Ties That Bind

Chinese investment in African infrastructure is rising, fueling increased trade, particularly breakbulk cargo, between China and Africa and opening new doors for forwarders and carriers.

Among those benefiting is Singapore’s BDP Project Logistics, which opened an office in Beijing last year to better penetrate the market.

“We are one of the first project freight forwarders to work with these state-owned Chinese companies with their investments in Africa, and one of the largest ones,” said Elizabeth Parke, manager of marketing and proposals for BDP in Houston.

BDP has been hired for three projects in Africa, and has more in the pipeline, said Jon Leong, the company’s Shanghai-based general manager of China. Leong worked for four years in Libya and Sudan before transferring to Shanghai.

In 2008, China National Building Materials hired BDP to provide logistics for the construction of a $40 million, privately owned cement plant in Ethiopia, Leong said.

BDP shipped cement, steel, steel structures and plant equipment from Shanghai and Tianjin, China, to Djibouti, and then trucked it to inland Ethiopia, he said.

The project’s volume reached 100,000 cubic meters of cargo, requiring more than 20 shiploads, and was carried on Ethiopia Shipping Lines, a breakbulk carrier, and China Ocean Shipping Co., Leong said.

In August, China Agriculture Machinery Equipment Cooperation, a state-owned company, hired BDP to provide logistics for a Zimbabwe Ministry of Agriculture project.

Vessels carrying 4,000 cubic meters of agricultural equipment, including loaders, tractors, excavators and spare parts, left Tianjin for Durban, South Africa, Leong said.

At the end of the year, BDP will provide logistics for a Chinese state-owned company building a cement plant in Libya. “We’ll handle the export side and the import side,” Leong said.

While China has been involved in African infrastructure projects for 20 years, most of the growth has occurred in the last decade. China has captured a growing share of the market by offering cheaper prices compared to Western nations, Leong said. Africa will provide the largest market and most opportunities for Chinese companies for perhaps the next 20 years, he said.

A 2008 International Monetary Fund report found China is now a major market, financier, investor, contractor and builder in Africa, as well as donor. The China-Africa relationship centers on markets for each other’s exports as well as Africa’s demand for infrastructure, the report said.

Yet critics say China invests in many countries despite their poor human rights records, endemic corruption and unstable governments.

For example, one Chinese fund recently signed a $7 billion mining and oil deal with Guinea despite strong international criticism of the West African country’s junta-backed government. Some also say China is stripping Africa of oil, gas and mineral resources while not creating a base for sustainable development. Others say Western investment also extracts resources from Africa, and that foreign investments, regardless of their source, often fund desperately needed infrastructure.

Despite these controversies, trade between China and Africa jumped 45 percent to $106 billion in 2008 compared to the previous year, according to the Chinese edition of the World Trade Atlas.

Chinese exports to Africa reached $50.8 billion in 2008, up 36 percent from 2007. Machinery was the top Chinese export to Africa, representing 10 percent of the total. Mineral products comprised the bulk of African exports to China, to meet the fast-growing economy’s demand for natural resources.

China’s major African trading partners last year were Angola, South Africa, Sudan, Nigeria and Egypt, representing a combined 62 percent of China’s total trade with Africa, according to the World Trade Atlas.

Chinese investment in Nigeria, for example, doubled from $3 billion in 2003 to $6 billion in 2008, with 75 percent of the total related to the oil and gas sector, according to Ken Ukaoha, national president of the Association of Nigerian Traders.

Meanwhile, the booming market continues to create opportunities for breakbulk shipments. Shanghai-based OSL, which operates a shipping line with twice-monthly service from China to West Africa, is also a big player on the route. The company, which has handled China-Africa business for 12 years, has transported cement, construction equipment, structural steel and Chinese trucks for infrastructure projects, primarily in Gabon, Cameroon and Angola. “Last year was a big year for us,” OSL owner Virginia Moore said.

Safmarine, an ocean carrier that is part of A.P. Moller-Maersk, also is expanding shipments to Africa — specifically to West and South Africa, said Waldemar Poulsen, general manager of Safmarine’s U.S. multipurpose vessel unit. “We are bullish on that market,” he said.

Contact Ina Cordle at lowtech617@gmail.com.