Jared Zerbe, CEO, Tanzania International Container Terminal Services (TICTS): Interview

Interview: Jared Zerbe, CEO, Tanzania International Container Terminal Services (TICTS)

What are the Port of Dar es Salaam’s chief competitive advantages compared to other ports in Africa?

JARED ZERBE: The Port of Dar es Salaam is strategically located as a gateway to several landlocked countries, benefitting the Democratic Republic of the Congo (DRC), Zambia, Rwanda, Burundi, Uganda and Malawi. The port is owned by the Tanzania Ports Authority, with TICTS operating a container terminal as a private investor under a lease agreement. It serves as a vital part of the supply chain to and from Tanzania, as well as to neighbouring countries in eastern, central and southern Africa. It has the following key competitive advantages: alongside the Indian Ocean, the port provides a convenient seaborne gateway for landlocked countries with a combined population of more than 150m; Tanzania enjoys political stability and an average annual GDP growth rate of 6.7%; the country has well-established rail and road infrastructure; and the port has a specialised container terminal, complete with a fully automated operating system with electronic data interchange compatibilities.

How has the composition of traffic volumes at the port evolved over the past five years?

ZERBE: Traffic volumes have grown from 554,288 twenty-foot equivalent units (TEUs) in 2012 to 668,912 TEUs in 2015, before dropping 7% to 622,959 TEUs in 2016. Local exports depend mainly on agricultural seasonal commodities, with the sector stagnating recently. Agricultural growth has remained slow due to various factors, including low investment, overdependence on rainfall and inadequate value addition to farmers’ produce. The transit exports are mostly minerals, which have been affected by decreasing commodity prices and subsequently low production volumes.

On the side of imports, the major reason for the slowdown in growth in 2015 and 2016 was the increase in local factories producing cement, which meant there was less import demand for the commodity. The slowdown was also caused by an increase in the production of local agricultural and industrial products; political instability, especially in Burundi and the DRC; value-added tax application on auxiliary services for transit goods; and the Single Customs Territory operationalisation for destined goods to the DRC. Additionally, there were reduced total corridor costs for South African ports due to the depreciated rand, which allowed the route to gain more business. The depreciation of the Tanzanian shilling made imports more expensive, while the decrease in world commodity prices affected much of the mineral products exported by neighbouring countries Zambia and the DRC.

Looking at the top priority in terms of infrastructure, the government is paying a lot of attention to the port, as it is the backbone of the transportation of goods and services in Tanzania. Major projects include the first phase of construction of a standard-gauge railway linking Dar es Salaam to Dodoma, and upgrading the port as part of the Dar es Salaam Maritime Gateway Project, which will enable it to handle post-Panamax vessels by 2020. In addition, 38% of the total 2017/18 national budget has been allocated to the development sector.

What impact will upgrades to the Ports of Tanga and Bagamoyo have on traffic at Dar es Salaam?

ZERBE: Investment at Tanga and Bagamoyo will have a slight impact on trans-shipment cargo, especially for shipments to Tanga, which currently come through Dar es Salaam. For Bagamoyo, work on the project has not started, so if the project happens it will not be for quite some time. In addition, the Bagamoyo project business model is expected to be based upon manufacturing and industrial zone traffic, with commodities coming in and finished products going out. Dar es Salaam will still be the principal gateway port for Tanzania and nearby landlocked countries, whose current expansion projects are aimed at increasing annual handling capacity from the current level of 12m tonnes to 28m tonnes.