Most U.S. Gulf ports focus largely on trade with Asia, Europe and South America, but a late bloomer is emerging out of the Southern Hemisphere. Trade with sub-Saharan Africa, though representing a small percentage of the volumes handled by the ports of Houston and New Orleans, is becoming a fast-growing market for the two ports.
Oil production, especially in West Africa, is fueling growth of the ports’ container and breakbulk trades, and mining and industrial production in South Africa is turning the country into a small but significant industrial products exporter.
One could even say South Africa is ready to become a capital “S” at the end of the BRIC countries of emerging markets: Brazil, Russia, India and China.
Although West Africa dominates most of the Gulf region’s trade with Africa because of its booming oil production, New Orleans is seeing growth in trade with South Africa. “It’s beginning to take off,” said Gary LaGrange, president and CEO of the Port of New Orleans. South Africa is offering “across-the-board trade opportunities” as it attracts more foreign direct investment. “We are even looking at the possibility of them expanding exports of electronics, power plants and mining equipment.”
“Even though our overall container trade with Africa is small, it’s growing rapidly,” said Ricky Kunz, vice president of trade development for the Port Authority of Houston. “According to our figures, about 95 percent of the Gulf’s container trade with Africa leaves from Houston.”
The container and breakbulk lines that serve Houston and New Orleans are largely carrying exports of oil field equipment, drill pipes, drilling fluid and muds and other petrochemical products to West and southern Africa. But imports also are starting to grow, at least in New Orleans, which is seeing growth in imports of fresh produce, and wine and spirits from South Africa.
New Orleans also is handling imports of auto parts produced by European automakers in South Africa to supply their plants in Europe and the U.S. “That’s been growing steadily over the last five years,” LaGrange said.
Mediterranean Shipping Co. and CMA CGM largely handle New Orleans’ trade with African markets via the carriers’ Caribbean transshipment hubs.
Houston, the center for the breakbulk trade in the U.S., handles most of the exports of oil field equipment to Africa, but it also has the largest share of the Gulf ports’ container trade with all of Africa. The terminals under the rubric of the Port of Houston Authority handled 56,000 20-foot-equivalent units in the export trade with East, West and South Africa last year, and 6,800 TEUs of import containers. Although the total volume of imports and exports together represents less than 3 percent of the port’s overall container trade, it’s one of its fastest-growing trades, increasing 15.4 percent year-over-year.
Maersk Line, MSC and CMA CGM, which connect at transshipment hubs in the Caribbean and Europe with vessels on direct service to Africa, handle the bulk of Houston’s African trade. Breakbulk and project cargo carriers that serve Africa out of Houston include Universal Africa Lines, Gulf Africa Line and Safmarine.
Houston’s containerized exports to Africa include apparel, food, plastics, chemicals, machinery, oil well supplies and vehicles. Most of the containers on the import leg of the trade are empty containers being returned, Kunz said.
In tonnage terms, however, imports from Africa outweighed exports last year. Houston handled 2.4 million metric tons of exports to Africa and 2.7 million tons of imports, mostly crude oil. One of the terminals the authority leases out to a private operator handled 1.2 million tons of grain exports to Africa last year.
The growth of the African trade is fast enough that Houston and New Orleans are sending trade delegations to key markets in West and South Africa to drum up business.
One key export to Africa from New Orleans is frozen poultry, which is shifting from the traditional refrigerated ships to reefers carried by container ships, as those ships start to dominate the cold trade. “We’re starting to see more and more frozen poultry exports, a lot of which is moving in containers, as a result of the opening here of our new New Orleans Cold Storage Facility,” LaGrange said. “They tell me that in five years up to 50 percent of their exports will move in reefer boxes to Africa, in large part because they are not building the reefer ships any more.” Grain exports to Africa also are shifting to containers, he said.
Other Gulf Coast ports are seeing growth in trade with Africa, but not on the scale Houston and New Orleans are experiencing. Tampa’s trade with Africa consists of a combination of bulk, breakbulk and container cargoes carried on multipurpose vessels by such carriers as Canada States Africa Line and Oldendorff Carriers. The Port of Mobile is seeing some incremental growth in lumber exports to Africa.
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Although West and South Africa dominate the trade, other African markets are starting to percolate. “We are seeing imports of coffee from Kenya and other East African countries and forest products from Nigeria,” LaGrange said. He also sees new growth in imports of textiles from Kenya, where some textile production is relocating to take advantage of lower wages and the duty-free access to the U.S. market under the African Growth and Opportunity Act of 2000.
“It’s very small right now, but I see it as a possible trend in the future, in large part in response to the higher wages in the Asia countries. We’re not doing a lot of that yet, but it’s on our radar,” LaGrange said. “Overall trade with Africa is not very prolific yet, but it’s at the forefront of our marketing efforts. Our hot buttons right now are certainly trade with Africa and South America.”