Global shipping continues to suffer from overcapacity caused by ships ordered during the pre-downturn boom years coming online. With demand still depressed, the three shipping sectors - container and dry and liquid bulk - are all struggling to maintain rates in the face of overcapacity. Indexes are falling and ships are increasingly being forced to operate below break-even rates. Huge geopolitical events, such as the Arab Spring and the Japanese earthquake, have further complicated market dynamics in the shipping sector.
In Kenya the shipping sector continues to be troubled by delays at the port of Mombasa, which is operating well over capacity. The situation has got so bad that liners have talked of imposing congestion surcharges. There is some hope for the beleaguered port, with dredging reportedly ready to begin. Expansion in the Kenyan ports sector is essential as new services, such as that introduced by Emirates Shipping Line, connecting the country to more ports in Asia, coming online.
Headline Industry Data
.. 2011 port of Mombasa throughput tonnage forecast to grow 4.7% to reach 19,828mn tonnes. Growth to average 4.5% to 2015.
.. 2011 port of Mombasa container throughput to grow 4.7% to reach 727,985TEUs. Growth to average 6.4% to 2015.
.. 2011 total trade set for year-on-year (y-o-y) real growth of 3.5%, and to average 5.3% to 2015. Key Industry Trends
Good News For Mombasa As Dredging Project Announced: There is an end in sight for the port of Mombasa's silt woes as plans to dredge the Kenyan facility were announced in mid-June, in addition to the announcement of a new cargo berth to be constructed at the port. BMI notes that the two measures should go some way to alleviate Mombasa's chronic congestion, a problem that has led to talk of container lines imposing surcharges on containers going to the port in recent months.
More Strife For Troubled Kenyan Port Of Mombasa: Continued delays and congestion at the Kenyan port of Mombasa led observers to suggest in June that delay surcharges may be imposed on containers, passing the costs on to shippers rather than the liner companies that are currently footing the bill. BMI notes that the beleaguered port is operating well above its nominal throughput capacity, and delays are likely to continue until the planned second container terminal is completed in 2015. Recent accusations of sustained corruption at the port will do nothing to help its reputation among international shipping lines.
Kenya-Ukraine Link-Up In The Pipeline - Kenya and Ukraine are to sign a memorandum of understanding (MoU) on cooperation in the maritime sector, it was announced in February 2011. BMI notes that trade between the two nations has grown sharply in recent years, and that the MoU will help this continue. Whether it will go some way to rectifying the trade imbalance between the two, however, remains to be seen.
Emirates Shipping Line Ramps Up Asian Expansion Drive: Dubai-based Emirates Shipping Line is continuing its expansion into Asia by adding two South China ports to its South East Asia to East Africa (AFA) service. With strong growth projected on the intra-Asia, Asia-Africa and Asia-Middle East trade routes, BMI believes the company's emerging trade route (ETR) strategy will serve it well. The carrier has added the port of Hong Kong and the port of Shekou to its AFA service. The loop's rotation is now Hong Kong, Shekou, Singapore, Port Klang, Colombo, Mombasa, Tanga, Dar Es Salaam, Singapore and Hong Kong. The average ship size on the route is 1,968 20-foot equivalent units (TEUs). The extension of the AFA service into South China is Emirates Shipping Line's first Africa to South China link.
Key Risks To Outlook
Risks to our forecasts in Kenya continue to come from the troubled port of Mombasa. Growth is dependent on the port being able to cope with the extra custom coming to the port. If work does not improve turnaround at the facility soon then lines could look to other East African ports in place of Mombasa.
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