Captain Pappu Sastry, CEO of Adhira Shipping and Logistics, on why shipping should be optimistic about greater business opportunities out of Africa.
Amid the geopolitical turmoil impacting shipping and logistics worldwide, Africa is emerging as a land of promise for smart investors particularly in the mining sector.
There is rapid expansion in the development of junior mines in Africa along with increased demand for commodities from existing mines. There are opportunities to invest in machinery, trucking and ports with high returns and lower risk.
For the bulk shipping sector, cargo volumes are available and increasing, while owners can add value to the African commodities export sector while enjoying contracts of up to 10 years. There is also strong demand for handy feeders for granites, construction material and clinker.
Land based transport is also underserved and there is a need for trucking services and rail services connecting the interior, where many mines are located, to the coastal ports. Demand is high for investment in port management for barge jetties and multi-user ports as well as warehousing. Long term contracts of up to 15 years are on offer in multi-user ports and barge jetties with payback within seven years.
In the charter market, ASL is seeing bareboat contracts for cape, kamsarmax, handy and mini-bulk for three, five and 10 years. In the cape shipment COA sector, there are opportunities in the bauxite, manganese and iron ore sectors from West Africa to India and China.
In short there are major opportunities for investors large and small to reap the rewards in this burgeoning market, with the only inhibitor being the shortfall in equipment, management, machinery and infrastructure, all of which can be resolved through adequate investment.
For the bulk shipping sector, cargo volumes are available and increasing, while owners can add value to the African commodities.
Africa is a continent of more than 1.4bn people, its land mass is bigger than China, India, the continental US, and most of Europe combined, meaning that effective shipping and logistics are key to success across the continent.
The pain point for Africa is that the cost of shipping and distributing goods within the continent adds 320% to the cost of the manufactured product, inflating the costs locally and inhibiting the development of manufacturing.
With additional capacity at ports, with investment in new machinery, trucks and railways Africa’s future is bright for both exports and imports. With volumes available and margins high, operators and owners can add value supporting growth in this exciting market.