AFRICA ... Sourcings Next HOT SPOT
Hans-Ole Madsen says the main requirements for doing business in Africa are patience and commitment. Shipping volume, for now, is just a bonus.
“When you operate in the developing world, it’s unrealistic to think that everything is shiny every day,” said Madsen, vice president of business development for Africa, the Middle East and India for APM Terminals. “We are committed to Africa, and are prepared to sweat it out.”
APM Terminals certainly is expecting shiny days in Africa in the future. The company has spent some $800 million over the past decade to modernize and expand nine container terminals and several inland facilities in eight West African countries, from Liberia in the north to Angola in the south.
That makes the company one of the largest investors among operators in shipping and logistics that are looking at the growing volume of trade out of Africa, listening to comments from shippers about the direction of low-cost manufacturing and setting the groundwork for growth in sourcing of goods beyond raw materials from the continent.
Real growth in manufacturing and container shipping through sub-Saharan Africa would mark a dramatic change in a continent all but written off in much of the developed world because of the seemingly entrenched instability, civil unrest, endemic corruption and unrelenting social problems across Africa’s map.
Yet democratic rule also is spreading across the continent in once-unlikely places such as Rwanda, and that comes as retailers, manufacturers and suppliers are plotting out low-cost factory sources in the coming years. With labor costs in China and other parts of Asia rising, some experts say, more conversations about long-term plans include Africa.
“We’re actually looking at major manufacturing sites in Africa,” Tommy Liu, senior vice president for Greater China at Li & Fung Logistics, told a Journal of Commerce conference on container shipping in Shanghai this summer. “This is the last place you’ll be able to find cheap labor for the next 20 years or so.”
Africa trade with Europe is far greater than it is with the United States and U.S. exports to Africa are nearly three times the volume of imports, based on container shipping volume measured by PIERS, a sister company of The Journal of Commerce.
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