PIL: Setting sail to Africa

Pacific International Lines' (PIL's) history in Africa goes a long way. Since its founding in 1967, the world's 16th largest container liner operator has been building a strong market presence in the continent.

The Singapore company started its first general cargo break-bulk service from North China to East Africa in November 1967, just months after it was started by its current Chairman, YC Chang. Chinese shippers then were having difficulties sending goods to Africa including aid cargo, due to the lack of a reliable shipping service. Opportunities thus arose for us to participate in the transportation of railway engines, machinery, and workers from China to Dar es Salaam in Tanzania for the construction of the Tanzania Zambia railway system in the late 1960s. The turning point for the growth of our business in Africa is when we introduced our first container service in 1993, and then a direct fortnightly service from Singapore to Tanzania and Kenya in 1995.

Container services to Africa were introduced in 1993, and today, PIL offers eight regular services between Asia and Africa with direct calls at ports in Tanzania, Kenya, Nigeria, Ghana, South Africa, Mozambique, Djibouti, Egypt, Eritrea, Somaliland, Sudan, Mauritius, Reunion Island, Madagascar, Togo, Ivory Coast, Benin, Cameroon, Angola, Congo, and Gabon. Other countries in Africa, such as Democratic Republic of Congo, Liberia, Sierra Leone, Guinea and Equatorial Guinea, are covered via feeder services operated by PIL.

Besides operating container liner services, PIL has re-commenced its general cargo break-bulk service using multi-purpose vessels to meet the demands for transportation of project cargo to Africa with monthly sailings from China to East Africa and West Africa.

In addition to shipping services, PIL is planning to develop inland container depots in Nigeria, Tanzania and Uganda. It is also looking into opportunities to provide logistics services to landlocked countries in Africa.

No plain sailing
We were fortunate to have started early in Africa and built up a network of partners who have intimate knowledge of the local market conditions, culture, business practices and regulations. This has enabled us to establish a strong reputation among our customers in Africa and Asia, especially in China and South-east Asia.

Yet getting to this point has not been plain sailing. Customer expectations in Africa are high, demanding constant attention beyond what can be provided with information technology and systems. Personal interaction is still preferred to computer-generated voice responses via the Internet, unlike our clients in Europe and the US. Attention to detail is paramount and the changing landscape of Africa as it matures means that we need to keep. building on and adjusting our network. Upgrade challenges and opportunities

Major shipping lines are now looking to deploy bigger ships of 5,000 TEU and above, to their services in Africa. These vessels are being moved from the main East-West routes, which are increasingly served by mega-ships. This development requires terminal and port operators to invest and upgrade equipment and systems. Custom procedures and inspection of containers will have to be streamlined to take on increased cargo volumes discharged by the bigger ships. The depth of water alongside berths at some ports, like Apapa/Lagos, have to be increased to accommodate bigger vessels calling at the port. All this upgrading will take time to complete. Beyond the initial investment, these ports need to be well maintained for the long term.

Road infrastructure at many ports will need to be upgraded to speed up delivering and receiving of containers at the terminal. It is not uncommon to see a long queue of container trucks waiting to enter the container terminal in Lagos, or in Dar es Salaam, due to the fact that many of these ports are in the city centre. Future development of Lekke port or Badagry in Nigeria, will be welcome but these are major infrastructure developments that will some years to realise.

Rail infrastructure to move containers beyond the port will be important. This can help relieve the congestion of trucks at the terminal as containers can be fast-tracked to off-dock inland container depots (ICDs).

PIL had been working on such an ICD in Ogun State in Nigeria. Even with Lekki port or Badagry, the value of having an ICD closer to the consumer will be a plus. Also, many countries in Africa are landlocked and rail connectivity is a better and more environmentally friendly option to trucks. We see potential for up-country distribution of containers from the gateway ports to the hinterland beyond the ICD. For instance, from Mozambique to the hinterland countries of Malawi, Zimbabwe and Zambia.

Ship safety

For many years, the shipping industry has accepted the notion of free and safe passage of all ocean-going vessels sailing globally as a pre-condition for international trade. But this assumption was challenged on 15 October 2009, when PIL vessel Kota Wajar was hijacked by Somali pirates off the Seychelles in the Indian Ocean, about 1,000 miles from Somalia. Despite taking all necessary precautions against attacks by pirates, our worst fear finally hit us.

Our management team worked relentlessly to secure the release of our officers and crew. Negotiations with the pirates were tough, especially amid threats to cause bodily harm to the crew. We also faced pressure from family members of our officers and crew, who wanted only the immediate safe return of their loved ones. Our vessel and all 28 officers and crew were finally released on 28 December 2009, after 75 days in captivity.

The waters close to Somali are now safer due to patrols by an international naval force as well as ship owners deployment of armed guards on their vessels. The efforts of the United Nations and other international organisations to solve the root cause of the problem, that is poverty and lack of a stable, functioning government in Somali, will be critical.

Unfortunately, hijacking, especially on slow moving tankers and general cargo vessels in the waters off Nigeria coast has increased. These attacks are more violent and efforts to work out solutions to provide armed guards on vessels calling in Nigeria have not been successful.

The security situation in Nigeria is increasingly risky. The Gulf of Guinea and Niger Delta region is particularly bad. There had been 20 attacks on ships in the Niger Delta area in the first three months of 2014 compared with 13 in the same period last year. International trade and shipping cannot develop well if the fundamental principle to ensure free and safe passage of ocean-going vessels cannot be guaranteed.

Africa is the continent to watch. But there will be challenges so companies looking to invest in the continent will need to do its homework and have lots of patience. There are 54 countries in Africa with a combined population of more than 1 billion, and each one of them is not like Singapore. Trade may grow at a different pace for each country in Africa, but regardless, at an average of 8 per cent, that's not something to sniff at.

 

 

 

NTU-SBF Centre for African Studies

 

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Singapore 639798

 

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