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CMA CGM invests in Africa logistics

The French shipping group CMA CGM said it sees potential in the African market and economy and it will develop its presence on the continent and invest in its logistics in the region.

The carrier's strategy is the establishment of positions on trade corridors between the main port hubs and inland areas, while in parallel developing an extensive and integrated range of logistics services. That is why the Group, via its CEVA Logistics subsidiary, recently acquired AMI Worldwide, a major force in logistics in East and Southern Africa.

“Since it acquired Delmas, CMA CGM has managed to build and expand a highly extensive network of shipping services. Rodolphe Saadé’s aim today is to develop an integrated range of transport services for the African market,” explains Paul Haéri, vice president CEVA, business development Africa.

With CEVA Logistics, CMA CGM will soon be in a position to offer an extensive and seamless catalogue of logistics services spanning 41 countries on a continent where the sector remains highly fragmented. “Some of our customers still have reservations about expanding into Africa given the issues they may face,” notes Pascal Hirn, Africa Lines vice president.

Eric Bonnemaison, vice president, head of Africa inland services development, CMA CGM Group shared his view on another aspect in the African market, “Today, an African producer looking to export their production to another continent has to reckon with a shipping cost of €2 per kilometre for their containers. That puts it at a major disadvantage to other countries where overland transport costs are far lower."

Bonnemaison said the company needs to build facilities that will enable local producers to export their goods at a far lower cost because an economy that does not export will ultimately struggle to expand.

"That is why CMA CGM Inland Services (CCIS) is to open up three new hubs in Egypt, South Africa and Nigeria—Africa’s three leading economies,” added Bonnemaison.

Africa has recorded a growth rate averaging 5% for the past decade and is on the fast-track to economic development, according to an announcement. While the continent has not been left unscathed by the Covid-19 pandemic, the World Bank believes its economy will not be hit as badly as that of other regional blocks.

“By 2025, Africa’s population will be three times that of the European Union,” explains Bonnemaison. “By 2050, its population is forecast to be five times the size, with Nigeria the world’s third-most populous country, trailing only China and India.”

In 2019, six African countries ranked among the world’s top 10 fastest-growing economies, according to the African Development Bank:

  • Rwanda: 8.7%
  • Ethiopia: 7.4%
  • Côte d’Ivoire: 7.4%
  • Ghana: 7.1%
  • Tanzania: 6.8%
  • Benin: 6.7%

Georges Serre, an Africa and institutional advisor is keen to point out that African economies are undergoing radical change. “Six years ago, agriculture accounted for 35% of Côte d’Ivoire’s economy. Today, agriculture’s share is down to just 20% as services have gained traction. African economies are changing and starting to industrialise. Ghana, for example, now exports cocoa powder rather than beans,” he commented.

Nowhere is the progress made by the African economy more obvious than with its digital transformation, according to CMA CGM statement. During the 1990s, the penetration rate of fixed-line telephony was just 2%, whereas, by 2025, the proportion of sub-Saharan African population with smartphone internet access is forecast to reach 40%.

“Shipping traffic has picked up over the past few years in Africa, and new routes are opening up with India, the Middle East and Turkey. Europe, which used to account for 80% of trade with Africa, now stands at just 15%,” said Hervé Zongo, general manager Côte d’Ivoire, CMA CGM Group.

With Tanger Med 2, Morocco has now broken into the highly exclusive club of the world’s top 20 ports, with a total capacity of 9 million TEU. Port Said in Egypt and Durban in South Africa, which handle close to 3 million TEU each, both rank among the world’s top 100. And behind them, the race is heating up, especially between the West African ports, which include three with a million TEU-plus capacity (Lagos in Nigeria, Lomé in Togo, and Tema in Ghana), followed closely by Pointe-Noire, Dakar, Abidjan and Cotonou. On Africa’s East Coast, Mombasa in Kenya posted a record performance last year, handling 1.4 million TEU.

And there is a whole raft of new projects, chief among which the deepwater port at Lekki, which is around 30km from the Nigerian capital. CMA Terminals officially agreed in late September 2019 a 45-year contract to manage the new port facility.

Lekki is scheduled to enter service in 2022 and will ultimately have a total capacity of 2.5 million TEU. With a depth of 16m, it will be able to accommodate vessels with a capacity of up to 18,000TEU and thereby ease congestion at existing facilities serving Lagos (Apapa and Tin Can) from which trucks face a journey of several days to reach the ports.

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