Maritime Supply Chain and Risks…

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Rollo Greenfield, Shahab Mossavat, Steve Cameron, Anthony Rix and Christopher Leonard

Maritime Supply Chain and Risks: Business Council for Africa and Afrimari joint event highlights challenges to trade growth

By James Brewer

Despite struggling with rickety road and rail logistics and frustrations with Customs services in Africa, businesses are succeeding in pushing trade volumes higher, the first joint event organised by the Business Council for Africa and networking group Afrimari heard.

Christopher Leonard

Christopher Leonard

Go-ahead international companies have stepped up training of local people to avert logjams at ports and inland depots; and the sheer scale of the market is forecast to support momentum. The meeting heard that even Nigeria, beset by the slump in oil prices and Boko Haram turmoil in its northern provinces, was likely to maintain its forecast growth rate.

Under the title Maritime Supply Chain and Risks, the February 4 2015 meeting, at the London offices of the hosts, law firm Stephenson Harwood, was opened by Steve Cameron, vice-chairman of the Business Council for Africa, who said that sub-Saharan economic growth was running at 5%, but in terms of trade volume the figure was between 10% to 15%. This meant it was a challenge for ports and other infrastructure to keep up with the cargo throughput.

Mr Cameron said that maritime people always reckoned that getting cargo on to the quay was “the easy bit” while the difficult parts were dealing with Customs, making cross-border trade very complex, and with problems on the land transport leg. “All this has an effect on how people run their supply chain.”

Shahab Mossavat

Shahab Mossavat

On the positive side, “we are seeing much better infrastructure, ” said Mr Cameron. “Most of the ports have been concessioned, and things have improved.” Also good news was progress towards normality and more settled pricing following the the Ebola outbreak which had hit supply chain operators in some countries.

Christopher Leonard, commercial manager at bulk cargo management specialists Nectar Group, said that his privately-owned company handled around 4m tonnes of bulk commodities a year and had 5m tonnes coal terminal capacity. The group’s main focuses were in West and East Africa, including investment in equipment in Ghana and Sierra Leone. It was looking to invest in transport and warehouse services, as existing transport could be low-quality and unreliable.

Rollo Greenfield

Rollo Greenfield

Mr Leonard said that there had been many damage problems with pre-bagged and break-bulk cargo, and showed photos of torn bags and other mishaps.

Nectar tended to focus on liner ports, because of high levels of congestion in conventional berths, and Mr Leonard referred to lack of availability and security of warehouses, including vulnerability of buildings to bad weather.

He said his company was strict on ensuring cargo was properly lashed and secured, and paid great attention to the safety of high stacks in warehouses, stringing nets along them so that staff or goods would be protected if they fell.

Anthony Rix

Anthony Rix

He cited a case study in which his company had improved procedures at Freetown, Sierra Leone, involving a consignment of 50kg and 25kg bags of rice, yielding a saving of $150, 000 in costs.

Mr Leonard referred to bottlenecks along dusty road networks which had not been developed for many years.

Shahab Mossavat, head of marketing and communications at procurement and export specialists Gapuma, described his company as “a traditional trading house in the modern setting.”  He declared: “We rely on the bonds of trust with our supply chain trade partners, ” and went on to praise the set-up established with Gapuma’s main customer, Pacific International Line, including dealing with bills of lading in-house. “Your business and trade are only as good as the relationships you make, ” said Mr Mossavat. Much of Gapuma’s business is concerned with pharmaceuticals.

A view of the left side of the auditorium...

A view of the left side of the auditorium…

Rollo Greenfield, chief executive of Diamond Bank, a Nigerian bank strongly involved in the oil and gas sector, said that Africa was still commodity-based. The global impact of falling oil prices, moderating growth in China and new energy supply in the US, amounted to being a “game changer” for the Nigerian economy. The currency, the naira, has been at a record low against the dollar. Old loans would need to be rewritten quickly.

Mr Greenfield said that Nigeria’s Cabotage Act and Local Content Act were intended to stimulate the development of indigenous capacity. Local banks had begun to finance offshore vessels. There had been many government initiatives to try to engineer energy security, but unfortunately the execution of those was not a success. Nigeria was still importing far too much gasoil, needed to run mobile generators. Refineries were failing to meet budgeted levels of output.

From the buffet reception...

From the buffet reception…

Despite all the problems, “most global banks cannot, and do not, ignore Nigeria, ” he said.

Anthony Rix, director of the maritime security division of Salamanca Group, said that the introduction of the International Ship and Port Facility Security Code in 2004 had brought a marked improvement in security, but a lot of port facilities and individual companies were taking time to implement the ISPS provisions.

Retired Admiral Rix said that in 2011 there had been 250 piracy attacks in the Indian Ocean and 30 big ships were held for ransom off Somalia, whereas in 2014 there were about 14 attacks and no ships hijacked. In contrast, the Gulf of Guinea in 2014 saw 34 attacks and several hijacks.

David Lamb, Chairman of BCA and Fatou Gaye from Infra Co talking at the buffet reception

David Lamb, Chairman of BCA and Fatou Gaye from Infra Co talking at the buffet reception

He spoke of the difficulty of covering the massive Indian Ocean (“the equivalent of having 12 police cars to patrol the whole of North America”) but the EUNavfor (European Union) navies and the BMP4 advice to shipowners and masters had been very effective. Some 60% or 70% of ships going through the Indian Ocean had guards on board, and most of them would be armed.

Mr Rix was anxious though that if the naval ships were redeployed to other areas, Somali pirates would resume their assaults.

In the Gulf of Guinea, placing non-military armed guards on board was prohibited, and other solutions had to be considered including using the military from the local states.

The most extreme situation in Africa at present was in Libya, where heavy fighting has taken place, and the ports of Bengazi and Dema should not be used, said Mr Rix.

Smiling faces: Beatrice Njindou, Temi Benite and Saba Ismail

Smiling faces: Beatrice Njindou, Temi Binitie and Saba Ismail

During questions, Mr Greenfield said that Nigerian business was trying to adjust to new oil price levels, and a lot of suppliers with “less stretchable resources” would go under. Despite this, Nigeria would still grow at 4% or 5% because of its sheer size and large population.

When the problem of cyber-risk was raised, Mr Cameron warned about hackers penetrating the sites of shipping lines and diverting cargo to hidden locations.

There was discussion on arbitration clauses. Mr Greenwood said: “We have always found it better to have as detailed a contract as we can.” Mr Mossavat added: “Our contracts are based on arbitration in London.”

Temi Binitie, a board member of Afrimari, said that the event had lived up to the networking group’s aim of “connecting future leaders” through meetings and facilitating business opportunities.

Meeting sponsors were Stephenson Harwood and Nectar Group, and media supporter was All About Shipping.

 

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