The escalating attacks around the Bab al-Mandeb strait have triggered a significant shift in major shipping carriers’ routes, leading to the suspension of passage through the strait. Instead, vessels are opting for the longer and more turbulent route around the Cape of Good Hope. The Bab al-Mandeb strait, positioned between Yemen on the Arabian Peninsula and Djibouti and Eritrea in the Horn of Africa, serves as a crucial link connecting the Red Sea to the Gulf of Aden and, consequently, the vast Indian Ocean.
These attacks on vessels navigating the strait have had far-reaching consequences, disrupting international trade along the shortest shipping route between Europe and Asia. Notably, there has been a substantial 55% decline in Suez Canal traffic, coupled with a striking 75% increase in vessels choosing to circumvent the Cape of Good Hope in January 2023. This shift in maritime routes has resulted in prolonged transit times for cargo traveling from Asia to Europe, experiencing delays of approximately 10-16 days. The ripple effects extend to supply chains, delivery timelines, and overall market velocity.
Having traversed major cities worldwide throughout my career, I’ve observed a consistent pattern: the prosperity of economies is intricately tied to the efficiency and capabilities of their ports, whether air or sea. This observation holds true as well for African economies, which should ideally be the primary beneficiaries of the increased vessel diversions around the Cape of Good Hope. The relationship between economies and ports is fascinating, as the prosperity of ports significantly influences the economic well-being of citizens.
While the passage of vessels through Africa should inherently bring economic advantages, the reality for African ports is mixed. With Djibouti being the exception, ranking 26th globally and second in Africa for port efficiency, others face challenges with Berbera following suit and ranked 144th globally according to the Container Port Performance Index (CPPI). Historically, ports along major shipping routes have thrived, offering opportunities for refueling, transshipment, and job creation. The potential benefits for African ports from the increased vessel volume around the Cape of Good Hope hinge on their ability to accommodate ultra-large container carriers and address issues such as congestion and low productivity.
Strategically positioned ports like Djibouti, Durban, and Cape Town stand to gain from the disruption in global trade volume, provided they are adequately prepared. The closure of the Algoa Bay bunkering zone has driven increased bunkering activity in Cape Town, presenting economic opportunities for ports. However, this potential windfall is viewed more as a missed opportunity due to insufficient readiness. A World Bank case study highlights that African ports, including Mombasa with deepwater berths and relatively new cranes, grapple with congestion, leading to low productivity.
Despite the challenges, there exists the potential for African ports to benefit from such situation in the future through concerted regional cooperation, improved infrastructure, and enhanced terminal capabilities. Governments play a pivotal role in this transformation by prioritizing investments in port facilities to meet international standards, thereby fostering economic growth and regional cooperation without compromising sovereignty. The current scenario serves as a call to action for African nations to seize the opportunities presented by the evolving maritime landscape.
Olamide Egbedeyi | International Commercial Writer