COMPETITION INTENSIFIES FOR W. AFRICAN SHIPPING

COMPETITION INTENSIFIES FOR W. AFRICAN SHIPPING

As deregulation of the shipping industry takes hold in a number of West African states, competition between European shipping companies for a share of the difficult north-south trade has intensified.

Following much prodding from the World Bank, countries such as the former French colonies of Cote d'Ivoire and Senegal have opened up their shipping industry, sounding the death knell for national carriers.But at the same time, European companies have had to grapple with currency devaluations and their subsequent impact on trade. At the beginning of last year, the 14 French-speaking countries of West Africa devalued the currency by 50 percent. The result was a dramatic decrease in imports from Europe. Exports

from the region have since become more competitive.

In addition to the monetary upheaval, seasonal traffic and commodity price fluctuations have also complicated business in the region for shipowners.

LINE OPERATORS OPTIMISTIC

Nevertheless, regular line operators say they are optimistic about economic conditions in the coming years as well the prospects for healthier competitive conditions.

Alain Labat, director of the Africa division at the French shipping company Delmas, says 1995 has been marked by large volumes of exports from West African countries as well as a gradual increase in imports.

"The situation is stabilizing," he said, adding that Delmas expects 3 percent-to-6 percent growth on its regular lines to the region, which accounts for 42 percent of the company's overall revenue.

According to the London-based Drewry Shipping Consultants, the southbound trade from Europe was roughly 275,000 TEUs last year, while northbound was about 200,000 TEUs. France accounts for about one-third of trade between the European Union and the West African region.

4 LINES DOMINATE MARKET

The top four shipping companies operating on the trade have captured most of the market. Delmas is the largest operator with about a 35 percent market share, followed by Compagnie Maritime Belge Transport with about 25 percent, OT Africa Line at 12 percent and Maersk Inc. with a little less than 10 percent.

Delmas has reduced its capacity to West Africa by half over the past three years. The first cutback was in response to a European commission ruling that its market share was anti-competitive. Then the company pulled vessels off the line after the devaluation.

Mr. Labat said that after restructuring of its Mediterranean-African routes, Delmas has turned the money-losing operations around to the point where they are expected to turn a profit this year.

Booming export volumes last year of wood, coffee, cocoa and rubber from West African countries have also helped. Mr. Labat said that investment in cotton production in countries like Cote d'Ivoire have also boosted trade.

VOLUMES TIED TO SEASON

The problem, said shipowners, is that trade volumes depend on the season. Delmas said its ships are filled to the brim for five months of the year and just 60 percent full the rest of the time. "It used to be just 35 percent so the situation is improving," said Mr. Labat.

He said the geography of trade with Western Africa is also evolving. Imports from Europe are still too expensive even though consumers are benefiting from export revenue. African countries have begun buying consumer products from South America and China as well as South Africa.

The reason Delmas has been successful in the region, he said, is that it provides both container and bulk carrier capacity.

The problem is containers are generally empty for the northbound journey, creating a logistical nightmare. A large percentage also come back damaged. Delmas said it hopes efforts to promote more transformation of raw materials will balance the trade in coming years.

Pierre Aim, president of Saga, a French stevedoring and transport company which has also invested heavily in Western Africa, described the region's growth in exports as an "economic miracle."

He said he expects the African stevedoring and land transport activities of Saga to grow by 25 percent this year over 1994. Mr. Aim said Saga has landed a number of key contracts in the region such as handling the logistics of transporting materials for the petrol industry in Congo and Chad.

SAGA MOVES KEY COMMODITIES

While Saga is not a shipowner, a large proportion of Cote d'Ivoire coffee and cocoa as well as the region's cotton passes through the company's hands. It is also one of the partners operating a newly privatized freight rail link between Abidjan, Cote d'Ivoire and Ouagodougou, Burkina Faso.

Like shipowners, Mr. Aim predicts growing trade links between Western Africa, South Africa and Asia.