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This research and analysis is provided by PANGEA-RISK and distributed in partnership with Trade Finance Global.

The heightened security and political engagements have resulted in evident repercussions on ports and the maritime shipping sector, leading to a major downturn in international navigation in this region. As stakeholders seek alternative routes, circumnavigating the African continent has become a prominent consideration. The redirection of global shipping has greatly increased demand for bunkering and restocking services at some African ports, especially those strategically located on the maritime route around the Cape of Good Hope. 

While the diversion of maritime traffic from the Red Sea and Suez Canal to alternative routes has created exceptional opportunities for African ports, it has also revealed the stark realities of infrastructural inadequacies and operational inefficiencies. Most of Africa’s harbours struggle to handle the increased freight volume, causing congestion as rerouting necessitates more vessels calling at African ports, including for bunkering services. 

Ports in the region are congested, and average wait times extend beyond the global average of three days to as many as six days or more. The inability to swiftly adapt to the increased demand has led to congestion and delays, impacting the economic benefits that these ports could potentially harness. PANGEA-RISK assesses the repercussions of maritime disruptions on African ports, the opportunities and challenges among different ports, and the growing global competition for investment in Africa’s port infrastructure.

The Cape of Good Hope diversions have affected approximately 90% of the container ship traffic that previously passed through the Red Sea and the Suez Canal. Each diversion adds approximately $1 million in fuel costs and 1-2 weeks of voyage time, yet saves the shipowner up to 1% of the vessel’s value in war risk insurance costs. 

In a report released in June, the US Defence Intelligence Agency (DIA) stated that the Houthi campaign of anti-ship missile strikes has impacted the interests of at least 65 countries. Due to these risks, at least 29 major energy and maritime companies have diverted from the Red Sea.

In addition to Egypt, which experienced a 64.3% decrease in Suez Canal revenues in May 2024, Djibouti is one of the African countries most affected by the disruption of maritime shipping. Over the past decade, Djibouti and its international partners have invested over $4 billion to support the development of the country’s ports, a vital component of its strategic “Djibouti 2035” development plan. 

This plan aims to build several new ports and enhance the capabilities of existing ones. Additionally, Djibouti has allocated substantial investments to infrastructure projects linking ports with other parts of the country and land-locked Ethiopia to boost revenues. However, the decline in shipping through the Bab Al Mandeb Strait and the Suez Canal has directly impacted Djibouti’s economy, which heavily depends on ports for revenue, given the country’s limited land area and resources. 

Despite a brief increase of 5% in container handling at Doraleh Port in early 2024, continuous attacks in the Bab Al Mandeb Strait threaten to undermine the strategic advancements made by Djibouti in the ports sector. Major international shipping lines, such as the Danish company Maersk, have implemented precautionary measures, including avoiding bookings to Djibouti’s ports, further exacerbating the situation.

Elsewhere in the Red Sea area, African ports in Sudan, Eritrea, and Somaliland must contend with reduced vessel availability, much higher freight costs, and insurance premiums to the detriment of their maritime trade. The Shippers Council of East Africa (SCEA) has also reported increased insurance costs for commercial vessels transiting through Somali and Kenyan territorial waters. 

This rise in insurance expenses has subsequently elevated the costs associated with exporting and importing goods to and from Kenya. This development marks a reversal from a 2022 decision to remove Kenya from the list of high-risk areas. As a result, five major carriers have withdrawn their vessels from operating in Somali and Kenyan territorial waters.

The decrease in navigation through the Red Sea and the Suez Canal has presented notable opportunities for several African ports, particularly in the eastern and southern regions of the continent. However, this sudden shift in demand for African ports’ services has also precipitated numerous collateral impacts, reshaping the maritime landscape. 

Mauritius, Madagascar, and Namibia are among the countries benefiting from their strategic locations along the maritime route between Asia and Europe, making them ideal servicing stations. Countries along the Indian Ocean coastline, such as Kenya, Tanzania, and Angola, are better endowed with resources than Mauritius, Madagascar, and Namibia. 

Yet, they lie outside the traditional shipping lanes around the Cape of Good Hope. Mozambique is arguably better positioned to benefit from the shift in global trade patterns, but this opportunity coincides with the commencement of its port revamps.

South African ports, among others, have experienced a dramatic surge in seaborne traffic. Over three months, maritime activity around South Africa has increased by 53%. This unexpected influx has transformed ports such as Durban, Port Elizabeth, and Cape Town into key logistical hubs and refuelling stations for the growing number of commercial vessels navigating the main Asia-Europe route. South Africa expanded its at-sea refuelling services, deploying ships specifically designed to serve large commercial vessels in Algoa Bay.

Despite these opportunities, the surge in demand has exposed and exacerbated existing infrastructural deficiencies. Outdated equipment and poor management of funds have hindered the competitiveness of South African sea freight. The inability to upgrade port facilities due to financial constraints has slowed down operations, causing extended berthing delays, particularly at Durban’s Pier 2 terminal. 

Additionally, shortages of crucial marine resources, such as tugboats, pilot boats, helicopters, and pilots, have particularly affected Durban and Richards Bay ports, further straining their capacity to handle increased traffic.

The first month of the Red Sea crisis saw backlogs at the Port of Durban escalate to crisis levels, with approximately 79 vessels and over 61,000 containers forced to remain at outer anchorage for weeks due to limited logistical capacity. Similar delays have been reported at the container terminal of the Port of Cape Town. 

According to the World Bank’s 2022 Container Port Performance Index (CPPI), the Port of Durban ranks 341^st out of 348 ports, closely followed by the Port of Cape Town at 344^th. These rankings are based on the average port hours per port call, with port hours representing the total time elapsed from a vessel’s arrival in port to its departure from the berth.

The inability of South African ports to cope with the increased demand has led vessels to seek services in neighbouring countries. Ports such as Toamasina in Madagascar, Port Louis in Mauritius, and Walvis Bay in Namibia have seen increased activity as they step in to fill the gap. Major ports in East Africa, including Mombasa (Kenya), Dar-es-Salaam (Tanzania), and Beira (Mozambique), have also experienced increased traffic as part of the Asia-Europe maritime route. 

However, the sudden surge has highlighted the unpreparedness of these alternative ports to accommodate the new demand effectively. However, these East African countries themselves rely upon the Suez Canal as an important route to key suppliers and markets in North Africa and especially Europe – which implies higher costs, longer delays and disruption for shipping companies and port operators.

Over the past few months, Africa has begun to witness growing competition among global investors for a foothold in Africa’s port sector. This trend is characterised by a shift towards privatisation and extensive infrastructural upgrades aimed at enhancing capacity and handling higher cargo volumes. 

Countries such as Tanzania, Kenya, Mozambique, and South Africa are at the forefront of this transformation, driven by both domestic initiatives and foreign investments. According to a Puma Energy report on the investment in Africa, Investment in port dredging, 24-hour berthing, high-capacity discharge pumps, and dedicated marine loading arms with automated equipment will give rise to faster discharge rates and annual demurrage savings of around $300 million across key Eastern and Southern African corridors. 

Inbound efficiency and de-bottlenecking across berth capacity and port infrastructure can potentially deliver $5.3 billion in total savings.

DP World, a UAE-based multinational, has been particularly active in expanding its African ports portfolio. The company plans to invest $3 billion over the next three to five years to develop new port and logistics infrastructure in Africa, catering to the long-term growth driven by the rising demand for critical mineral exports. 

Despite losing a bid to partner with South Africa’s Transnet SOC Ltd. to develop Durban Port to International Container Terminal Services Inc. (ICTSI), DP World remains committed to its expansion plans. The company continues to express interest in opportunities arising from the partial privatisation of Transnet and is also looking at the port of Lamu in Kenya, where a privatisation process is underway. 

In October 2023, DP World signed a 30-year concession agreement with the Tanzania Ports Authority to operate and modernise the port of Dar-es-Salaam. Simultaneously, the Kenya Ports Authority has issued tenders inviting global companies to partner with Kenyan firms to manage the port of Lamu and sections of Mombasa port. Indian multinational port operator Adani has also entered the African ports market, securing a 30-year concession deal with the Tanzania Ports Authority to operate and manage Container Terminal 2 at the Dar es Salaam Port. 

This move introduces potential competition with DP World, which already operates part of the port. The presence of multiple global operators is anticipated to revamp the business, improve infrastructure, and boost the port’s general efficiency.

The Dar-es-Salaam Port serves not only Tanzania but also landlocked countries in the region, including Zambia, the Democratic Republic of Congo, Burundi, Rwanda, Malawi, Uganda, and Zimbabwe. However, the port faces challenges such as limited capacity to handle higher volumes and larger ships. 

Currently, the waiting period for ships to offload cargo at Dar-esSalaam can extend to five days, compared to just 1.25 days at the neighbouring port of Mombasa in Kenya. The port’s annual capacity is 14.1 million tonnes for dry cargo and 6 million tonnes for bulk liquid cargo, with a maximum ship handling capacity of 8,000 containers, which is relatively low compared to neighbouring ports.

Mozambique’s ports have also attracted substantial investments. The port of Beira, operated by Cornelder de Moçambique – a joint venture between Mozambique Ports and Railways and Rotterdam-based Cornelder Holdings – has undergone major infrastructural improvements over the past 25 years. According to the World Bank, these efforts have positioned Beira as the most efficient port in southern Africa. 

The Maputo Port Development Company’s (MPDC) strategic investment of $600 million to enhance terminal facilities by 2026 is part of a broader $2 billion plan to expand the port’s capacity and infrastructure. In South Africa, ICTSI has entered a 25-year joint venture with Transnet, taking over operations at Durban’s container terminal. This partnership brings optimism for resolving the longstanding issues at Durban’s ports, which have been losing business to Mozambique due to congestion and inefficiencies. 

Transnet Port Terminals is leveraging existing infrastructure to improve operations, including using a rail link between back-of-port facilities and the terminal for loading import containers. The strategic involvement of ICTSI is expected to address these challenges and enhance the port’s competitiveness.