Interview with ConstructAfrica: Steen Knudsen, Terminal Manager, APM Terminals Apapa, Nigeria
It is 17 years since APM Terminals took on the concession for the Apapa Container Terminal in Nigeria. Since 2006 you have invested US$438 million in the terminal. Broadly speaking, what investments have you made and what has been the impact on volume growth and turnaround times?
We have made substantial investments in facility upgrade, training of our employees, equipment, and technology. The impact on our business and the Nigerian economy has been enormous. By acquiring more equipment, we have improved our capacity to serve our customers better. For instance, in 2022, we set a new record for the most cargo moves in a single month. This new all-time record of over 41,000 moves, is around 2% higher than the previously record set in 2014. This shows our strong volume stability and ability to successfully manage these increasing volumes. This success is also due in part to the introduction of a berthing schedule in 2021, allowing shipping lines maintain a regular fixed arrival time and eliminates waiting time for vessels.
In June 2023, we received the largest container ship to ever call at the Lagos Port Complex Apapa; the Singapore-flagged Kota Cantik, a 6,606 TEU containership. With bigger vessels come economies of scale through lower slot costs for consignees.
Investing in both our frontline as well as our office-based employees, allow us to upskill our organisation, provide growth and career opportunities in and outside Nigeria and continuously improve the services to our customers and stakeholders.
What is the current capacity of the port?
Our current capacity is over 1,000,000 TEUs annually. In the last 15 years, we have handled more than 8.1 million TEU of containers. Volumes have increased by an average of 23% per year over the past five years alone.
Apapa Container Terminal is the only port in Nigeria connected into the rail network, with links to Kaduna and Kano restored in 2013 and the line to Ibadan beginning cargo operations this year. How important is having these connections to your operations?
It is important firstly because it reduces the pressure of evacuating cargo solely by road. Apapa is often plagued by traffic which isn’t great for port operations as it sometime takes consignees days to get export cargo into the port and likewise to evacuate their import cargo. Multimodal connections ensure consignees have other transportation options and can transact their business more efficiently as they are not constrained by traffic delays. These multimodal connections also reduce the pressure on our business because if consignees are unable to get into the port to take delivery of their cargo, the yard can easily become congested.
In the medium to longer term, it will have a positive environmental impact when cargo is carried by rail, which produce a lower carbon footprint per carried container, when compared to road transport.
Are you planning any further investments at Apapa Container Terminal?
APM Terminals is continuously looking for opportunities to serve our customers better and expand our vessel handling capabilities. When the global shipping lines continue to focus on economy of scale and cascade larger and larger vessels into the Africa trade, it is important that ports keep up with this development and ensure the port infrastructure is adequate to handle larger vessels. APM Terminals is geared towards growth and investments into the logistics business in our never-ending quest to offer a strong value proposition to our customers.
APM Terminals also has the concession for the West African Container Terminal (WACT) in the Onne freezone in Nigeria. How do the two terminals co-operate with each other?
There are so many opportunities for collaboration between both companies especially in the area of training and development. Some of our technical team have been to Onne to train our colleagues on the handling of container equipment, maintenance and reliability. Such occasions are great opportunities for employees from both companies to share ideas, experiences and learn from one another.
Our customers can benefit from enjoying the same high service level in both our operated terminals, ensuring a smooth and efficient access to the entire Nigerian market.
APM Terminals also operates an inland container terminal in Kano, which serves our customers in northern Nigeria. Through our facilities in Apapa and Onne, APM Terminals Kano offers Through Bill of Lading (TBL) products to consignees ensuring a fast and efficient transit of cargo. Furthermore, APM Terminals Kano can offer container export products and warehousing, tailored to the vast agricultural potential of northern Nigeria.
Are there any investments planned at the WACT terminal?
There are several projects currently in the works at WACT, especially in terms of infrastructure and equipment. Last year, the terminal acquired a new mobile harbor crane as part of a fresh US$112 million investment to upgrade and expand the terminal. Some of the planned investment includes the acquisition of mobile harbour cranes, rubber tyred gantry cranes, empty handlers, terminal trucks and forklifts. This is in addition to the deployment of reefer racks with a 600-plug capacity, as well as a 13-hectare expansion and of our current yard, paving, a new workshop and a new terminal gate complex.
There has been continued growth in volumes in the Eastern Nigerian market and these investments position WACT to better meet the demands of the market.
APM Terminals has committed to reducing its global emissions by 70% by 2030 and achieving net zero by 2040. What does this mean for your operations in Nigeria and what emission reduction plans are you working on there?
It means greater efficiency with our operations to reduce carbon emissions into the atmosphere. Obviously, because of the peculiarities of the Nigerian environment, we cannot now or sooner, replace fossil-fuel driven equipment with battery electric equipment. However, what we can do is ensure that the hours our equipment are in operation, they are actually moving boxes and not idling away, releasing emissions into the atmosphere. That way, we can cut down on our fuel emissions.
Also, we have started receiving larger vessels. Larger vessels consume less fuel per container transported, the emissions per TEU are lower than for smaller vessels. Bigger vessels are more environmentally friendly and contribute to lowering the total emissions of the shipping industry. We are also collaborating with our government stakeholders to continuously improve the efficiency of our port operations and find better ways to do business with lesser negative impact on our environment.
The A.P. Moller Group is globally taking a leading role in decarbonising global trade, most recently seen in the launch of a new series of methanol-powered container vessels. With the inhouse expertise we have in our group, we will be able to partner with governments to find solutions for our port and inland operations as well.
APM Terminals operates terminals in nine other markets in Africa. How do you envisage the AfCFTA benefitting your business on the continent?
The projections for AfCFTA on the African continent are great; boosting Africa’s income by US$450 billion by 2035, increasing Africa’s exports by US$560 billion and much more. Going by these projections, AfCFTA is great for international trade and by extension the logistics business. The continent has a lot of potential in terms of resources and manpower.
The more trade Africa is able to engage in, the better for the continent and also for us who do business there. We have the capacity to facilitate trade for our host country in the most efficient way possible and in a cost-effective manner. The majority of our employees are recruited locally, so more business for us also means more job opportunities for our host communities; it is a win-win situation.
How long was the Apapa Container Terminal concession signed for? What are the plans for continuing beyond this?
It was signed for 25 years, ending in 2031. Since we entered the Nigerian market, we have revolutionised the port industry. We have modernised port infrastructure, invested in the latest technology in port equipment and in the training of our people. The Nigerian economy has benefitted greatly from the concession to private operators, likewise the private operators. It is our intention to continue this mutually beneficial relationship, hence our continuous investment in the long term.
How many staff do you employ at Apapa Container Terminal and what percentage are local employees?
We have around 700 employees in direct employment and many more in indirect employment through our contractors and suppliers. Local employees make up over 98% of the workforce. We invest heavily in the development of our employees and leverage our global portfolio of terminals to offer opportunities for our staff to work in different environments around the world. This will ensure we are bringing international standards to our work here in Nigeria.
For instance, in 2021, we invested over N50 million in employee development programs spread across various professional skills. Our employees is one of our five company values. It is important that we continue to invest in developing and upskilling our organisation to be ready for tomorrow’s challenges.
How do you see the outlook for shipping in Nigeria? What do you see as the key challenges in the sector that need addressing?
2022 ended on a good note for shipping in Nigeria. There was better improved maritime security resulting in the delisting of Nigeria from the IMB Piracy list. This of course led to a reduction in the premium paid by shipowners for war risk insurance for voyages to Nigerian waters. Improved maritime security translates to a more conducive environment for business.
Then in the last few years, the government has been looking to increase export volumes. With more Special Economic Zones to drive manufacturing and production, this goal is achievable. One key factor that would boost export in Nigeria is getting the export goods from the hinterland into the ports on schedule. Like I mentioned earlier, Apapa struggles with traffic congestion and cargo exports are often caught up in these traffic delays. It is worse if the cargo are agricultural exports because means a longer time getting to the port and the destination country. This could affect the quality of the cargo.
If more efforts could be put into ensuring the multimodal connections especially the rail and barge options, continue to work efficiently, this would be a great boost to the export market.
Several other countries in Sub-Saharan Africa are also looking to bring in private firms to operate their ports including South Africa and Kenya. Is APM Terminals interested in taking on other assets in the region?
APM Terminals is always looking for opportunities to expand our global portfolio of terminals. Our purpose of improving life for all by integrating the world is very befitting our expansion agenda, where we can ensure that we deliver value to the economies and countries we operate in.
What are the main benefits for governments of bringing in a private port operator?
There are lots of benefits, the first being port operations can now become profitable and generate more money for the government through lease and concession fees. Consignees are better assured of greater security for their cargo, more efficient services and at more competitive cost. A profitable port means more money for the government in terms of taxes and concession fees. It also means more jobs for the citizens and the overall growth of the economy.
Image caption: Steen Knudsen holds a wealth of experience in shipping and terminal operations, having spent over 25 years in various leadership roles within and outside the Maersk group. He holds an unlimited ship captain license and a certification as a chartered shipbroker, London.
