Cape struggles to cope

Six months of attacks on passing shipping by Yemen’s Houthis since November last year has had major effects on Africa’s bunker market, reports John Rickards

At the time of writing, according to the International Monetary Fund’s PortWatch project, the seven-day average of vessel transits through the Suez Canal is down around 50% from the year before. Tonnage is down even further, around 60%, as numerous major shipping lines operating between Asia and Europe have redirected their vessels around the Cape of Good Hope. Ships still running the Bab-el-Mandeb Strait are predominantly smaller ones, relying on the US or European naval task forces in the area, good luck, shutting off their AIS, and/or setting their AIS voyage information to things like “No Israel Ties” or “All Turkish Crew” to pass untouched. With war risk premiums enormously hiked and the danger to crews real, the big vessels are steering well south across the Indian Ocean instead.

Tensions in the region haven’t been helped by Ethiopia signing a deal at the start of the year with the breakaway region of Somaliland to use the port of Berbera and lease 20km of coastline for a naval base in exchange for recognition as an independent nation. The Somali government has bitterly objected to the move, which it considers illegal and a breach of its sovereignty and said in February it would “defend itself” if Ethiopia tried to press ahead with the move. With the semi-autonomous region of Puntland declaring its withdrawal from the federal system until constitutional changes put forward by the government can be ratified in a referendum and Somali piracy ticking upwards since the world’s eyes turned northward, the Horn of Africa seems dicey at best.

This major shift in trading patterns means more fuel demand, but the volumes and infrastructure involved have posed significant challenges for numerous ports on the loop around the Cape: availability, capacity, congestion, waiting times. Many smaller ports or those which have seen limited investment in recent years aren’t able to readily service a sudden influx of major line cargo vessels or don’t have sufficient bunker suppliers to handle them without delays; those that do have tended to quickly jam with ships looking to refuel.

As Céline Bacrot and Marc-Antonine Faure, writing for the UNCTAD Transport and Trade Facilitation Newsletter summed up in April: “The disruption in the Red Sea and increased shipping traffic around Africa underscore the need for African countries and ports to scale up ongoing efforts aimed at implementing trade facilitation measures, taking up digitalisation and mainstreaming green processes to reduce port congestion and expedite the clearance of goods.”

South Africa has come off particularly badly on these scores. Bunker services were suspended in Algoa Bay’s Port Elizabeth in September last year after the South African Revenue Service detained five bunker tankers for BP, Trafigura Marine and Minerva Bunkering on suspicion of customs tax violations, chilling relations somewhat with suppliers. And while Durban and Cape Town have seen a rise in interest, they’ve also seen a consequent rise in bunker costs, with the country still an importer of fuel oils even with Cape Town’s refinery reopening last year, and port congestion. With offshore bunkering limited entirely to Algoa Bay, operators can be forgiven for not wanting to chance getting stuck in a portside traffic jam waiting to bunker. South Africa’s capacity to act as a major bunker destination has been in question for years, with concerns over port charges and administrative framework dogging bunkerers trying to draw in international trade.

In its most recent half-year financial report (at time of writing), state-owned logistics and port operator Transnet recorded a 1.6bn rand (US$87m) loss in the first half of the last financial year, down from a narrow profit the year before, on the back of higher costs and falling cargo volumes coupled to ongoing shortages of equipment. The company is billions of dollars in debt and has required hefty cash injections from the South African government to stay afloat. All that being so, it’s no wonder that ships needing fuel on the longer route round the Cape have largely been bypassing South African ports. This despite hugely increased passing trade – research from Clarksons showed that in early March, average gross tonnage rounding the Cape was up 85% on December, with box ships particularly affected; container vessel arrivals more than tripled in the same period.

Instead, it’s been ports further up both coasts that have benefited so far, especially Walvis Bay in Namibia and Port Louis in Mauritius, as well as the rapidly expanding port of Maputo in Mozambique. While sudden extra demand for services has at times stretched resources at these ports, they’re far less affected by the kind of congestion seen in South Africa.

Maputo has been, and continues to be, heavily redeveloped as Mozambique seeks to establish itself as both a heavy exporter and a regional commercial centre and has already seen increasing bunker interest on the back of this growth. Figures released earlier this year by Maputo Port Development Company showed annual cargo volumes up 16% last year. Of the 31.2 million tonnes of freight handled, about 80% was bulk ores of various types. Maputo’s inland transport links and infrastructure have been something that MPDC has been cautious of. Rail utilisation has improved, dropping road traffic and improving bulk cargo handling, but there’s still some way to go.

“The sustainable growth of the transportation corridor continues to be a concern for MPDC. Although there is growth in rail handling, demand for the Port has grown exponentially and so we will continue to work with CFM to seek a better balance between rail and road cargo,” said MPDC CEO Osório Lucas.

Despite this, by all accounts the port hasn’t been affected by the kind of jams seen elsewhere. Instead, the capacity of the comparatively nascent bunker sector has perhaps been a limiting factor in terms of the volume of calls seen since the Red Sea crisis began.

That’s less of a factor in Mauritius. In February-March, both Trafigura and Minerva shifted some of the focus of their regional offshore bunkering operations from Algoa Bay to Port Louis – though both companies are reported to have linked up with local suppliers rather than launching wholly new operations of their own. Reuters reported that Minerva had done so with Engen Mauritius, while Trafigura inked a deal with Groupe Roland Maurel.

Trafigura’s statement on the development was brief and rather chipper: “We’ve just launched our latest operation location in Port Louis, Mauritius, through a joint-venture with Mauritius bunkering company Groupe Roland Maurel (GRM).”

“The partnership combines TFG Marine’s best-in-class approach to marine fuel supply with GRM’s local expertise and infrastructure network, to meet the needs of the growing number of shipping customers traversing the Cape of Good Hope.”

Not long after, the company announced that the bunker delivery vessel, the MT Hakkasan, was to be fitted with a mass flow meter, easing the way for similar additions in future. “While in Port Louis, our delegation also met with local shipyards to discuss the technical specifications necessary for the installation of MFMs on additional barges, underscoring our commitment to expanding the application of this cutting-edge technology across our operations in the region – and to help pave the way for others to follow suit,” TFG Marine said in a statement.

Fellow local supplier Stonewin announced in April it had switched bunkering vessels to the newer Verde. No mention of a MFM, but the company did describe it as “state-of-the-art” and able to deliver both VLSFO and HFO as well as MGO.

On the west coast, the biggest player in the market had reshuffled its regional service infrastructure just as the crisis off Yemen was kicking off. Monjasa replaced its chartered 119,456 dwt mothership storage vessel SKS Dokka with the 68,589 dwt tanker Monjasa Leader, and switched out the 13,000-odd dwt oil and chemical tanker Monjasa Runner, used for deliveries to vessels across the WAF region and now sold on to work the western Med, for the similarly sized but confusingly named Monjasa Refiner.

Switching more towards an owned fleet would help reduce operating costs, the company said. Group shipping director Torben Maigaard went further: “The Monjasa Leader becomes our largest fleet member and represents our single most important tanker acquisition ever. Given the limited opportunities of storing fuel products ashore, our floating storage solution is the backbone of our West Africa marine fuels operations and allows for our supply tankers to frequently go alongside the vessel to load cargo. Providing maritime end-to-end logistics in West Africa is a challenging task, but we are confident that our two new vessels bring the efficiency and flexibility needed.”

Flexibility has certainly proved to be useful, in the circumstances. At the start of the year, the company moved three of its WAF fleet to Namibia to serve the uptick in demand in Walvis Bay. The port is already a key commercial and cruise passenger hub, and with recent expansion and investment, and the availability of offshore bunkering via tankers operating out of Walvis Bay, has been able to weather the surge in demand comparatively easily. In mid-April, the Namibian Ports Authority announced that it was allowing bunkers-only calls within port limits, adding further incentive to use it as a fuelling stop en route to and from Europe.

Namport has been steadily growing and developing its service offerings for some years. Last year, while profits were down a little compared to 2022, revenue was up 22% to N$1.5bn, comfortably beating the port authority’s own targets, and cargo throughput was up 17% to 7.7m tonnes on the back of higher demand, increased mining output and a rise in overall tonnage of visiting vessels. Looking to its own wider future, the port operator is also extremely keen on becoming an export hub for green hydrogen and ammonia, with the country looking to put US$20bn in hydrogen projects into action in the coming years.

Chairperson Nangula Hamunyela said: “The developments in Europe and across the world have compelled many countries to seek alternative sources of energy to reduce supply risk and added to the growing demand for energy alternative sources. Namibia’s positioning as one of the most competitive and viable sources of green hydrogen production came at the right time. While the world is decarbonising, fossil fuels will remain relevant for years to come, especially in the Southern hemisphere where green energy technologies still lag or are completely non-existent. Namibia’s recent oil and gas discoveries are well-placed to resolve European supply challenges resulting from the Russia-Ukraine conflict.”

Namport has plans to expand the Port of Lüderitz to add a new deepwater terminal at Angra Point and integrate green hydrogen exports from the Southern Corridor Development Initiative. Its ongoing MoU with the Port of Rotterdam is, it said, providing valuable input in helping position Namibia as a green fuels hub for the future, in addition to increasing supply links with northern Europe. Last year, Belgium’s CMB announced plans to build a €2.2bn green ammonia bunkering facility in Walvis Bay.

“Namport recognises the significant potential of green hydrogen production and export as an emerging market and its importance in advancing sustainable energy solutions,” the authority said. “The Authority is committed to staying well-informed, exploring further collaborative opportunities and aligning strategies within the evolving market dynamics to ensure that port facilities are adequately prepared to facilitate green hydrogen exports.”

The current crisis helping cement Walvis Bay and other Namibian ports as reliable fuelling points now will surely only give Namport an advantage to become a southern African green fuels hub in the future.

Image Caption: South Africa’s ports have struggled to offer a major bunkering presence.
Image Credit:
Axel Bührmann/CC-BY

24/05/2024

Image Caption: Monjasa revamped its WAF fleet late last year.
Image Credit: Monjasa

Image Caption: Walvis Bay has proved a solid bunkering hub.
Image Credit: Namport

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