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Africa is Ready for Growth with Support from Trans-Ocean Transportation

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Africa is Ready for Growth with Support from Trans-Ocean Transportation

RTM Lines is a trans-ocean transportation company headquartered in Norwalk, Connecticut, with over 39 years of experience in the global ocean carrier business. As a respected ocean transportation provider, we are continually equipping clients with valuable information and insight related to the ocean transportation industry.  Recently, RTM Lines has invested time and research to better understand the growth of African infrastructure and resources; and how those factors affect opportunities for growth and development in the breakbulk and project cargo markets. Research shows Africa resources and opportunities in key locations such as the Democratic Republic of Congo, Ethiopia, and Northern Mozambique. 

“Right now, the Democratic Republic of Congo (DRC) is sitting on the world’s largest cobalt resource, however the ongoing political turmoil, makes it very difficult to access the cobalt,” said Richard Tiebel, RTM’s Executive Vice President. He states, “Africa is showing more exponential growth than any other continent. Right now, markets like Ethiopia have shown 8% GDP growth, per annum. Analyzation shows there are a number of factors within urbanization, ICT (Telecommunications), and the Extractives Industry (Oil, Gas, and Mining) driving this growth.” 

With an array of potential possibilities for growth in Africa in the coming years, RTM Lines recommends directing attention to trades and the international markets in Africa, specifically in the shipping and trading processes. The growth and opportunities available in the African market, have great potential for clients that develop and understand the Africa market. 

“In the next 4-5 years, city populations in Africa will double, which means the infrastructure will need development. This development will motivate the community to build infrastructure that supply power, water, sanitation, housing developments, and support to serve the new population in the area. Most governments couldn’t support fixed-line infrastructures, but Africa is going through an information, communication, and technological revolution. The private sector is supporting this revolution and allowing Africans to pursue business opportunities. Companies like Microsoft have been investing in some African tech sectors, to develop talent and to take Africa forward,” said Tiebel.

As the International Maritime Organization (IMO) 2020 regulation will soon go into effect, Tiebel shared his perspective on how Africa’s natural resources can positively influence the trans-ocean transportation industry. 

Mr. Tiebel states, “the gas in Northern Mozambique is the world’s 12th largest natural gas resource. A lot of infrastructure will be needed in order to get this gas because the town itself is very small and scarcely has roads to support it, no port, no airport, or even power and electricity. The town of Palma will literally be built up in order to access this gas resource offshore.” He continues, “the cost of the IMO regulatory change on the shipping industry is unknown, and though we know the IMO’s decision will impact refiners, producers, bunker suppliers, and more, Africa offers a variety of natural resources to emerge as a major beneficiary of this regulation. This supply of natural resources has the potential to help the trans-ocean transportation industry control the anticipated spike in fuel costs in 2020.” 

RTM Lines is committed to providing customers the information necessary to ship ocean cargo with confidence. Understanding the changes and regulations in these expanding and shifting markets is key to providing smooth transit for infrastructure, mining, and oil & gas project cargo. RTM Lines is both knowledgeable and competent in global operations. Port to port, RTM Lines strives to improve the global trade market and the quality of the ocean transportation industry.

Economic Opportunities of Megacities in Sub-Saharan Africa

The uninterrupted flow of people from rural communities to urban areas has remarkably increased over the past 100 years worldwide. This migration trend, leading to the formation of megacities, will continue over the next decade with 60 percent of the world population expected to live in urban areas by 2030 based on projections from the United Nations (UN).

The UN defines megacity as a metropolitan area with population of over ten million residents. Euromonitor International reported that 33 of such cities exist in the world as of 2017. If the threshold is lowered to five million, the number of qualified cities goes up to 47. Between now and 2030, the significance of megacities in global economic affairs will continue to rise. Megacities will alter the economic landscape of the world as 15 percent of world GDP will come from these cities. Developing countries, which currently have the highest number of megacities, 26 out of 33, will play a dominant role.

In Sub-Saharan Africa (SSA), high youth population continues to fuel urbanization since young people are always seeking the excitement of urban life, job opportunities and higher quality of life. Mckinsey Global Institute is forecasting that African cities with more than five million inhabitants will rise from six in 2015 to 17 by 2030 and cities with over ten million people will increase from three to five, adding Dar es Salaam, Tanzania and Luanda, Angola to the region’s current megacities of Cairo – Egypt, Kinshasa – Congo DRC and Lagos – Nigeria.

By projection, Luanda would increase its population by 60 percent, Cairo would add 6.3 million inhabitants to become Africa’s largest megacity with about 30 million people and Nigeria’s urban size would grow by nine percent over the next decade. In addition, 89 African cities across the continent will have population of 1 million or more according to Mckinsey Global Institute. Although the middle class emerging from this pattern of urbanization will drive strong economic growth in the future, additional burdens that will come with high density living demand urgent attention to limit economic, social and environmental hardships such as traffic congestion, pollution, income inequality and high crime rate.

Based on this imminent urban population surge, the affected countries are seeking solution-based engagements with both local entrepreneurs and foreign investors to provide infrastructure upgrade and contemporary urban planning. Existing and upcoming megacities in the continent require coordinated investments in housing, healthcare, sanitation and waste management, energy, clean water supply and education including transportation facilities that would boost access to regional and global markets. It is the only way to achieve the productivity gains that other developing regions have achieved through urbanization.

This urbanization trend presents a unique opportunity to U.S. service and infrastructure companies with appetite for business expansion in Africa. Already many Asian companies, especially Singaporeans, have taken advantage of this situation to establish strong presence in Africa’s city-planning sector.

Surbana Jurong, Meinhardt and Hyflux are Singaporean firms leveraging their domestic experience to solve urban-infrastructure problems in Africa. Evidently African stakeholders are engaging them in planning for the future of cities facing unprecedented pressure. From Surbana Jurong’s city planning of Kigali, Rwanda, the sewage treatment systems in Nairobi, Kenya, the master planning of Lekki new township in Lagos, Nigeria to Hyflux’s multi-billion dollar development of infrastructure, utilities and environmental solutions for the Star City township project in Morogoro, Tanzania, these companies are making impact in urban planning and city development projects across Africa.

Africa offers extraordinary opportunities for those who are prepared to overcome short-term difficulties. It is extremely important for American companies to understand the geography of Africa’s growing cities and deploy strategies to succeed in this very dynamic and evolving business environment.

Kemi Arosanyin is an International Trade Development Specialist and Director, Africa Trade Expansion Program at the World Trade Center Miami. She writes, speaks, and advises on trade and investment in sub-Saharan Africa.

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RTM LINES PROVIDES INNOVATIVE SOLUTIONS TO AFRICA’S COMPLEX CARGO CHALLENGES

Headquartered in Norwalk, Connecticut, and boasting 38 years of trans-ocean transportation, RTM Lines continues its position as a major player among global ocean carriers. RTM Lines’ initial focus was rolling stock. Over the years the carrier added competence in breakbulk, FCL and project cargo management. Comprehensive global knowledge as well as in-depth understanding of local customs and regulations allow RTM Lines to provide innovative solutions to the complex cargo challenges facing Africa and the world today.

“We are niche players and have been doing this for many years,” says RTM’s Vice President Richard Tiebel, adding, “We know who the suppliers are, what their requirements are, how their operations work, and they know what RTM can do. They appreciate our thorough understanding of the business. Our in-house responsiveness and assistance with planning and preparation on difficult loads are what sets us apart.”

“At RTM, customers and suppliers will always be able to speak with a representative who has a working knowledge of their shipments from end to end. Our clients appreciate this and keep coming back to us with their projects and shipments year after year. I love what we do, it is an exciting industry, every shipment is unique, and ocean transport is essential to global trade.”

More recently, RTM has invested efforts in learning about untapped global opportunities, specifically within African infrastructure and breakbulk. Among the continents, Africa presents resources and opportunities in regions such as Ethiopia, Northern Mozambique and the Democratic Republic of Congo (DRC). However, these same regions don’t come without unique challenges to navigate. As RTM’s vice president, Tiebel understands that before tapping into this market as he knows one must first understand both its potential and roadblocks that are found within the political and economic environments.

“Right now, the DRC is sitting on some of the world’s largest natural cobalt resource, but because of political turmoil, it makes it that much harder to get this cobalt,” Tiebel observes. “Africa has a reputation of political/government instability, so if a project was approved by one political party, throughout the life of a project it could experience some instability or complete regime changes. Certainly, this will be a big risk because if a government changes overnight, this market could change overnight. You may have a license for an exploration of a resource, and then the next government could have a different plan.”

Furthermore, Tiebel shared the importance of local knowledge as a driver behind success in international markets, such as Africa. Reiterating the company’s core value of local expertise, RTM places an emphasis on all players involved in the shipping and trading process.

“Africa is showing the exponential growth of any other continent,” Tiebel says. “Right now, markets like Ethiopia have shown eight percent GDP growth, per annum. Taking a deep dive and analyzing what is driving this growth there are a number of things within urbanization, ICT (telecommunications) and the extractives industry (oil, gas and mining).”

Diving even deeper into the region’s shifts and opportunities, Tiebel highlights key areas that need attention and research for successful utilization and navigation.

“In the next four to five years, city populations will double. This places a lot of pressure for infrastructure and the need to develop. Right now, most cities weren’t built for these amounts of people. That in of itself is an amazing opportunity, because it places a need on power, water and sanitation, housing developments, and around that the buildup of industries for support to serve these populations.”

He continues: “Most governments couldn’t support fixed-line infrastructures, but now Africa is going through an ICT revolution. Now the private sector is supporting this revolution and its allowing Africans to conduct business in a normal way, using technology. Companies like Microsoft have been investing in some African tech sectors, to develop talent and to take Africa forward.”

“Additionally, Africa has a lot of stranded resources in the middle of nowhere, no infrastructure whatsoever. The gas in Northern Mozambique is the world’s 12th largest natural gas resource. A lot of infrastructure will need to be built in order to get this gas, because the town itself is very small and barely has roads to it, no port, no airport or even power and electricity. The town of Palma will literally be built up in order to access this gas resource offshore.”

As African regions maintain a position of opportunity, industry players must continue to provide regular service at a good price by MPV conveyance while anticipating shifts, according to Tiebel. As IMO 2020 draws closer, he shared his perspective on how Africa’s natural resources could potentially offset some of the unidentified challenges to come.

“The cost of the IMO’s regulatory change on the shipping industry in unknown, but every analyst expects it to be large. As well as shipping lines, the IMO’s decision will also impact refiners, crude producers, bunker suppliers and emissions and air quality affecting the health of millions of people. With Africa sitting on many different natural resources and this new emergence of investment to extract these resources, hopefully these resources in Africa will help with the industry with the spike in fuel costs, in 2020.”

Bringing the conversation back to the core of the RTM difference, Tiebel positions the local community and its needs as a priority before changes can take place in unpredictable and shifting markets. This further confirms the company’s continued success and robust, satisfied customer base. RTM Lines is a prime example of what it takes to conduct global operations while catering to a variety of customer needs. Instead of limiting customers, RTM provides its customers timely options.

“The issue with Africa is it’s a place with a lot of internal issues that need to be dealt with,” Tiebel concludes. “To get things done, one must have local knowledge and knowing the local people to get things moving. Without local knowledge and understanding what people need, you won’t be able to move on.”