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As ships reroute to the Cape, African bunkering hubs benefit

The hip-refuelling businesses along Africa's coastline are seeing a boom in business, as more ships divert around Cape of Good Hope. This is due to the Middle East war reshaping the global shipping routes and boosting Africa's role as an important bunkering hub. Since the Houthi attacks against Red Sea shipping in late 2023, carriers have avoided the Suez Canal as well as the Bab el-Mandeb strait. U.S., Israeli and Strait of Hormuz closures and strikes against Iran have reinforced this shift. This has led to expectations that Africa's Bunkering Sector will benefit from the prolonged instability.

Container carriers such as Hapag-Lloyd, Maersk and CMA CGM have announced this month that they will reroute vessels around Cape of Good Hope.

Detours prolong voyage times, but allow vessels to refuel in emerging African supply areas. This accelerates investment by fuel providers and trading houses.

Existing suppliers of bunker in Africa such as Denmark’s Monjasa have reported increased demand in the last few years. Meanwhile, new players like Vitol Bunker Partner, Peninsula Flex Commodities, Global Fuel Supply and Bunker Partners have announced plans to expand.

The Red Sea security situation has positively affected volumes, causing more vessels reroute southwards of Africa, said Monjasa's spokesperson Thorstein Andreasen.

Monjasa - which operates in West Africa and supplies fuel to Fujairah - reported an increase in bunkering during the first weeks of the Iran War.

Andreasen stated that "no matter what the outcome of the conflict is, we expect the overall volatility to be high for a significant period of time."

NEW ROUTES BECOME 'OPERATIONAL REALITY'

Along the Cape Route, the scale of the shift can be seen.

Cape Chamber of Commerce and Industry reported that diversions increased 112%?as of the beginning of March, signaling what carriers see now as a permanent change in operations.

After nearly two years operating in these conditions, it's becoming increasingly difficult to describe our setup as temporary. Instead, it has?become a adaptation to a different operational reality," Bhavan Vempati said. He is the head of Asia Market for Oceans at Maersk.

He said Maersk bunkers ports in West Africa, including Tangiers.

This trend has attracted new players. Flex Commodities, based in Dubai, launched physical bunkering in Namibia's Walvis Bay & Luderitz.

Rakesh Sharma, Flex's managing director, said: "We target the growing traffic around Cape Town and the offshore markets around the region by offering an alternative to the traditional bunkering stop in the area."

He added that the company will initially focus on West Africa where there is a shortage of supply, especially offshore.

Moses Komodatam, the operations manager at Misa Energy in Ghana, said that Misa Energy is increasing its volumes in order to meet a?rising need in offshore bunkering areas. Moses Komodatam, the operations manager at Misa Energy in Ghana, said that they are increasing their bunkering volume to meet?rising demand in offshore bunkering zones.

Tahra Sergeant, Africa Regional Manager at the International Bunker Industry Association, says that long-term growth prospects go beyond geopolitical disruption. Investment in port infrastructure and Africa's position on global shipping routes are supporting demand.

Mauritius Ports Authority announced at a conference in March last year that overall bunker fuel sales had almost doubled?at Port Louis, to a record of 929,043?metric tons by 2024, from 509 837 tons the year before.

PwC reported earlier this month that regulatory issues in South Africa, historically the continent's biggest bunkering hub, caused it to lose business to Port Louis, Walvis Bay, and other countries. Bunker volumes dropped to 80,000 tons per month in 2024, from 130,000 tons in 2023.

GROWTH IS IMPACTED BY RISKS IN SECURITY, SUPPLY AND ACCESS

Sources in the industry warned that African bunkering is faced with a number of obstacles, ranging from limited infrastructure and piracy to the uncertainty of supply due to the closure of the Strait of Hormuz which curtails Middle Eastern oil exports.

Emril Jamil is a senior analyst with LSEG. He said that "given the loss in crude supply and refinery runs,?fuel supply will tighten up across all bunkering 'hubs".

Misa Energy's Komodatam stated that long-term challenges include infrastructure bottlenecks such as congestion in the Port of Tema, Ghana, and high costs of products because of tax regimes.

Uncertainty is also created by tax and licensing disputes. Algoa Bay in South Africa, a major refuelling port for international shipping, is experiencing reduced bunkering capacities since the tax crackdown of late 2023.

(source: Reuters)