US-China Trade Truce May Ease Logistics Costs, DP World Says
'Up Until Now, the Trade War Has Increased the Cost of Logistics in Terms of Freight Rates and Duties.'
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Improved trade relations between the U.S. and China may help lower logistics costs, while previous tensions provided opportunities for growth in regions like Africa to cater to global needs for goods and manufacturing, the regional head of port operator DP World Ltd. said.
“It will definitely be positive for the cost of logistics,” Mohammed Akoojee, DP World’s managing director for sub-Saharan Africa, said in an interview on Bloomberg Television on Nov. 18. “Up until now, the trade war has increased the cost of logistics in terms of freight rates and duties.”
The world’s biggest economies reached a trade truce in late October after a pivotal meeting between Chinese leader Xi Jinping and President Donald Trump. The one-year deal may serve more to stabilize relations between the world’s two largest economies than resolve fundamental differences.
The trade tensions have created greater opportunities for regions like Africa that can serve as alternative transit hubs to serve shipping routes interrupted by tariffs, Akoojee said. There’s also great scope for the continent to build its manufacturing base as duties restrict exports from China and other countries, he said.
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The company sees the biggest opportunities for growth in the region in West African nations such as Nigeria and Senegal, where it’s investing in new ports and logistics centers, he said.
“West Africa is an area of big growth,” Akoojee said. “We have a big logistics distribution business in Nigeria. Senegal is a key hub into West Africa so we’re investing in a new terminal there,” including a $1.2 billion investment in a new port in Senegal.
The Democratic Republic of Congo is also an area of growth “with the critical minerals and exports that are needed from that market,” Akoojee said. Congo is the world’s biggest producer of copper, and Africa’s largest miner of copper.
A booming market for critical minerals is highlighting trade and logistics opportunities in Africa as multinational firms seek to secure access to supplies. Global trade has been battered by tariff wars and conflict in areas around the Red Sea that’s pushing more shipping traffic around Africa, highlighting the continent’s shipping and infrastructure.
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DP World plans to spend $3 billion this decade expanding port and logistics infrastructure in Africa, where it sees long-term demand and growth in critical mineral exports.
DP World runs Dubai’s Jebel Ali port, a transshipment hub and gateway for many goods into some of the Middle East’s wealthiest countries. The company runs container ports and is expanding into logistics services, developing industrial sites, freight services and trade financing.
