Chinese President has sealed Tanzania’s Bagamoyo ‘mega-port’ project

bagamoyo-mapThe Chinese President has sealed Tanzania’s Bagamoyo project. Tanzania has laid down its claim for a future large slice of regional trade through a deal with China to build the new port of Bagamoyo in its Mbegani area, north west of Dar es Salaam, at a total cost of $10bn.

The deal was announced by the President of China, Xi Jinping, while recently visiting Dar es Salaam and forms part of a major investment by the China in the infrastructure of the Mbegani area and East African seaboard – a project to be completed by 2028 with the expectation that Bagamoyo port will supersede Dar es Salaam port as the country’s main port and container handling centre.

The new port will be built with a draft sufficient to accommodate higher capacity container vessels up to 10,000 teu and beyond, as well as possess specialised roll-on roll-off berths and other cargo berths.

The overall scale of the planned development is such that it will provide a highly competitive solution to Kenya’s port expansion plans in Mombasa and Lamu which, as well as catering for national trade, are focused on meeting the needs of surrounding landlocked countries such as Uganda, Rwanda and Burundi.

Kenya has ground out plans for a new deep water container terminal in Mombasa – now under construction – and has embarked upon major new port development at Lamu, but the Bagamoyo port plan has a stronger profile and coherence to it. The money is down and in the background are new offshore gas discoveries for Tanzania which promise to play their part in promoting a strong and enduring relationship with China.

The first-phase development of Bagamoyo port is expected to be in operation by 2017 with construction undertaken by China Merchant Holdings of Hong Kong.

There has been no discussion to-date of whether the new port will feature cargo handling terminals operated by the private or public sector. As in Kenya, this subject remains something of a ‘hot potato’ with some Tanzania Port Authority executives suggesting it was a mistake to introduce the private sector as the operator of the Dar es Salaam Container Terminal. As in Mombasa, there is a belief that the public sector could have done as well as private interests in seeking to achieve efficient container terminal operation.

This belief persists in certain circles despite the TPA taking steps to raise the calibre of executives in its organisation through the introduction of executives from the private sector and a greater overall focus on human resources.

Dar es Salaam currently handles over 9m tons of cargo per year which is equivalent to about 95% of all Tanzania’s import and export volumes. In container trade alone, growth has been over 12% per annum since 2000. Despite this, the cost of shipping to Tanzania is about 25% higher than rates to the larger competing ports in southern Africa. This is mostly attributable to port inefficiencies brought about by inadequate investment in port infrastructure.

These costs are compounded when the effects of congestion and delay are added to the total freight bill, which can account for between 20%-70% of the total delivered price, inflating the price of imports and undermining global and regional export competitiveness.

The rationale for the introduction of major new port capacity in Tanzania is self-evident – demand is outstripping available capacity. It is to be hoped, however, that new capacity will be introduced supported by a modern port management model and institutional arrangements to facilitate optimum use of this capacity at the lowest cost. Source: PortTechnology.com

Serious Regional Competition – China to build Africa’s largest port

Port of Dar es Salaam, Tanzania, West Africa. Image credit: TPA

Port of Dar es Salaam, Tanzania, West Africa. Image credit: TPA

China has announced plans for a new US$10 billion mega port in the Tanzanian town of Bagamoyo.

The new port, boasting an annual capacity of 20 million TEU, will not only become Africa’s largest box facility but will also rival the major ports of the Persian Gulf.

Dwarfing Tanzania’s current largest port in Dar es Salaam, which handles an estimated 800,000 TEU a year, the new port, northwest of the capital, will be used as a transhipment hub for raw materials coming in and out of landlocked Malawi, Zambia, Congo, Burundi, Rwanda,and Uganda.

China will also help to establish new road and rail networks in the area, whilst contributing to the upgrade of existing links. Source: Port Technology International.

Car importers slam KRA transit vehicles rule

Is the time for a regional transit bond nigh? Given prevailing draconian measures to ensure security and surety, the message is clear that customs brokers, freight forwarders or clearing agents need to demonstrate financial security over and beyond what they are accustomed to. Question – is the transit business lucrative for agents? Why not refuse the business – its just not worth the risk.

A requirement by the Kenya Revenue Authority demanding that all imported transit vehicles above 2000cc be cleared against cash bonds or bank guarantees has been opposed by clearing agents in Mombasa. The agents, under their umbrella Kenya International Freight and Warehousing Association, have threatened not to pay taxes if the regulations are not withdrawn by the tax collector. The agents said that the stringent measures by KRA may stifle trade in the region and may also see the port of Mombasa losing some foreign importers to the port of Dar es Salaam in Tanzania. “We as clearing agents cannot pay the bonds for the importers”.

On August 31, KRA directed all clearing agents that with effect from September 1, all transit vehicles exceeding 2000cc would be cleared against a cash bond or bank guarantees paid by the agents. The forwarders also said that Uganda, Rwanda and DR Congo business class was considering ditching Kenya as an import avenue for Dar es Salaam port. Source: The Star (Nairobi)