SINGAPORE -- Africa, the least-developed continent in the world, is attracting increased attention from the world's biggest manufacturing countries looking for natural resources and an outlet for exports.
Leading the way is -- who else? -- China, which is sponsoring or has involvement with some 77 percent of all African projects, Hua Wallace Cai, a project manager with TransProjects Asia, told attendees of The Journal of Commerce's Second Annual Breakbulk Asia Conference in Singapore this week.
China is focusing on Africa because of its need to extract natural resources, but this is not a new phenomenon, said Wallace, who was participating as part of a panel discussing Sino-Africa trade. Chinese engineering, procurement and construction companies have been working in Africa since the 1950s. Beyond the hunt for resources, Africa is an important market for Chinese exports and a source of employment.
European and U.S. companies such as Bechtel also have significant operations in Africa and often source material and equipment from China, said Zhou Hui, transport and logistics manager for Bechtel China.
Breakbulk services between China and Africa, however, are spotty, at best. "According to the feedback we get, sometimes ship conditions are not good. Ships are old or dirty or delayed," Zhou said.
U.S. and European EPC contractors have strict requirements for shipping quality. Damage during shipment costs money and time, even to the point of having to refabricate pieces. "We always put the cargo safety issue first," Zhou said.
Virginia Moore, managing partner with Shanghai-based OSL Steamship, said the cargo market encompassing container, ro-ro and submersible transport between China and Africa is well-developed. But "there are different levels of service in the breakbulk field. There is a great pressure on rates; a lot of vessels offer good rates, but they may not be clean or they may be old.
"There is an extreme variety of services, and it can be difficult for shippers (newly) entering the market to differentiate between the services," she said. "They must know who the carrier is, (and know) if they are really calling the ports you are asking them to call upon."
OSL's main trade lane is China and West Africa. "We have shipping offices in those ports to assist customers and ensure that vessels will enter berths quickly and not have problems at the port," Moore said. "Our offices in Africa are critical to our operations. Everyone on our team has to spend time in Africa to understand that role.
"Africa is such a difficult market," she said. "It's making that connection and making sure that communication is working -- and that puts a lot of emphasis on your destination agent."
Within the African continent, service providers often must create routes "from scratch," said Mark Schweiger, managing director with Bertling Logistics for sub-Saharan Africa. What often appears to be the shortest route from port to site includes bridges and other bottlenecks that cannot handle a given piece of cargo's weight or size -- or roads simply don't exist.
Some African countries are reluctant to allow projects not intended for them to cross their borders. Shippers need an efficient port that can receive the cargo and that also gives access to the site. In Africa, the consequences of not thoroughly mapping out these issues can be "extreme," Schweiger said.
Poor African infrastructure and port facilities and changeable government policies also make things difficult on the Chinese side, Wallace said. Many Chinese EPCs have poor management and IT support, and often they do not understand export procedures.
"Most (Chinese) project cargo is controlled or sponsored by the government and so is awarded on the basis of relationships," he said. "It can be difficult for them to find a reliable agent or partner in Africa."
Steven Yang, general manager with OSL, recommended reducing the number of shipments when moving specialized cargo, thus reducing risk and uncertainty. Improper packing is a frequent problem. "Select a reliable shipping business or company. Select a good agent," he said.
Communication is key to this trade lane, the panelists said. Africa is a high-risk market but offers high rewards. While the Sino-African trade was affected by the banking slowdown, it is one of the most active trade lanes comparatively, growing as others were contracting, Moore said.
Contact Janet Nodar at firstname.lastname@example.org.