major ports in Africa have also witnessed the increased traffic. These include Mombasa in Kenya, Dar es Salaam in Tanzania and Beira in Mozambique.
“The Red Sea crisis highlights the potential of African ports. This is sparking crucial conversations about port development and modernization,” observes George Vandyck, senior lecturer at Plymouth Business School, University of Plymouth. He adds that overall, African ports were caught off guard by the sudden increase in traffic.
For the continent’s ports, myriad infrastructure and operational bottlenecks have made it impossible to capitalize on the opportunities presented by the crisis, particularly resupply and relief. Clearly, many ports are struggling with outdated equipment, insufficient storage facilities and a shortage of skilled workers. Additionally, inadequate investments in expansions and development have led to inefficiencies that slow operations, contributing to long wait times and congestion.
Ports facing disease in Africa are made worse by corruption, bureaucratic delays and inconsistent regulatory frameworks. Additionally, high logistics costs and limited interconnectivity between ports and inland transportation networks add layers of inefficiency. As if these were not bad enough, the lack of deep water facilities means that a majority of ports on the continent cannot accommodate larger vessels.
Unprecedented congestion
At the start of the Red Sea attacks, the ports of Durban and Cape Town were prime examples of Africa’s deep-rooted infrastructural inadequacies and operational inefficiencies. A sharp increase in traffic of 328% compared to the period from December 2023 to March 2024 triggered unprecedented congestion at both facilities, literally bringing operations to a halt. Durban, the largest seaport in South Africa which handles around 60% of traffic, was worst hit. At one point, around 80 ships were forced to wait offshore for weeks as the Logjam Crisis paralyzed operations.
“South African ports have apparently lost credibility in extending support services to ships entertaining through the Cape of Good Hope,” says François Vreÿ, professor emeritus at the Faculty of Military Science at Stellenbosch University , South Africa. He adds that a key area that African ports have occasionally failed to engage in is bunker services.
Obviously, the increase in sailing distance has given rise to an increase in demand for stumping services. Ports like Port Louis, Walvis Bay and Maputo have attempted to strategically position themselves as refueling hubs. However, they faced challenges in handling the larger volumes, a situation compounded by shortages of fuel supplies and a lack of suitable refueling facilities.
Durban, which historically stands as the largest relief center in Southern Africa, was set to reap the maximum benefits from the relief boom. Certainly, the port has made progress in terms of expansion. However, limited investment in advanced infrastructure and services has denied the port a competitive advantage. Weather conditions characterized by storms, strong winds and high waves have worsened the situation.
“Although African ports along the Cape of Good Hope are increasingly seen as refueling stops, they have not emerged as major relief hubs mainly due to operational deficiencies,” believes Bassiouni. He adds that logistical weaknesses have meant that the potential benefits of increased shipping traffic have been diluted on the continent.
Undoubtedly, the Red Sea attacks presented Africa with a critical window to reevaluate maritime and logistical capabilities. In fact, the likelihood of all-out war in the Middle East means that the global merchant shipping industry is beginning to realize that it could rely on African ports for an indefinite period of time. Having largely missed the boat in the first “wave”, the continent has the opportunity to draw on future models. “The opportunity lies in positioning African ports as critical shipping hubs in the global supply chain,” notes Vandyck.
For this to happen, African countries must prioritize investments in expanding port infrastructure, improving logistics networks and upgrading equipment to handle higher traffic volumes. In addition, governments must improve regulatory frameworks, strengthen regional cooperation and provide incentives for private sector participation. Furthermore, focusing on improving the integration of ports with railways and road networks is essential to ensure better connectivity between ports and domestic markets. The ripple effect maximizes the economic benefits of increased global trade.
Certainly, investing in port infrastructure is a pain that the continent must be willing to bear. However, budgetary constraints and competing national interests mean that most governments cannot mobilize the required resources. South Africa, for example, estimates it requires a $9.2 billion Mindboggling to address the infrastructure woes plaguing its ports and rail network. Namibia, which has made significant offshore oil discoveries, needs $2 billion to expand port infrastructure.
Floating loans
The inability to increase massive resources requires governments to bring global operators on board not only to invest, but also to take over the running and management of ports with the sole objective of improving efficiency. Dubai-based DP World and Indian conglomerate Adani are among the operators fighting port concessions on the continent. DP World, for example, has committed to investing $3 billion in the medium term on new port infrastructure across the continent.
Vreÿ argues that while port infrastructure investments are essential, Africa must be aware of the risk of overinvestment to avoid creating white elephants seeking short-term gains. Kenya’s Lamu Port offers a classic example of irrational port investment. While the government has committed $367 million to build the first three berths that were commissioned in 2021, the port that was to become a transshipment hub is now largely a white elephant. Since its commissioning, fewer than 70 ships have called for the facility. “The focus should be on long-term and strategic investments that align with global shipping needs,” he notes.
By all accounts, port infrastructure investments form the cornerstone of Africa’s ability to compete globally. This is more critical considering the World Bank Container Port Performance Index (CPPI) 2023, none of the continent’s ports ranked among the top 100. The Berbera port of Somaliland, Africa, ranks at position 103 globally.
Although infrastructure remains critical, Africa must also strengthen maritime security to make ports more attractive. There’s a long journey ahead for the continent’s ports, but addressing these factors could propel them to the forefront of global maritime trade.