Hub ambitions: Critical investments position the country as a trans-shipment centre

As part of plans to turn itself into the shipping and logistics centre for West Africa, Côte d'Ivoire is pushing ahead with investment in its primary ports of Abidjan and San Pédro, both of which play key roles in maintaining the country’s external position. Critical improvements in port infrastructure are needed to underpin the government’s long-term strategy, but they will also be crucial in supporting exports of cocoa, palm oil and rubber, and developing nascent industries like mining.

After a sharp decline in container traffic due to political instability in 2011, activity at Abidjan Port has bounced back, with container traffic increasing by 87% year-on-year to 22.9m tonnes in 2012 as compared to 16.6m tonnes the previous year. However, the location is as much an obstacle as an advantage. “A major challenge facing the port’s development is the lack of space in central Abidjan and the congestion resulting from the port’s proximity to the city’s bridges and residential areas,” the CEO of Société Ivoirienne de Manutention et de Transit, Stéphane Eholié, told OBG.

EXPANSION PLANS: To fuel its export-led industries, expand regional trade with landlocked countries and develop into a trans-shipment hub, the Abidjan and San Pédro ports need infrastructure upgrades to boost efficiency and lower costs. The Abidjan Port Authority (Port Autonome d’Abidjan, PAA) has launched several projects that seek to make the port the most competitive and attractive in the region. As the majority are still in the conceptual stage, implementation depends on technical feasibility and financing. The Vridi Canal expansion development is of particular strategic importance. The port is currently unable to accommodate container ships longer than 150 metres or with a draught greater than 11.5 metres, limiting it to West African Maximum (or WAFMAX) vessels. The narrowness of the canal also increases waiting times for docking at the container terminal. By increasing draught to 15 metres, mother vessels will be able to enter and dock.

VRIDI CANAL: Given that it will allow the port to accommodate mother vessels, the canal expansion project is key to the port’s future as a trans-shipment hub, François Egon, commercial director at Bolloré, which manages the container port, told OBG, “Dredging of the Vridi Canal is important as it will allow Abidjan Port to welcome mother vessels, not only feeder ships. It will have the effect of shortening the travel time between China and Abidjan. The port would become the first stop for major container ships, turning it into the major West African hub for trans-shipment.”

Given that the project is still in the conceptual stage, it is unclear how the PAA will raise the financing necessary for its execution. Furthermore, the project’s long-term sustainability could be undermined by high maintenance costs. To maintain a draught of 16 metres, the canal will need to be dredged routinely. Despite these challenges, it is essential that Abidjan Port move forward with expansion and dredging of the canal to capture future traffic volumes given that the shipping industry is moving towards larger-capacity ships to save costs. The port’s container terminal, which is managed by France-based Bolloré and currently has a capacity of 800,000 twenty-foot equivalent units (TEUs) will also be undergoing a roughly $80m overhaul which will see the introduction of four new cranes and an increase in capacity to 1.5m TEUs by 2015.

TC2 PROJECT: The lynchpin of Côte d’Ivoire’s port plans is the TC2 project, which involves the construction of a 1.5m-TEUs-capacity terminal that will allow the Abidjan Port to welcome ships carrying up to 8000 containers, more than double the current size. The tender for what is expected to be a $660m project was awarded in March 2013 to a consortium led by Bolloré, along with Denmark’s AP Moller Terminals and France’s industrial conglomerate Bouygues. The public-private partnership concession, which stretches for just over two decades, will be operational by 2016.

The selection of the Bolloré-led consortium was controversial. Two other bidders – a group comprising South Korea’s Hanjin Shipping and Mediterranean Shipping Company (MSC) of Switzerland, and a consortium led by Filipino handler International Container Terminal Services Incorporated (ICTSI) and French companies CMA-CGM and Necotrans – were prequalified by the PAA Attribution Commission, but following the tender’s award, the ICTSI consortium filed an appeal with the evaluating commission to re-launch the tender, alleging that the winners had failed to provide key documents during the pre-qualification process. In May 2013, Côte d’Ivoire’s regulator for public procurement dismissed the appeal, although the competition department of the West African Economic and Monetary Union has accepted a complaint against the bid.

The minister of commerce argued that the winning bid by Bolloré could limit competition, as well. Abidjan Port charges a handling fee of $260 per tonne. By comparison, Togo’s Lomé Port charges closer to $220 and Ghana’s Tema Port about $168. This is compounded by the fact that the current constraints of the Vridi Canal limit the port to feeder ships, as opposed to larger vessels, making the prices proportionally more burdensome. Finally, a fragmented system of labour representation, with 14 different port-related unions, complicates wage negotiations and can lead to higher operating costs.

PROSPECTS: By investing in its infrastructure, Abidjan Port aims to reassert its former position as the shipping and logistics gateway of the region. Now that Côte d’Ivoire has returned to political stability and is seeing economic growth, shipping firms are likely to begin using Abidjan as a base again, instead of Tema or Lomé. Abidjan Port has a comparative advantage in the transport links connecting it to landlocked countries. Côte d’Ivoire has the best intermodal transport connections and the region’s most developed road and train network. Sitarail runs two to three trains between Abidjan and Ouagadougou each week, for example. However, if Abidjan Port is unable to attract shipping firms with the increased traffic volumes that make it a viable transshipment hub, Côte d’Ivoire may face problems with excess capacity. Still, the container terminal has a capacity of up to 1.1m TEUs, so the port is well placed to meet domestic and regional demand for the next decade. SAN PÉDRO UPGRADES: San Pédro Port is also looking to upgrade its infrastructure to increase capacity. In 2011, San Pédro handled 118,000 TEUs and processed around half of the country’s export volume of cocoa beans at 522,000 tonnes. The port authority granted a concession for managing the container terminal to MSC in 2010 with a goal to increase primary traffic. With only one quay, San Pédro is prone to congestion, particularly during high-traffic periods. Ships also face delays due to frequent stops from MSC, Maersk, and CMA-CGM ships on stopovers. While the port aims to build a new 500,000-TEUs-capacity container terminal, the project would not be launched before 2017 or 2018. In the short term, San Pédro is seeking to raise CFA120bn (€187.5m) from investors connected to Port of Antwerp International, to further increase capacity with additional berths and developing 2000 ha of land.