Economic Update

Ghana: Port expansion to handle rising cargo

Ghana | 8 May 2013

Ports in Ghana are struggling to keep up with the demands of the expanding economy, which are being fuelled by the rapidly developing energy industry and increasing domestic consumption. However, new investments being channelled into the maritime services sector should ease some of the pressure.

Domestic maritime trade is served by two ports: Tema, around 25 km east of Accra, the capital; and Takoradi, 230 km to the west. The two ports handle more than 90% of the foreign-trade volume. Tema in particular has also increasingly served as an outlet for Ghana’s landlocked neighbours, Burkina Faso, Niger and Mali – especially as shippers began to shift over from the Port of Abidjan in 2011, following the spate of post-electoral violence in neighbouring Cote d’Ivoire – further adding to the total throughput at the Ghanaian facilities.

GDP growth of nearly 7% has spurred a rise in imports to feed infrastructure and energy developments but also engendered increasing delays in loading, offloading and cargo clearance as freight volumes climb.

In 2012 the Tema and Takoradi facilities handled 19.4m tonnes of cargo, comprising 4.4m tonnes of exports and 15m tons of imports and trans-shipments, according to data issued by the Ghana Shippers’ Authority in April 2013. This figure was an 8% increase over the 2011 total, with imports rising by 9.7% and exports up by more than 4%.

While the ports have managed to handle the increased volume so far, the strain is beginning to show in the form of congestion and increased waiting time, leading to a higher cost of doing business. According to Syed Naved Uz Zafar, managing director of Maersk Line in Ghana, bottlenecks in the transport chain, such as a lack of cargo handling and storage capacity and insufficient inland connections, which slow freight movement in and around the harbor zones, are putting pressure on the logistics network.

“The biggest challenges maritime players and the industry face are operational inefficiencies, as well as inadequate infrastructure. This includes insufficient port and harbor infrastructure, cumbersome cargo clearing and examination processes, and lack of expansion of road links, bridges and rail connections,” he told OBG.

With the volume of containerised traffic through the ports expected to rise by 12% or more for each of the coming three years, the two ports need to be expanded and the land-based transport backbone strengthened, Zafar said.

Steps to brace the logistics spine are being rolled out. In late March, Bolloré Africa Logistics Ghana (BAL) announced it was planning to invest $15m to upgrade infrastructure at Tema Port to improve cargo handling and speed up freight movement. The investments, to be made through the company’s joint venture with the Ghana Ports and Harbours Authority (GPHA) – the state agency that owns both Tema and Takoradi – will involve installing new cranes and other cargo-moving equipment.

Announcing the spending programme, Jason Reynard, BAL’s outgoing managing director, said serious efforts had to be made to expand the port’s facilities and to plan for future growth. “We need to know where we are going and have a vision on the future development of the port,” he told local newspaper the Daily Graphic.

The need to improve facilities at Takoradi is even more urgent, as the port is now serving the rapidly developing offshore gas and oil fields. Much of the material needed to build the facilities required by the energy sector are being shipped through Takoradi, which is struggling to manage the increase in traffic, having previously handled only around one-quarter of Ghana’s maritime trade.

Recognising the need to boost Takoradi’s capacity, the GHPA signed a $150m contract in August 2012 with the China Harbour Engineering Company to carry out the first phase of a major expansion programme at the port. Under the planned first stage, which is forecast to take up to 36 months, new breakwaters will be constructed to expand the port basin, extended quay walls will be built, dredging conducted to deepen the port to 16 metres, and road access improved.

The upgrade, which will see local firms assigned 40% of the work, is expected to improve efficiency and cut freight movement times. Further expansion will increase berthing space and allow for larger vessels of up to 10,000 TEUs to use the facility.

While the upgrades will improve the cargo-handling capacity of both ports, the amount of freight will continue to rise as Ghana’s economy maintains its high rate of growth, with expansion tipped to come in at just under 8% in 2013. This could mean there are further opportunities for maritime equipment suppliers in the market, and for building materials and construction firms in the expansion phase. The biggest winner, however, will be the national economy itself, as its links to the outside world begin to flow more freely.

 

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