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A record surge in trade between Asia and Africa to as much as USD$1.5 trillion by 2020 is prompting companies including AP Moeller-Maersk A/S and Deutsche Post AG (DPW) to expand shipping links between the continents, according to Bloomberg.

Chinese and Indian demand for commodities from coal to copper and African purchases of such items as automobiles and rice are set to fuel the fivefold rise in trade from $304 billion in 2010, said Anil K. Gupta, who holds the Michael Dingman Chair in Global Strategy & Entrepreneurship at the University of Maryland in College Park.

Gupta, who is a visiting professor for the Fontainebleau, France-based business school INSEAD, said Africa has the resources that Asia needs.

“Africa now has an historic opportunity to transform its development, and Asia has begun to look at Africa as a market of high growth potential,” he was quoted saying.

The strengthening ties are part of what HSBC Holdings Plc calls the new “Silk Road” connecting emerging markets and supporting global growth as US and European expansions falter.

The prospective growth in imports and exports must overcome a legacy of political instability in Africa that has constrained expansion. Most nations in sub-Saharan Africa had a gross domestic product per head of less than $1,000 in 2009, according to the 2011 Africa Progress Report, produced by a group chaired by former United Nations Secretary-General Kofi Annan.

Maersk, Denmark’s biggest company, said it’s spending more than $2 billion to create a fleet of the 22 largest container ships to connect West Africa and Asia. The so-called West Africa MAX vessels are each about 249 meters (817 feet) long, more than three Airbus A380 superjumbo jets.

“It’s a route that gets a lot of attention internally at Maersk, and it’s one of the fastest-growing,” said Sonny Dahl, director of West Africa services for Copenhagen-based Maersk.

The Africa-Asia trade relationship “in the medium term is going to be about commodities,” said Malcolm Gray, a fund manager in Cape Town at Investec Asset Management Ltd., an Investec unit that oversees $94 billion. In 15 years, Africa may provide “a manufacturing capability and labour to the then much more affluent Chinese and Indian markets,” he said.

Trade between Asia and Africa, which together account for three-quarters of the world’s 7 billion people, rose more than 400% from 2001 through 2010, data from the United Nations and the Population Reference Bureau show.

Average annual economic growth of about 5% in Africa and 7% in Asia spurred the record jump, Gupta said.

DHL Global Forwarding, a unit of Bonn-based Deutsche Post, the biggest carrier of air and sea freight by volume, and Marseille-based CMA CGM SA, the third-largest container line, are among other companies expanding links between the two continents.

Maersk predicts about 15% annual cargo volume growth on Asia-Africa sea routes during the next five years.

That outlook signals the company expects trade between the continents to weather threats from Europe’s sovereign-debt crisis and a struggling U.S. economy. The risks have unnerved investors, wiping $6 trillion off stocks worldwide this year.

The prediction also indicates an expectation that trade growth will overcome a history of political upheaval in Africa.

More at Bloomberg


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