Good Performance Still Expected
We remain broadly upbeat about Kenya''s ports and shipping sector, based on three main factors:
reasonable economic growth in Kenya itself; a dynamic East African region (important because Mombasa
acts as a trade gateway for many of Kenya''s neighbouring countries); and finally, some signs that the
port''s ongoing congestion problems may be easing a little.
After experiencing something of a slowdown because of monetary tightening, we see Kenya''s GDP
growth picking up from mid-2012 onwards. As inflation comes down BMI believes the Central Bank will
be encouraged to cut interest rates and stimulate consumer demand. With the country heading towards
elections later this year or in early 2013, the Nairobi government can be expected to do a little pumppriming
through greater public spending, which will also help growth. Admittedly, after the communal
violence experienced in the last elections there will be fears of rising political risk and perhaps a slowdown
in investment; however, our expectation is that this time the elections will be hotly contested, but
peaceful.
Given the eurozone crisis foreign trade will perhaps not contribute much to Kenya''s growth rate, though
this should be offset by the relatively good performance of the country''s East African neighbours, who are
now responsible for almost 50% of Kenya''s exports. Taking these factors into consideration we are
predicting a GDP growth rate of 4.9% in 2012, rising to 6.0% in 2013. We expect the economy to grow
by an average annual rate of 5.6% over the medium term to 2016.
Headline Industry Data
Port of Mombasa tonnage throughput forecast to grow 4.79% in 2012 to reach 20.539mn tonnes.
Growth to average 4.4% in the period running to 2016.
Container throughput forecast to grow 7.35% to reach 826,595 twenty-foot equivalent units
(TEUs) in 2012. Box growth to average 6.7% to 2016.
2012 total trade set for year-on-year (y-o-y) real growth of 4.0% and to average 5.6% to 2016.
Key Industry Trends
Progress In Mombasa''s Congestion Battle?
There were signs of movement in Mombasa Port''s long struggle with congestion, on the back of news that
dredging work has been completed in some of the access channels. The dredging of Kilindini Harbour
was finished four months ahead of schedule by Dutch firm Van Oord Dredging and Marine
Kenya Shipping Report Q3 2012 © Business Monitor International Ltd Page 6 Contractors. In late May it was reported that major shipping lines were rerouting mega-vessels to the port in order to capitalise on the resulting economies of scale. Switzerland-based Mediterranean Shipping Company replaced some of its smaller container vessels with two Panamax vessels, namely MSC Roberta and MSC Jade, while French shipping line CMA-CGM deployed a 222 metre (m)-long vessel with a draft of 12m.
Lamu Corridor: Show Me The Money?
BMI has previously expressed concern that highly ambitious plans for the Lamu Port-Southern Sudan-
Ethiopia Transport Corridor (Lapsset) infrastructure project may be frustrated because of the high cost
and a scarcity of funds. We therefore welcome news that The African Development Bank (AfDB) is
willing to be part of the project. The US$25bn proposal includes the construction of a port at Lamu, a
1,720km railway line connecting Kenya to South Sudan and Ethiopia as well as a highway along the same
route. It also involves the construction of three airports, a pipeline from Kenya to South Sudan and
Ethiopia as well as an oil refinery in Kenya. BMI believes the construction of the Port of Lamu is crucial
not only for Kenya, but also for the other countries of East Africa which are reliant on the transit of goods
through Kenyan ports.
KPA Is Bullish On 2012 Tonnage
According to media reports, Kenya Port Authority (KPA) expects cargo traffic via Mombasa, the key
gateway into east Africa''s landlocked countries, to rise by 5.3% this year because of strong economic
growth in the region. Gichiri Ndua, KPA managing director, said the East African economies were
growing by about 5% resulting in high consumption levels due to increased disposable incomes. ‘We are
likely to do 21mn tonnes this year... the economic performance of the entire region is a major player in
what is going on at the port’, he said. However, BMI is marginally more conservative in our predictions
for Mombasa tonnage.
Key Risks To Outlook
The Kenyan ports and shipping sector faces quite a wide range of risks, with none being particularly
dominant over the others. BMI has identified four main risks facing the wider economy, each with an
indirect effect on the industry. These are the weather, political instability, global energy prices and
inappropriate monetary policy. To these we must add the ever-present risk of congestion at Mombasa
Port. Broadly speaking, the main downside risks are the weather - in particular the potential for a new
drought - which would again hit the country''s important agricultural sector; political instability (the risk
of renewed violence in the coming elections); and the prospect of new and mis-timed monetary tightening
which would delay the expected economic recovery.
While the other risks could conceivably work on the downside, they may also actually boost, rather than
restrain shipping activity. While energy prices are always liable to spike, particularly on the back of
political conflicts in the Middle East and other key oil production areas, it can also be argued that in the
Kenya Shipping Report Q3 2012 © Business Monitor International Ltd Page 7
current sluggish state of the global economy as we go into the northern hemisphere summer, they may
actually fall below our expectations, providing the Kenyan economy with a bit of a boost. Similarly, we
have normally listed Mombasa congestion as a downside risk, but in recent months dredging work has
opened up the port to larger vessels and has therefore been an upside risk.
Kenya Shipping Industry 2012
Table of Contents
Executive Summary . 5
SWOT Analysis . 8
Kenya Shipping SWOT . 8
Kenya Political SWOT . 9
Kenya Economic SWOT . 9
Kenya Business Environment SWOT . 10
Global Overview – Container Shipping 11
Executive Summary: Rate Decline Risk, Threat Of Another Year Of Losses 11
Slowing Demand A Major Threat To Freight Rates 12
Carriers Thinking Outside Box On Overcapacity, Can Rate War Be Avoided? . 18
Lines Must Tackle High Bunker Prices To Avoid Impact On 2012 Bottom Line 23
Evergreen''s Order Raises Questions For Future Of Box Fleet Expansions 27
Global Overview – Dry Bulk Shipping . 33
Executive Summary: Rates Struggling To Recover From 25-Year Low . 33
Bleak Demand Outlook Gives Cause For Concern . 34
Lines Withhold Payments As Shipping Struggles In Depressed Market . 36
Vale''s Valemax Woes Continue, Vessel Values And Demand Plunging . 38
Orders Continue As Lines Take Advantage Of Bargain Basement Prices 43
Record Dry Bulk Scrapping Levels No Match For Global Fleet 45
Global Overview – Liquid Bulk Shipping . 47
Executive Summary: Bearish View Maintained Despite Industry Optimism 47
Will Increased Asian Crude Imports Offset Excess Tonnage? 48
More Pain For US Tanker Operators Despite Investor Confidence . 52
2012 Political Impact On Crude Oil Shipping Emanating From Iran 54
Tanker Operators Scrap In Desperate Attempt To Shore Up Rates 58
Tanker Pools To Grow As Operators Seek Safety In Numbers 60
Industry Trends And Developments 62
Container Shipping Market Overview . 65
Industry Forecast . 71
Port of Mombasa 71
Table: Major Port Data, 2008-2016 . 73
Trade 73
Table: Trade Overview, 2008-2016 73
Table: Key Trade Indicators, 2008-2016 (US$mn) . 74
Table: Main Import Partners, 2002-2009 (US$mn) 75
Table: Main Export Partners, 2002-2009 (US$mn) 75
Company Profiles . 76
Delmas 76
Maersk Line 79
Mediterranean Shipping Company (MSC) . 85
Kenya Shipping Report Q3 2012
© Business Monitor International Ltd Page 4
CMA CGM 89
COSCO Container Lines Company Limited (COSCON) 94
Hapag-Lloyd 99
Evergreen Line .103
APL 107
China Shipping Container Line (CSCL) .113
Hanjin Shipping (Container Operations) 118
Mitsui OSK Lines (MOL) (Container)122
Kenya Demographic Outlook 127
Table: Kenya''s Population By Age Group, 1990-2020 (''000) 128
Table: Kenya''s Population By Age Group, 1990-2020 (% of total) .129
Table: Kenya''s Key Population Ratios, 1990-2020 130
Table: Kenya''s Rural And Urban Population, 1990-2020 .130Table: Major Port Data
Table: Trade Overview
Table: Key Trade Indicators (US$mn)
Table: Main Import Partners (US$mn)
Table: Main Export Partners (US$mn)
Table: Kenya''s Population By Age Group ('')
Table: Kenya''s Population By Age Group (% of total)
Table: Kenya''s Key Population Ratios
Table: Kenya''s Rural And Urban Population
We remain broadly upbeat about Kenya''s ports and shipping sector, based on three main factors:
reasonable economic growth in Kenya itself; a dynamic East African region (important because Mombasa
acts as a trade gateway for many of Kenya''s neighbouring countries); and finally, some signs that the
port''s ongoing congestion problems may be easing a little.
After experiencing something of a slowdown because of monetary tightening, we see Kenya''s GDP
growth picking up from mid-2012 onwards. As inflation comes down BMI believes the Central Bank will
be encouraged to cut interest rates and stimulate consumer demand. With the country heading towards
elections later this year or in early 2013, the Nairobi government can be expected to do a little pumppriming
through greater public spending, which will also help growth. Admittedly, after the communal
violence experienced in the last elections there will be fears of rising political risk and perhaps a slowdown
in investment; however, our expectation is that this time the elections will be hotly contested, but
peaceful.
Given the eurozone crisis foreign trade will perhaps not contribute much to Kenya''s growth rate, though
this should be offset by the relatively good performance of the country''s East African neighbours, who are
now responsible for almost 50% of Kenya''s exports. Taking these factors into consideration we are
predicting a GDP growth rate of 4.9% in 2012, rising to 6.0% in 2013. We expect the economy to grow
by an average annual rate of 5.6% over the medium term to 2016.
Headline Industry Data
Port of Mombasa tonnage throughput forecast to grow 4.79% in 2012 to reach 20.539mn tonnes.
Growth to average 4.4% in the period running to 2016.
Container throughput forecast to grow 7.35% to reach 826,595 twenty-foot equivalent units
(TEUs) in 2012. Box growth to average 6.7% to 2016.
2012 total trade set for year-on-year (y-o-y) real growth of 4.0% and to average 5.6% to 2016.
Key Industry Trends
Progress In Mombasa''s Congestion Battle?
There were signs of movement in Mombasa Port''s long struggle with congestion, on the back of news that
dredging work has been completed in some of the access channels. The dredging of Kilindini Harbour
was finished four months ahead of schedule by Dutch firm Van Oord Dredging and Marine
Kenya Shipping Report Q3 2012 © Business Monitor International Ltd Page 6 Contractors. In late May it was reported that major shipping lines were rerouting mega-vessels to the port in order to capitalise on the resulting economies of scale. Switzerland-based Mediterranean Shipping Company replaced some of its smaller container vessels with two Panamax vessels, namely MSC Roberta and MSC Jade, while French shipping line CMA-CGM deployed a 222 metre (m)-long vessel with a draft of 12m.
Lamu Corridor: Show Me The Money?
BMI has previously expressed concern that highly ambitious plans for the Lamu Port-Southern Sudan-
Ethiopia Transport Corridor (Lapsset) infrastructure project may be frustrated because of the high cost
and a scarcity of funds. We therefore welcome news that The African Development Bank (AfDB) is
willing to be part of the project. The US$25bn proposal includes the construction of a port at Lamu, a
1,720km railway line connecting Kenya to South Sudan and Ethiopia as well as a highway along the same
route. It also involves the construction of three airports, a pipeline from Kenya to South Sudan and
Ethiopia as well as an oil refinery in Kenya. BMI believes the construction of the Port of Lamu is crucial
not only for Kenya, but also for the other countries of East Africa which are reliant on the transit of goods
through Kenyan ports.
KPA Is Bullish On 2012 Tonnage
According to media reports, Kenya Port Authority (KPA) expects cargo traffic via Mombasa, the key
gateway into east Africa''s landlocked countries, to rise by 5.3% this year because of strong economic
growth in the region. Gichiri Ndua, KPA managing director, said the East African economies were
growing by about 5% resulting in high consumption levels due to increased disposable incomes. ‘We are
likely to do 21mn tonnes this year... the economic performance of the entire region is a major player in
what is going on at the port’, he said. However, BMI is marginally more conservative in our predictions
for Mombasa tonnage.
Key Risks To Outlook
The Kenyan ports and shipping sector faces quite a wide range of risks, with none being particularly
dominant over the others. BMI has identified four main risks facing the wider economy, each with an
indirect effect on the industry. These are the weather, political instability, global energy prices and
inappropriate monetary policy. To these we must add the ever-present risk of congestion at Mombasa
Port. Broadly speaking, the main downside risks are the weather - in particular the potential for a new
drought - which would again hit the country''s important agricultural sector; political instability (the risk
of renewed violence in the coming elections); and the prospect of new and mis-timed monetary tightening
which would delay the expected economic recovery.
While the other risks could conceivably work on the downside, they may also actually boost, rather than
restrain shipping activity. While energy prices are always liable to spike, particularly on the back of
political conflicts in the Middle East and other key oil production areas, it can also be argued that in the
Kenya Shipping Report Q3 2012 © Business Monitor International Ltd Page 7
current sluggish state of the global economy as we go into the northern hemisphere summer, they may
actually fall below our expectations, providing the Kenyan economy with a bit of a boost. Similarly, we
have normally listed Mombasa congestion as a downside risk, but in recent months dredging work has
opened up the port to larger vessels and has therefore been an upside risk.
Kenya Shipping Industry 2012
Published: August
2012 No. of Pages: 131 Price:
US $ 1175
Table of Contents
Executive Summary . 5
SWOT Analysis . 8
Kenya Shipping SWOT . 8
Kenya Political SWOT . 9
Kenya Economic SWOT . 9
Kenya Business Environment SWOT . 10
Global Overview – Container Shipping 11
Executive Summary: Rate Decline Risk, Threat Of Another Year Of Losses 11
Slowing Demand A Major Threat To Freight Rates 12
Carriers Thinking Outside Box On Overcapacity, Can Rate War Be Avoided? . 18
Lines Must Tackle High Bunker Prices To Avoid Impact On 2012 Bottom Line 23
Evergreen''s Order Raises Questions For Future Of Box Fleet Expansions 27
Global Overview – Dry Bulk Shipping . 33
Executive Summary: Rates Struggling To Recover From 25-Year Low . 33
Bleak Demand Outlook Gives Cause For Concern . 34
Lines Withhold Payments As Shipping Struggles In Depressed Market . 36
Vale''s Valemax Woes Continue, Vessel Values And Demand Plunging . 38
Orders Continue As Lines Take Advantage Of Bargain Basement Prices 43
Record Dry Bulk Scrapping Levels No Match For Global Fleet 45
Global Overview – Liquid Bulk Shipping . 47
Executive Summary: Bearish View Maintained Despite Industry Optimism 47
Will Increased Asian Crude Imports Offset Excess Tonnage? 48
More Pain For US Tanker Operators Despite Investor Confidence . 52
2012 Political Impact On Crude Oil Shipping Emanating From Iran 54
Tanker Operators Scrap In Desperate Attempt To Shore Up Rates 58
Tanker Pools To Grow As Operators Seek Safety In Numbers 60
Industry Trends And Developments 62
Container Shipping Market Overview . 65
Industry Forecast . 71
Port of Mombasa 71
Table: Major Port Data, 2008-2016 . 73
Trade 73
Table: Trade Overview, 2008-2016 73
Table: Key Trade Indicators, 2008-2016 (US$mn) . 74
Table: Main Import Partners, 2002-2009 (US$mn) 75
Table: Main Export Partners, 2002-2009 (US$mn) 75
Company Profiles . 76
Delmas 76
Maersk Line 79
Mediterranean Shipping Company (MSC) . 85
Kenya Shipping Report Q3 2012
© Business Monitor International Ltd Page 4
CMA CGM 89
COSCO Container Lines Company Limited (COSCON) 94
Hapag-Lloyd 99
Evergreen Line .103
APL 107
China Shipping Container Line (CSCL) .113
Hanjin Shipping (Container Operations) 118
Mitsui OSK Lines (MOL) (Container)122
Kenya Demographic Outlook 127
Table: Kenya''s Population By Age Group, 1990-2020 (''000) 128
Table: Kenya''s Population By Age Group, 1990-2020 (% of total) .129
Table: Kenya''s Key Population Ratios, 1990-2020 130
Table: Kenya''s Rural And Urban Population, 1990-2020 .130Table: Major Port Data
Table: Trade Overview
Table: Key Trade Indicators (US$mn)
Table: Main Import Partners (US$mn)
Table: Main Export Partners (US$mn)
Table: Kenya''s Population By Age Group ('')
Table: Kenya''s Population By Age Group (% of total)
Table: Kenya''s Key Population Ratios
Table: Kenya''s Rural And Urban Population
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