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Kenya Shipping Report Q4 2012

  • Publication Date:October 2012
  • Publisher:Business Monitor
  • Product Type: Report
  • Pages:146
  • ISBN:151342

Kenya Shipping Report Q4 2012


Includes 3 FREE quarterly updates.

BMI View: Double Digit Growth In Port Activity
Although this quarter we have reduced our 2012 GDP growth forecast for Kenya, we have at the same
time boosted our projections for activity at the country's main port of Mombasa. This is the result of a
number of factors working in different directions. The reduction in the GDP forecast (to 4.5%, down from
4.9% previously) is based on new data releases showing that the effects of previous growth-reducing
influences - such as tight credit - are lingering for longer than expected. We are still positive about the
fundamentals of the Kenyan economy however, and foresee the recovery gaining pace in 2013. On the
other hand, we believe recent dredging and other work to expand capacity has in effect released
previously repressed freight demand at Mombasa, a port that has traditionally suffered from crushing
congestion problems. Data releases for the first half of this year show that there has been stronger than
expected growth in gross tonnage and containers handled. This is what has driven us to raise our forecasts
for 2012 port activity growth to double-digit percentage levels.
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, the signs that the port's
ongoing congestion problems are easing.

Headline Industry Data


Port of Mombasa tonnage throughput forecast to grow 12.1% in 2012 to reach 21.966mn tonnes. Growth
to average 6.6% in the period running to 2016.
Container throughput forecast to grow 18.7% to reach 914,298 twenty-foot equivalent units (TEUs) in
2012. Box growth to average 10.0% to 2016.
2012 total trade set for year-on-year (y-o-y) real growth of 3.75% and to average 6.3% to 2016.

Key Industry Trends


New Mombasa Berth To Boost Throughput
Work on a new, US$58.4mn berth at the Port of Mombasa has been completed, positioning the facility to
maintain the current strong growth in container handling. The total number of boxes handled at Mombasa
rose by 24% in the first half of 2012. The new berth will be able to handle three medium-sized container
vessels of 235 meters each, according to the Kenya Ports Authority's Managing Director Gichiri Ndua.
The berth's construction work, which started in early 2012, is being carried out by a Chinese company,
China Road and Bridge Corporation, and is co-financed by the Kenyan government.
Kenya Shipping Report Q4 2012
6
Work Due To Start On Dongo Kundu
Development work on the Dongo Kundu free port in Mombasa is due to begin within a matter of months.
The facility will cost KES26bn (US$308.18mn) and will be run along the lines of the Jebel Ali Free Zone,
the free economic zone around the port of Jebel Ali in Dubai. The aim is to encourage foreign companies
to operate out of the facility by enabling the unrestricted import of labour and export capital. According to
transport minister Hassan Joho, the government has a secured loan for the project. Twalib Khamis,
operation general manager of the Kenya Port Authority (KPA), said that the KPA had 3,000 acres to
expand the capacity of the port. The free port is part of the economic strand of Kenya's Vision 2030,
which has the aim of turning Kenya into a 'middle-income country providing a high quality life to all its
citizens by the year 2030.'
New Box Movement Mark Set At Mombasa
The Mombasa Container Terminal has set a new record by completing 1,275 moves within a 24-hour
period while unloading the CMA-CGM ship, the Violetta. The vessel achieved 548 moves on the first
shift, 524 moves on the second shift and the remainder on the third shift. The performance by the Violetta
has broken the previous record of 1,125 moves set by MSC Eagle on March 4 2009.

Key
Risks To Outlook




In our last quarterly report we identified four main risks to our forecasts, and said that none were
particularly dominant over the others. The four were: the weather, political instability, global energy
prices and inappropriate monetary policy. Three months on, we believe the risk of political instability has
edged up ahead of the other three. Riots in Mombasa broke out briefly in late August following the killing
of Aboud Rogo, a Muslim cleric accused by the US of helping al-Qaeda-linked Islamist militants in
Somalia. While BMI believes the incident will not have major economic repercussions, it does highlight
the delicate transition Kenya must achieve as the March 2013 elections approach. Many investors have
the 2008 riots in mind, and note the continuing risk of Kenya becoming further enmeshed in the fighting
in Somalia, or indeed of Somali militant groups such as al Shabaab causing trouble within Kenya's
minority Muslim population. The danger is that further incidents may cause business groups to hold back
or slow investment projects.
The weather risk is the potential for a new drought - which would again hit the country's important
agricultural sector. A renewed rise in global energy prices would have a negative impact on Kenyan GDP
and the shipping sector, but we think the probability of this risk materialising is at present relatively low.
We also assign low probability to the possibility of a new and mis-timed monetary tightening which
would delay the expected economic recovery. This is particularly the case since inflation has been
trending down, suggesting that no further tightening is needed from the Central Bank.
BMI Industry View .... 5
SWOT Analysis .... 7
Kenya Shipping SWOT . 7
Kenya Political SWOT . 8
Kenya Economic SWOT .... 8
Kenya Business Environment SWOT 9
Global Overview - Container Shipping .... 10
More Positive Box Outlook In H212 ... 10
Box Supply Demand Imbalance Worsens . 11
Concerted Rate Push Must Continue .. 20
Bunker Price Still A Worry .. 23
2013: A Year Of Mega Realisation 24
Containerisation Revolution Hits Dry Bulk .. 31
Global Overview - Dry Bulk Shipping . 34
Stockpiling: A Threat To Dry Bulk Shipping . 34
Overcapacity A Long Term Problem .. 37
Bankruptcies To Continue .... 40
Vale's Forced Diversification Hedges Against China Slowdown . 44
Protectionism Trend Takes Off . 49
Global Overview - Liquid Bulk Shipping . 54
Executive Summary: Unconventional Sectors To Outshine Traditional Crude 54
Dirty Tanker Index To Remain Depressed .... 55
Bunker Prices Down, But So Are Rates ... 60
Table: BMI's Bunker Fuel Forecasts, 2010-2016 ($/Bbl) . 60
Iran Sanctions Continue To Affect Crude Shipping 63
Saudi Arabian Merger Bad News For Other Operators ... 65
Table: Biggest Operators Of VLCCs & ULCCs . 66
Bullish On Golar LNG Prospects .. 67
Tight Market Creates Boom Times For Rig Sector . 71
Industry Trends And Developments ... 75
Kenya Container Shipping Market Overview .... 78
Industry Forecast ... 84
Port of Mombasa .. 84
Table: Major Port Data, 2009-2017 ... 86
Table: Trade Overview, 2009-2017 .... 86
Table: Key Trade Indicators, 2009-2017 . 86
Table: Main Import Partners , 2002-2009 .... 87
Table: Main Export Partners, 2002-2009 88
Company Profiles ... 89
Delmas ... 89
Kenya Shipping Report Q4 2012
4
Maersk Line 92
Mediterranean Shipping Company (MSC) .... 98
CMA CGM .102
COSCO Container Lines Company Limited (COSCON) ..109
Hapag-Lloyd ...113
Evergreen Line ....118
APL ..122
China Shipping Container Line (CSCL) .127
Hanjin Shipping (Container Operations) 133
Mitsui OSK Lines (MOL) (Container) 137
Country Snapshot 142
Table: Kenya's Population By Age Group, 1990-2020 ('000) 143
Table: Kenya's Population By Age Group, 1990-2020 (% of total) .144
Table: Kenya's Key Population Ratios, 1990-2020 145
Table: Kenya's Rural And Urban Population, 1990-2020 ....145
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