SOUTHERN AFRICA TRANSIT PILES UP COSTS

The transport route around the southern tip of Africa was once little used — but freighters are now forced to take it and are charging higher rates.

To get from Asia to Europe and back, global shipping companies have for decades sailed through the Red Sea and the Suez Canal. But a year ago, the Houthi insurgents in Yemen began targeting vessels in the Red Sea with drones and missiles, forcing shipping companies to divert their cargo around the Cape of Good Hope at Africa’s southern tip, a route that is some 3,500 nautical miles and 10 days longer.

Now, as this great diversion enters its second year, the costs are piling up for importers, the environment and countries like Egypt that rely heavily on maritime revenue. And the stress on shipping is likely to increase if companies rush to bring in imports 

But the diversion around Africa has increased the need for vessels — more were deployed to maintain regular service over the longer route — and rates have surged. The cost of shipping a container from Asia to Northern Europe is up 270 percent in 12 months, according to Freightos, a digital marketplace for shipping.

The demand for ships has pushed up rates everywhere. The cost of shipping a container from China to a West Coast port in the United States is up 217 percent over 12 months.

Some importers have been hit with much larger increases.

FESCO STARTS CONNECTING MOMBASA, KENYA

• A Russian transport company launches sea route to Kenya. 
• FESCO has started shipping cargo between Novorossiysk on the Black Sea and Mombasa

A Russian shipping company has launched a container route between Novorossiysk on the Black Sea and Kenya’s largest port, Mombasa. 

On Wednesday, FESCO – owned by Russian state nuclear power firm Rosatom – announced that the first consignment of Kenyan tea bound for Russia was being loaded in Mombasa. The projected transit time is 43 days.

The FESCO statement indicated that Russia will export construction materials, fertilizers, metals, polymers, wood products, as well as paper and pulp to Kenya using the new route. Imports from the East African nation will be dominated by tea, coffee, nuts, and other agricultural commodities.

Russia’s export shipments will go from Novorossiysk to India’s Mundra port, a regular stop for vessels operating on the FESCO Indian Line West route between India and Novorossiysk, before onward transportation by feeder vessels to Mombasa. Imports will make their way through the port of Jebel Ali in the United Arab Emirates, ensuring a steady flow of diversified goods between the two countries.

INDIA'S ADANI BUYS DUBAI'S ASTRO SHIPPING 80% STAKE FOR $185 MILLION

The biggest private port operator in India, Adani Ports and Special Economic Zone (APSEZ) stated that it will acquire an 80% stake in Dubai-based Astro Offshore, an offshore supply vessel company in a deal worth $ 185 million or 1551 crores.

The move was intended to expand its fleet, increase earnings and become one of the biggest marine operators in the world, mentioned Ashwani Gupta, CEO of APSEZ.

He also said that Astro would add 26 vessels to their present fleet comprising 142 tugs and dredgers, making it 168 ships in total and also give them access to several significant customers in the region, strengthening their presence in the Indian subcontinent, Far East Asia and the Arabian Gulf.

Gupta mentioned the company’s aim to expand globally and revitalize the maritime trade route between Southeast Asia, India, the Middle East, East Africa, and North Africa. In line with this strategy, the company is exploring opportunities in Southeast Asia.

The agreement valued Astro Shipping at 235 million dollars.

The company handles offshore construction and serves clients like Saipem, McDermott and NMDC. It also specializes in offshore structures and supports drilling, exploration, dredging and land reclamation projects.

Adani Ports has a major presence in the Middle East and Far East. In the former, the company, in collaboration with Gadot Group acquired Israel’s Port of Haifa in 2022 for 1.18 billion dollars, with Adani holding a 70% stake.

In the Far East, Adani Ports is planning to build a new port in Da Nang, Vietnam. They have got approval from the government and they also operate the Port of Colombo, Sri Lanka.

APSEZ plans to expand its operations in several segments of the maritime sector and apart from its main business of container cargo handling, it wants to diversify into liquid cargo, bulk cargo and specialized cargo handling.

It is also investing generously in developing infrastructure, like building new terminals and modernizing the old facilities.

References: Business Standard, Economic Times