The Red Sea, a vital maritime corridor for global trade, has recently been brought into the spotlight due to escalating tensions and security concerns. This strategic waterway, linking the Mediterranean Sea to the Indian Ocean, is now at the heart of a crisis with far-reaching implications.
African ports, which serve as critical nodes in the international shipping routes, are feeling the brunt of this turmoil. The Red Sea crisis has disrupted the usual flow of maritime traffic, leading to a cascade of challenges for port operations across the continent. From the bustling docks of Port Said to the harbours of Mombasa, the ripple effects of the Red Sea's unrest are reshaping the landscape of African trade and logistics.
This article explores the broader economic effects of the crisis and its impact on African ports. In these troubled waters, it becomes clear that the situation is more than just a disruption -- it is a wake-up call for a strategic reevaluation of Africa's maritime infrastructure and policies.
Red Sea Crisis Impact on African Ports
The ongoing crisis in the Red Sea, caused by the conflict between Israel and Hamas, has had a profound impact on maritime operations, particularly affecting African ports. The Houthi militia's strategy to target commercial shipping in the Red Sea has led to a significant decrease in vessel traffic through the Suez Canal, with a reported 37% year-on-year drop in January 2024. This disruption has had a ripple effect on African ports, which have seen varied impacts.
1. Port of Aden and Port Said Reduced Vessel Calls:
The Port of Aden in Yemen and Port Said near the Red Sea in Egypt experienced a decline in vessel calls in the first quarter. The reduced commerce has not only affected the local economies but also the broader trade routes that rely on these ports for goods exchange.
2. African Container Ports Struggling with Increased Demand:
Despite a year-over-year improvement in business at African container ports in Q4 2023, many ports struggled to manage the surge in vessel calls and container volumes. This struggle led to longer ship wait times and a significant decline in port productivity, which fell by more than 18%.
3. Tanger-Med and Mombasa:
In contrast, some ports like Tanger-Med and Mombasa demonstrated resilience by improving productivity despite the increased container capacity. These ports serve as examples of efficient management and adaptability in the face of industry-wide challenges.
4. A Decline in Yard Productivity:
The last quarter of 2023 saw a decrease in yard productivity at key African ports. The Red Sea shipping disruption hits over 50% of UK exporters. Import and export container dwell times rose sharply, indicating a bottleneck in the handling and processing of cargo.
5. Economic Ripple Effect:
The World Bank highlights that the crisis has reduced traffic through the Suez Canal and Bab El-Mandeb Strait by 50% while doubling activity around the Cape of Good Hope. This has severely impacted Red Sea ports, with Rabigh and Jeddah experiencing a combined loss of nearly 600,000 metric tonnes of import volumes. Furthermore, the surge in ocean spot rates, as reported by JP Morgan, is driving inflation and straining regional economies dependent on global maritime trade.
The Broader Impact on African Trade
The Red Sea Crisis has had a profound impact on trade across the African continent. With the Red Sea being a critical juncture for maritime routes, the crisis has led to significant disruptions. The Economist Intelligence Unit reports that traffic through Africa's Red Sea ports has been seriously affected, with a sharp fall in transit through the Suez Canal, which typically handles over 95% of ships travelling between Asia and Europe. This has resulted in a 37% year-on-year decrease in monthly transits through the canal as of January 2024. Consequently, African countries that rely on trade through the Red Sea, particularly those in East Africa, are facing challenges such as shortages of key manufactured goods and higher costs for certain goods.
The crisis has inadvertently benefited some ports outside the Red Sea region due to increased demand for bunkering and restocking services. However, inefficiencies and congestion have prevented major African ports from fully capitalising on the increase in trade around the Cape of Good Hope caused by the diversion away from the Red Sea. This has led to increased delays and costs for the rapidly growing African trade with Asian or Middle Eastern counterparts, particularly on the West and Central African coast.
Global Shipping Reroutes and Environmental Impact
The Red Sea crisis, exacerbated by Houthi rebel attacks, has forced vessels to take longer routes around the Cape of Good Hope, significantly increasing global sea transport activity. According to Clarksons Research, shipping activity measured in ton-miles—cargo volume multiplied by distance travelled—is set to rise by 5.1% in 2024, marking the second-largest annual increase on record. This shift adds over 690 ships rerouting around Africa, leading to a 53% increase in travel distances, which is detrimental to global carbon emission reduction efforts. For instance, Maersk reports burning an additional 13.6 million tonnes of fuel, equivalent to the emissions of nine million cars since the crisis escalated in December 2023.
The Need for Strategic Development
The Red Sea Crisis underscores the urgent need for strategic development in African port infrastructure. The crisis has highlighted the vulnerabilities of African ports and the necessity for improved intra-African and international connectivity, capacity, and efficiency. Strategic investments are essential to enhance port performance, which could significantly boost GDP and trade competitiveness. For instance, a 25% improvement in port performance could increase GDP by 2%, demonstrating the close relationship between port effectiveness and economic growth.
African ports must meet several criteria to claim continental hub status, including strategic positioning, port offer context, resultant demand in traffic, and good connectivity. The current situation presents an opportunity for African policymakers to accelerate port development strategies, focusing on 'smart' investments that address priority needs such as routes, storage capacity, and strategic positioning.
In a nutshell
The Red Sea Crisis is not only a wake-up call for African port infrastructure but also an indicator of larger global disruptions. The increased shipping routes, higher freight rates, and environmental consequences emphasise the need for Africa to accelerate strategic investments and adapt to new maritime realities.
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