Making space: Port infrastructure is set to benefit from additional logistics areas

With about 95% of the nation’s external trade passing through its ports, Algeria’s maritime transportation sector remains essential to the economy. Despite the country’s strategic location on the Mediterranean Sea, the modernisation of Algeria’s ports has lagged behind when compared to neighbouring countries. With port development mainly focused on the export of hydrocarbons, the amount of containerised traffic was a mere 16% of total cargo in 2011, according to international media reports. Aged infrastructure and delays at most facilities have increased costs for businesses. In the Port of Algiers, the average processing time is 30 days, according to local media. The situation is set to improve, however, as authorities focus on building logistics zones close to some of the country’s busiest ports.

PRIVATE PARTNERS: Gradual liberalisation has made the ports more competitive. In 1982, the government abolished the centralised office for the management of all ports, substituting it with port companies to oversee operations at each site. This was followed by the introduction of private concessions for port facilities, first to national operators in 1998, and later to international companies. This allowed fresh private investment to be injected into some of the key ports.

In 2004, Singaporean operator Portek took control of 49% of the container terminal at the Béjaïa port, entering into a joint venture with the Enterprise Portuaire de Béjaïa. The current concession period is 20 years, and involved an initial investment of $19m. Another international port operator, Dubai Ports World, entered into a concession for part of the Algiers port, and a portion of the container handling operations in Djen Djen, to the east of the capital.

Both Algiers and Djen Djen are set to receive more investment to increase efficiency over the coming years, as these ports are examples of the challenges faced by many port facilities in the country – being located inside fast-growing cities with little space to expand. M'hamed Boudouma, CEO of Laboratoire d’Etudes Maritime, told OBG, “A close collaboration by private operators and public authorities is required to reduce costs and delivery times via multimodal logistics platforms.”

MORE FLEXIBILITY: Traffic growth has compounded the shortage of available space. To facilitate logistics operations, the government is currently building several new cargo areas. The Rouiba logistics platform in Algiers will be managed by a recently created company, Algerian Intermodal Logistic du Centre. The new entity will be 64% owned by l'Entreprise Portuaire d' Alger, which manages the capital’s port, and 36% owned by Société de Transport Intermodal de Marchandises, part of state-owned Société Nationale des Transports Ferroviaires, which manages Algeria’s railway network.

A second cargo area is being developed in Bordj-Bou-Arréridj to serve the Béjaïa port. Covering an area of 20 ha and involving an investment of AD3.5bn (€32.2m), the new logistics zone is set to be operational by the end of 2014. New logistics areas at two other ports will also help to alleviate the lack of space. After an investment of AD500m (€4.6m), the 5-ha cargo area of Ighil Ouberouak, 5 km from the Béjaïa port, is expected to start operations before the end of 2013. A larger cargo area, spanning 19 ha, is planned for Kseur, which will be strategically located close to the Constantine-Algiers railway line as well as the East West Highway.

REGIONAL INTEGRATION: Cooperation between Mediterranean ports has increased the need to upgrade logistics areas. Oran and Béjaïa ports have recently been included in the EU’s Motorways of the Sea project, which aims to standardise management and port procedures across the region. The two Algerian ports will get EU technical support to enhance operations.

Allowing private concessions into port operations has allowed for gains in efficiency. However, in order to fully improve port operations, more investment will need to be directed towards expanding logistics areas to serve port facilities across Algeria. This will help reduce freight costs, but, more importantly, increased logistics capabilities will also allow the country to take full advantage of major investments in road and rail.