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Innovation and initiatives in ports sector

Article - August 1, 2014
Complementary nature of private and public investment regenerates national logistics network in fast-growing country highly dependent on international trade
STATE-OWNED LOGISTICS COMPANY UNICARGAS HAS UPGRADED ITS EQUIPMENT AND TECHNOLOGY AT ITS TERMINAL AT THE PORT OF LUANDA THROUGH A BIG INVESTMENT
The creation of an efficient national logistics network is critical to Angola moving to the next level of economic development. The African Development Bank, in its 2011-2015 country strategy paper, acknowledges Angola’s “remarkable ongoing effort to reconstruct and rehabilitate infrastructure” while adding that “there is a need to plan beyond and develop an expansion program that can accommodate the country’s new development goals”.

The country is highly dependent on international trade with a heavy reliance on oil and gas exports and on imports of construction materials and consumer products, not to mention a large part of its food needs. PricewaterhouseCoopers states that 95% of imports come by sea and that “Angola’s international trade is therefore entirely dependent on the country’s ports”, besides which they “will be essential for Angola’s plans to become an important regional supplier to its landlocked neighboring countries”.

The Angolan government’s comprehensive strategy for addressing these major structural vulnerabilities has included opening the ports sector to private-sector involvement and widening the reach of ports and port operators beyond the physical limitations of the ports themselves. The integration of the ports with other logistical elements in a national intermodal system, as well as heavy investment in rebuilding and extending the rail network, has also been key.

The success of this national strategy is, therefore, highly dependent on the ports “delivering the goods” and so far they have done just that. This has come through a mix of public and private investment, improvements in operational efficiency, innovative solutions to structural challenges, operational integration within a wider logistical perspective and through sheer innovative entrepreneurship in finding solutions to seemingly intractable problems.

Perhaps the major private sector player in the ports sector are the Multiterminais and Multiparques groups. In 2005 the group won the concession to operate the Port of Luanda’s general cargo terminal, a concession originally for twenty years but now extended to 2045 in return for the group committing to heavy investment in developing the facility. Multiterminais and Multiparques inherited an under-invested terminal, with little room for expansion and renowned for its inefficiency in a port where vessels could, anecdotally, have to wait thirty days to dock and unload. Investments amounting to $75 million have been made in new handling equipment, in bulk storage silos and in a state-of-the-art tracking system. It means vessels may now be pre-cleared before arrival and average waiting times are now about three days, resulting in an immense efficiency boost in this imports-dependent economy as customers get their shipments quicker and losses and wastage are minimized with costs being reduced.

“There is no room left for the port to expand, so we have been investing in an aspect that may replace the physical expansion, which is the increase of productivity”

FRANCISCO VENANCIO
Chairman of the Port of Luanda
Unicargas, the state-owned national logistics company that operates the multipurpose terminal at Luanda under a concession running to 2025, has also upgraded its equipment and technology at its terminal. The company, which also manages facilities at other ports in the country, sees this as the first link in developing a door-to-door national container transportation service. The upgrades have included capitalizing on the rail link directly into its terminal and expanding its national fleet of trucks.

Ruben N’Dombasi, CEO of Unicargas, emphasizes the cost and efficiency savings achieved, saying that “our objective is to reduce the time containers stay in the terminal, alleviate congestion through use of railways and reduce costs to the customer”.

Francisco Venancio, Chairman of the Port of Luanda, recognizes the achievements of the terminal operators and gives clear evidence of the transformation brought about in only a few years. Mr. Venancio states that “from a physical point of view, there is no room left for the port to expand, so we have been investing in an aspect that may replace that physical expansion, which is the increase of productivity—and that comes down to two conditions: the swiftness of the operations and the fluidity of information and processes”. He adds that “in 2010, we had averages in the port that did not go above nine movements per hour. Today, things are so different that some European countries could not match our current levels. In our latest test, we reached 43 movements per hour. It is important to note that the average for African ports is no more than 20 to 25 movements per hour”.

The problem of the lack of room to expand at the Port of Luanda has also been tackled cleverly through investment of $70 million. This has gone towards the building of the dry port at Viana, some 15 miles from Luanda, and the construction of a dedicated rail link. The latter can take cargo straight out of the port, thus at a stroke easing congestion in the terminals, enabling faster turnround times of vessels, increasing flexibility for consumers and, most importantly, bringing about a dramatic reduction in costs. Leonel da Rocha Pinto, Director-General of the Multiterminais and Multiparques groups, estimates the direct savings at about $700 per container, not including the benefits accruing to customers from being assured of faster delivery and being able to consequentially operate with lower inventory levels.

It is not only the Port of Luanda, which accounts for 80% of the country’s imports, that has seen this dramatic transformation in efficiency and effectiveness. Major investments have also been made at Lobito, Soyo, Amboim and Namibe, as well as in the enclave of Cabinda, while a new port is to be built at Dande, a little north of Luanda, as part of the national strategy to increase port capacity in the area of the capital. All of these investments, together with substantial investment in rehabilitating and extending existing west-to-east railway lines and plans to build a national rail network through constructing north-to-south lines, form part of the government’s comprehensive intermodal logistics strategy.

Completion of these investments will enable imported goods to be distributed efficiently within the country and also to the wider regional market in landlocked neighboring countries. They will also provide outlets through Angola’s ports for minerals, raw materials and agricultural produce from interior provinces of Angola itself and from countries such as Zambia and the Democratic Republic of Congo.

The role and strategic importance of the nation’s ports will thus continue to increase in the future, not only in economic terms but also in binding together the different parts and the different regional ethnicities in Angola. It will almost certainly also provide an impetus to the process of regional economic integration.

Victor Carvalho, CEO of IMPA, the Ports Authority of Angola, summarizes the importance of the ports in driving development forward, saying that, “our ports have a fundamental role in making our economy more dynamic. The more modern they are, the more modern our approach and efficiency in operations, and the better our equipment and services will be. Our contribution to a better, stronger Angolan economy will be all the more significant”.

The sector seems to be in good hands and well set to deliver on these expectations as a powerful agent of change, development and progress, not only nationally but regionally.

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