Cargo delays a permanent feature at African ports
“Rather, we need to understand the interests of the parties involved and look for ways of overcoming those interests in favour of the public’s interest, which in this case is greater competitiveness and jobs”
Windhoek – Cargo waiting time or delays at most African ports is a major bottleneck to trade and a stumbling block to trade and economic integration in Africa, a World Bank study on six African countries reveal.
The amount of time cargo spends at ports in Africa, which on average is around 20 days is part of a much bigger African challenge-which is an infrastructure deficit estimated at around $48 billion annually.
Economic analysts say that Africa’s infrastructural gap shaves off two percent of the gross domestic product (GDP) every year.
The World Bank study found out that with the exception of Durban, cargo dwell time is on average, 20 days in African ports.
Cargo dwell time means the amount of time cargo spends in a terminal’s in-transit storage while awaiting shipment for export or onward transportation by either road or rail.
The World Bank says that dwell time is one indicator of a port’s efficiency and the higher the dwell time, the lower the efficiency and the toll on the economy.
For the six African ports under the scope of the study, South Africa’s Durban port is the only exception with four days dwell time and the World Bank says this fare well with three to four days dwell time at most international ports.
At some ports, importers are said to use the ports to store their goods, a common feature at Douala port in Cameroon, where it is said storage in the port is the cheapest option for up to 22 days.
Customs brokers have little incentive to move the goods because they can pass on the costs of delay to the importers.
When the domestic market is a monopoly, downstream producers have an incentive to keep the cargo dwell times long, as a way of deterring entry of other producers.
The World Bank says that the net effect of this is long dwell times, ineffective interventions such as building more berths or privatising ports, and globally uncompetitive industries in African countries.
Dealing with the proximate cause of the problem, such as the apparent lack of berths in the ports, is unlikely to trigger a solution.
“Rather, we need to understand the interests of the parties involved and look for ways of overcoming those interests in favour of the public’s interest, which in this case is greater competitiveness and jobs,” said Shantayanan Devarajan, World Bank’s chief economist for Africa.
The World Bank says that cargo dwell time in ports in Africa South of the Sahara ‘is abnormally long’.
“More than two weeks on average compared to less than a week in the large ports in Asia, Europe and Latin America.
“For benchmarking purposes, if we exclude Durban and, to a lesser extent, Mombasa, average dwell time in most ports in Sub-Saharan Africa is close to 20 days (compared to three to four days in most large international ports),” the World Bank says.
“Another peculiarity in African ports is the frequent occurrence of very long dwell times, which adversely affect the efficiency of port operations and increase congestion in container terminals at a higher cost to the economy,” the study says.
Surprisingly, ports operated by private companies have no interest in reducing dwell time and there are strong incentives to use ports as storage areas.
Some operators are said to generate large revenue from storage, and customs brokers show no interest in reducing dwell because time inefficiency is passed on to the importer and eventually to the consumer.
“A vicious circle, in which long cargo dwell time (two to three weeks) benefits incumbent traders and importers, as well as customs agents, terminal operators or owners of warehouses, constitutes a strong barrier to entry for international traders and manufacturers,” the study says.
“It also explains why most industries, which are not time-sensitive, such as exports of raw materials or minerals, prosper and why time-sensitive ones (those that add value), do not.”
The World Bank says that the port of Durban has broken this circle and this is attributed to a strong domestic private sector which has shown the interest and energy in global trade and public authorities willing to support them.
“Weeks-long cargo dwell times in ports have become a serious obstacle to the successful integration of Sub-Saharan African economies into global trade networks, because they make lean, demand-driven manufacturing and trading activities virtually impossible,” the World Bank says.
World Bank analysts also argue that the widespread assumption that the provision of additional port infrastructure will necessarily translate into shorter dwell time does not hold in the medium term, especially when it comes to expanding existing ports.
The analysts base their argument on Durban port, which they argue that reducing dwell time from a week to four days more than doubles the capacity of the container terminal without any investment in physical extensions.
“Making investments in larger port storage areas is a suboptimal measure when efficiency gains can be obtained by speeding up clearance operations,” the World Bank analysts say.
Of the six ports covered by the World Bank study, Durban enjoys unparalleled dominance in Sub-Saharan Africa with regards to size and performance though it does not meet the standards of Rotterdam or Singapore.
At the Durban port, dwell time for both imports and exports has been on average three to four days since 2006. Dwell at the port of Mombasa has improved from 13 days in 2007 to about nine days in 2008.
At Tema port in Ghana, average dwell time is around 20 days while at the port of Lome, a key hub for west and central maritime traffic, average port dwell time is 18 days.
Lome provides the only deep sea port in the sub-region and is ideally located at the heart of West African shipping networks and regular calls are composed of both mother ships for east-west routes and feeder vessels for the region.
At the port Dar es Salaam dwell time ranges between five and 20 days while at Douala port in Cameroon, the average time is 19.3 days.