Episode Transcript
[00:00:00] Speaker A: Hello and welcome to the Lodestar Podcast News in Brief, where with the help of my guests, I'm going to be recapping this week's supply chain news. Coming up in this episode, we are going to be looking at what is contributing to port congestion in West Africa, the Middle east and Europe. The possible implications of a recent cyber threat to shipping lines and terminals, and why air freight shippers are facing peak season conditions. Let's get straight into the episode.
My first guest for this episode is Senior Associate of Ports and Terminals at Drury, Eric Hooper. Hi, Eric, it's great to have you on the podcast.
[00:00:39] Speaker B: Hi, Charlotte, thanks for, thanks for having me. Great to be here. There's certainly plenty going on in the port sector at the moment.
[00:00:44] Speaker A: Yes, definitely, and I'm excited to get into all of that today.
So, first of all, one of the biggest problems impacting ocean shipping, obviously outside of geopolitics, is port congestion. Recently we reported that schedule reliability is the worst it's been. And obviously port congestion is a big part of the reason for this. You actually spoke with my colleague Alex Whiteman this week about the situation along the coast of West Africa. So what are you seeing as the current levels of congestion in West Africa and what is the main reason for this?
[00:01:11] Speaker B: Yeah, well, I think West Africa is a particularly interesting example of how quickly a port system can come under pressure when shipping patterns change. So last April, MSC introduced its 24,000 TU vessels onto the Africa Express, the Asia West Africa trade lane. And that's a significant increase in vessel size. And it came alongside some exceptionally strong cargo growth. In fact, our figures show that container throughput across West Africa grew by almost 20% in 2025, which is quite extraordinary. And that followed several years in which capacity had generally been keeping keeping pace with demand. And the result is that a number of terminals which had had plenty of spare capacity just a few years ago, are now operating close to their limits. Douala, for example, was operating above its nominal capacity last year. At Waln, Dakar, Lome and Pont Noir were all above 80% utilization. But what's interesting is that the congestion isn't necessarily worst at the busiest terminals. So take Tima in Ghana, for example. It's had substantial investment in a modern container terminal, yet we've seen persistent vessel delays. And a large part of the problem is that the investment inside the terminal hasn't been matched by improvements to the roads, trucking capacity and other infrastructure needed to move containers to the interland.
[00:02:28] Speaker A: That's interesting that you say that, that it doesn't matter about size of the investment, it's just, it's just where it goes.
[00:02:32] Speaker B: Yeah, to move the containers through the entire port system. And that's really the problem we're seeing across the region. The vessels have got bigger, volumes have grown very rapidly, but parts of the supporting logistics network haven't kept up. Which means that the current performance issues are not a temporary operational disruption. In several ports, we're seeing underlying structural constraints being exposed by that growth.
[00:02:54] Speaker A: Well, we reported this week though that there's quite a lot of investment. DP World is investing $90 million into Angola's port of Luanda on the back of its announcement earlier year to up its operations at Senegal's Dhaka, at terminals in Mozambique, Tanzania and the DRC. And also MSC and its terminal operating arm have agreed a 45 year concession at Nigeria's Snake island, while APM Terminals pledge to put around $600 million into its operations across Nigeria. So do you think that these are meaningful investments that will solve or at least alleviate some of these congestion issues, or do you think that it's going to be a case of they're not going to be in the right place or it's going to be a while before we see any efficiency gains?
[00:03:35] Speaker B: That's, that's exactly the question. These are significant investments. They're part of a much bigger wave of port development that's been underway in West Africa for quite some time. We've seen major new developments, major new terminals at Tima, Abidjan, Kribi and Lekki. We've seen projects, further projects underway in Senegal, in Congo, Nigeria and the drc. So as you said, DP World's latest commitment at Luanda, for example, which is supposed to more than double the terminal's nominal capacity. But as you said, there were two important points. First, you need to invest in the right part of the system. So at ports like Douala and Conakry, additional berths and terminal capacity is clearly needed. But at somewhere like Tema, where you've already invested heavily in modern terminal infrastructure, building more keys isn't necessarily going to solve the congestion. So the real gains may come from improving road access, customs clearance, off dock storage, potentially anything that improves the speed at which containers can be evacuated from the port, I would just like to raise the point that and the overall investment outlook is actually quite positive. Our current forecast suggests that West African container throughput will grow by only around 1.6% annually over the next five years. And you compare that with the planned terminal capacity growth of nearly 5% per year. So at a regional level, there's no obvious shortage of planned terminal capacity. The challenge, as you said, is making sure that the capacity is in the right location, comes online at the right time, and is supported by the necessary logistics infrastructure.
[00:05:02] Speaker A: It does sound positive, but I guess time will tell with that one. As well as Africa, Europe has also been in the spotlight quite a lot for having repeated congestion issues. We saw this week, equipment maker Kona Cranes announced that Urogate ordered four automated stacking cranes for its Willemshavn container terminal with handover planned for Q2, 20, 28. This also gives Urogate an option for four more in Hamburg. So first of all, what kind of delays are we currently seeing in Europe? And also, do you expect this kind of automated technology to continue to be employed by ports?
[00:05:36] Speaker B: Well, we're seeing a similar combination of pressures in Europe, although the the underlying causes are somewhat different to West Africa. So for September, looking just at monthly average pre birth waiting times in Rotterdam they were just under half a day, with Antwerp and Hamburg just a little bit less than that.
Some of that is down to vessel bunching and changes to shipping schedules. But we're also seeing constraints on the inland transport system. Over the summer I wrote a piece about the low water levels on the Rhine, for example, restricting barge capacity. And then that puts pressure on road and rail transport. So there's the similar theme with West Africa, is that the performance of the terminal depends heavily what's happening beyond the terminal gates. When it comes to automation, I think we'll certainly see it continue to expand, but I wouldn't necessarily present that as a quick solution to the congestion issue. The attraction of automated stacking cranes is that they deliver more consistent operations, they improve yard density and reduce reliance on manual equipment deployment. But perhaps more importantly, they can provide greater predictability in how a terminal performs. But automation doesn't automatically mean higher productivity. It depends on how well it's integrated with the rest of the operation. And there's often a learning curve during implementation. I think what's interesting about Urogate's approach is that they're looking at integrating automated equipment into an existing operating environment, rather than necessarily automating the entire terminal from scratch. And I think that that kind of phased approach is something we're likely to see more of, particularly at established terminals where a whole wholesale redevelopment would be extremely disruptive and costly. Yeah. So ultimately though, automation can improve how efficiently a terminal handles containers, but it can't solve congestion caused by containers not being collected on time or by insufficient Inland transport capacity.
[00:07:24] Speaker A: Sure. Yeah. I was speaking to the port of Rotterdam fairly recently because I think it's quite easy to look at the kind of vessel bunching numbers and say, what? Ask the port, why are you causing this congestion? But actually, I mean, one of their representatives that I spoke to said that it is. It's not just the port. There's a whole range of players along the supply chain that could be the reason for the congestion. So, yeah, very important to keep in mind. Of course, on top of Africa and Europe, they're not the only ones suffering with congestion. We reported that the Gemini alliance is relaunching connections between the Far east and Middle east to restore direct ocean links. But after replacing Jebel Ali calls core for Kan appears to be showing signs of being under pressure with this addition additional capacity injection. So how are you seeing congestion in the Middle east? And do you think that this additional service could cause more problems?
[00:08:09] Speaker B: Short answer, yes. And Corfukan is an interesting example because the disruption there is fundamentally being driven by geopolitics rather than underlying trade growth or lack of investment or anything like that. So with the Strait of Hormuz effectively closed to normal container shipping, we've seen a significant shift in cargo flows away from the traditional golf hubs, particularly Jabal Ali and Khalifa, towards ports outside the strait. Khorfakan and Fujairah are the obvious alternatives because of their geographic positioning. But quite clearly neither was designed to absorb all of the traffic that would normally move through Dubai and to the other Upper Gulf gateways. So we're now seeing the consequences of that redistribution. So we've got high yard utilization, vessel congestion, and increasingly significant pressure on road transportation going from east to west across the uae. And that's the important point. Getting a container into Corfican is only part of the solution. If its final destination is Dubai, Abu Dhabi or further into the Gulf, it still has to be moved overland. And that requires additional trucks, drivers, road capacity and inland handling facilities. So Gemini's new service should help restore some much needed direct connectivity between Asia and the Middle East. But in the short term, additional vessel calls are likely to add pressure at a port that's already really very stretched. Now, I understand Maersk is reportedly planning to move some containers to the inland depot at Sarja, which should help relieve pressure on the terminal itself. But I think the bigger issue is that the region's port and logistics network has had to adapt to a very different geographic distribution of cargo. And that's just something you can't do overnight. So it's yet another example where the constraint isn't necessarily the ability to handle a vessel, it's the ability to move cargo through the wider supply chain.
[00:09:52] Speaker A: And the situation is changing so quickly over there. So it's quite remarkable how quickly these logistics players are able to adapt to these changing flows. Eric, finally, I wanted to ask you about a cybersecurity issue that came about this week. Cyber Crime Group non released A list of 38 shipping and port groups that it is threatening with data leak if ransom isn't paid. Quite a large ransom as well. These companies include port operator Santos, Brazil, Singapore based Carrier 1, China's CU lines, Taiwan's TS lines and Morocco's Eurogate Tanger among many others. There were quite a few port operators and so there was quite a few terminal operators and port IT providers on this list. What kind of issues could the industry face if these players are attacked online? I mean, could this create operational issues at the ports?
[00:10:40] Speaker B: Absolutely. And I think cybersecurity is becoming one of the most important operational risks facing the ports industry. Modern container terminals are incredibly dependent on interconnected IT systems. You've got terminal operating systems managing container movements, you've got equipment control systems, electronic communications with shipping lines, customs platforms, gate systems, and increasingly, as we just spoke about, we've got automated handling equipment. All of those systems are interconnected, either directly or indirectly, and that creates a much wider area of vulnerability. We've already seen how disruptive cyber attacks can be. The Notpetya attack on Maersk and APM terminals in 2017 is probably the best known example, when operations at several terminals were severely affected. But what's particularly interesting about this latest incident is that the attackers appear to be focusing on data theft rather than necessarily shutting down operations. And we should be slightly careful here because as I understand it, the claims involving these 38 companies haven't yet been independently confirmed. And we shouldn't assume that all of them have actually suffered breaches directly. But even if the attack is limited to data theft, potential consequences are still significant. Shipping instructions, container manifests, commercial information, cargo movement records, all extremely valuable data, which in the wrong hands that information could potentially be used for, for cargo theft, fraudulent cargo release or further targeted attacks. But it's if the attackers gain access to the operating systems themselves used to exchange or process that information, then there's a real risk of operational disruption. And I think the other, the other concern is that these systems are increasingly shared between multiple organizations. So if a common service provider or data exchange platform is compromised, the consequences could spread well beyond the original target. And I think, yeah, one thing that's particularly concerning is how dependent ports have become on exchanging accurate information in real time. And if you lose confidence in the data you're receiving, whether it's container release instructions, customs documents or truck appointments, then you have to stop or manually verify transactions. And at a major container terminal, even a relatively short interruption can create a substantial backlog and then congestion. I think we saw another example of that risk last month when a cyber incident at Tanjung Pelapas in Malaysia interrupted terminal operations for several hours. So I think the lesson for terminal operators is that cybersecurity has to be treated as an operational resilience issue, not simply an IT issue is not just preventing an attack. It's having systems and procedures that allow you to recover quickly and keep essential operations functioning if something does go wrong. And as, as, as an industry, as we make terminals more connected and increasingly automated, we also need to make sure we're not creating new single points of failure.
And in a way, you can bring all of the topics we've discussed today under a single framework. One of the things we're seeing across the ports industry is that simply building bigger terminals isn't enough. The industry has become extremely good at accommodating larger ships. The next challenge is making sure that the wider logistics network, both both physical and digital, is suff efficient and above all, resilient to handle those cargo flows. It's something that we at Drew have been discussing and writing about with, with increasing urgency over the last few years.
[00:13:57] Speaker A: Presumably it is quite a hard balance for these, for these companies to get right. And as you said, it is important to note that these claims of the cyber threat haven't actually been verified by any of the companies. I have reached out to a few of the companies that were listed by the cybercrime group. No one's got back to me yet. Presumably they're all kind of scrambling at the moment, trying to figure out what to do. Eric, thank you so much for joining me. It's been wonderful to speak to you.
[00:14:18] Speaker B: Thanks, Charlotte. It's been a pleasure. Always, always good to talk about what's happening in the port sector.
[00:14:22] Speaker A: My next guest for the Lodestar podcast, News in brief. To help me unpack the air freight news and beyond, I am joined by the Lodestar publisher, Alex Linnane. Hello, Alex. Great to have you back.
[00:14:31] Speaker C: Thanks, Charlotte.
[00:14:32] Speaker A: Alex, this week we had the very troubling news that the US Iran war has seen another escalation, as well as multiple ocean vessel attacks and one that actually resulted in one of Global Feeder Shipping's vessels sinking in the Strait of Hormuz in Saudi Arabia. The Houthis hit Riyadh airport with drone attack and additionally hit the airport in Dammam. So what was the impact on air cargo that you reported?
[00:14:58] Speaker C: Well, we looked up on Rotate's database, sort of 72 hours or so after the drones had hit, and we found that traffic, international cargo capacity measured in freighters and widebody passengers was down 1/3. For Saudi Arabia as a whole, Riyadh was down 99%. So effectively the airport was closed. So what we've, what we understand is that Riyadh Airport was scheduled to open this weekend, but we don't know if it actually will be. Dammam appears to be operating sort of normally, reasonably. As far as we can see, there has been disruption. Obviously not only are the flights affected, but we spoke to Oman Air Cargo, they've got a bit of a backlog of volumes at Muscat waiting to go to Saudi. Arman Air was thinking about doing a road feeder service in Saudi. It says it might accelerate that plan now also, other interesting thing is that the European Aviation Safety Agency has recommended sort of not to fly through some airspace in the area. So there might be longer routes, more fuel and all the rest of it for some airlines. But everything's slightly up in the air at the moment, or not. Sorry for the pun. So we're not quite sure exactly how it's all. How it's all going to pan out, but I feel very sorry for the region. Definitely.
[00:16:18] Speaker A: Yeah, definitely. And just again, underscores how uncertain this whole situation is. Alex, this disruption is also happening at a time when the air freight market is already being squeezed with tight capacity. So why is there general capacity issues in the market at the moment? I mean, what impact is this having on rates? Presumably they're still quite high.
[00:16:37] Speaker C: So rates actually are still being impacted by Golden Week. They are still still slightly under up to the week up to 12th of October. Takindex said they're 2 sort of percent down on before, but still 24% up year on year. So it's not like rates are particularly low. We heard also from Tacindex that some of the hyperscalers haven't booked enough capacity for the peak season, whereas the sort of dwindling E commerce coming to Europe, they have booked their capacity up. So it could be if we get a sudden rush of more AI infrastructure in the next few months as we go into traditional peak season, that rates could escalate further and the market could be quite tight. Of course the Middle east is going to add some disruptions to that, but it's hard to say yet exact what that will be. And of course those fuel prices, which as everyone knows are astronomical at the moment. And so even if airlines manage to pass that off onto their customers, which they likely can, it's going to be, it looks like it might be tighter margins for the airlines than in a normal peak. And for shippers, pretty, pretty bad. To be honest, it might be a tough few months for them.
[00:17:42] Speaker A: Yeah. As you, as you said, it does seem like AI and data center components are the main driver of these capacity constraints at the moment. And it feels like just two years ago we were having this exact same conversation about E commerce. I actually had an article this week from Latam Airlines. They did a report that said they were 150% up on pharma shipments between Europe and Brazil, which I thought was quite interesting because I spoke to Martin Burma from Avian just like a few weeks ago actually when we were in Athens for Aviation Connect and he was saying that actually broadly, pharma is pretty flat on most lanes. It's just moved around where it's coming from and going to. But on the whole he, he did underscore that these AI and data center shipments were taking up the bulk of the capac.
Also looking to capitalize on this hot air freight market at the moment that you reported this week that Samsung is expanding its air freight business with a takeover of South Korean consolidator Wujiang Air. What are the details of this and what is it going to mean for the market?
[00:18:40] Speaker C: Any details on the price, whatever. But it always catches my eye when a shipper buys more into logistics. Now Samsung said in its financial results earlier this year that it was it saw the airfreights as quite a stable, profitable market, more so than ocean freight. So it wanted to get a bit more of the action. It already has its own forwarding platform called Cello and that also deals with forwarders volumes from other forwarders as well. And the Wujiang one, they deal with something like 1200 different forwarders and they also work for Kainiao, Alibaba's logistics arm. So it's quite interesting to sort of think about how that might impact the existing customers. Will they want to be part of the Samsung products? We don't know. But it's quite an interesting move and it amused me the fact that everyone thought air freight was more of a hot market and more stable than sea freight. So that's made me happy being an airfreight kind of girl.
[00:19:34] Speaker A: Finally, Alex, what was on the Lodestar Premium this week?
[00:19:38] Speaker C: Well, we managed to get eyes into a cunanagel town hall meeting with CEO Stefan Paul. So that was very interesting. He essentially said that they're better than DSPs, paraphrasing. And that because of their culture, they're gonna, they're gonna sort of be the best of the best. So as an article on that, there's also DSV has had a pretty poor showing and its shares this week, they have dropped quite steadily, quite fast. There's an article about that and what that means for dsv.
There's also a look at the new ransomware direwolf, Ransomware Group, and who is targeting logistics companies. So that was quite an interesting story from Premium.
[00:20:18] Speaker A: Yeah, as always, lots to get stuck into over on the Lodestar Premium. Alex, thank you so much for joining me this week and giving me your time once again. It's been great to chat to you.
[00:20:26] Speaker C: Thanks, Charlotte.
[00:20:27] Speaker A: And that brings us to the end of this episode of the Lodestar podcast News in Brief. A huge thank you to Eric and Alex for joining me and helping me unpack this week's supply chain news. And a huge thank you to you all for listening and watching. We will see you next week with another installment on of News in Brief.
