Case study: Tanger Med

10 November 2009

Morocco is positioning the port as a hub serving Europe and Africa, but the global economic downturn is putting its expansion plans in jeopardy

Tangier marks the meeting point of two continents, sitting at the western end of the narrow Strait of Gibraltar, which divides Africa from Europe. With about 200 vessels passing through its waters every day, the strait is one of the world’s busiest commercial shipping routes: an estimated 25 per cent of the world’s containerised cargo passes along the north Moroccan coast. 

In 2008, ports around the Mediterranean handled 24 million 20-foot equivalent units (TEUs), but most of it passed through the docks of France, Spain and Italy. Morocco now wants to carve out a larger share of regional trans-shipment trade for itself.

The result is Tanger Med, a megaproject first mooted in 1999, which the government would like to turn into one of the world’s largest ports.

It is being developed as a multipurpose port. A bulk grain terminal will open in 2010, along with a car terminal able to handle up to 1 million vehicles a year. Horizon Terminals, which is owned by the Dubai government, is also developing an oil terminal, with storage for more than 500,000 cubic metres.

Container focus

But container traffic lies at the heart of the strategy for the port. Two container terminals have opened. TC1, which started operations in the summer of 2007, is managed by APM Terminals Tangier, a consortium of Netherlands-based APM Terminals and the Moroccan Akwa Group.

TC2 opened in October 2008. It is managed by Eurogate Tanger, a consortium of terminal operators Eurogate of Germany and Contship Italia, with two shipping groups, Switzerland’s Mediterranean Shipping Company and CMA-CGM of France.

Last year, Tanger Med’s two container terminals handled 1 million TEUs in total, with 850,000 TEUs passing through TC1.

Although the volume of containers passing through TC1 had been expected to rise to as much as 1.5 million TEUs this year, APM Terminals says it now expects no growth this year because of the global economic downturn.

The slump in trade has had a similar impact on TC2. Mediterranean Shipping Company is not planning to transfer its services to the terminal until 2010, which means the terminal is likely to end this year having handled barely 600,000 TEUs in total – less than half of its 1.3 million-TEU capacity.

With infrastructure in place to handle more than 3 million TEUs a year, Tanger Med will have capacity to spare for some time.

This has put plans for the next phase of the port complex, known as Tanger Med II, in jeopardy. The expansion plan includes two new terminals, TC3 and TC4, and was expected to deliver an additional 5 million TEUs by 2011.

TC3 would have delivered additional capacity of 3 million TEUs on its own, and was designed to be a dedicated terminal for Maersk Line, a sister company of APM Terminals. But the consortium of APM Terminals, Maersk and Akwa Group that won the management concession for TC3 in July 2008 has decided not to go ahead.

“We are not involved with Tanger Med II,” says Hans-Ole Madsen, vice-president of business development for Africa, the Middle East and India at APM Terminals. “We have decided not to participate. That is not to say that if we saw a new opportunity the door would remain closed. We might revisit the project if and when an opportunity arises.”

There are also questions over the fourth terminal, which would have added further capacity of about 2 million TEUs.

In July 2008, the Tanger Mediterranean Special Agency, which is in charge of the Tanger Med project on behalf of the Moroccan government, awarded the development and management concession to a consortium of Singapore’s PSA International, state port operator Marsa Maroc and SNI, a local investment company. But since then, Marsa Maroc has taken over PSA’s role as the concession holder and operator.

Rabat is still hopeful PSA will reconsider its position when international trade recovers but, either way, TC4’s launch will now be delayed from 2012 to 2014 at the earliest.

Much of Tanger Med’s initial appeal lay in its lower labour costs. But over the course of developing the port, its anticipated costs have soared from $1.7bn to nearly $2.3bn.

In the current market conditions, it is more difficult to secure finance for port development. But Morocco has to press ahead with Tanger Med II to achieve the critical mass the port needs to become truly competitive.

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