Nacala Corridor and Port Performance Assessment
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NACALA CORRIDOR AND PORT PERFORMANCE ASSESSMENT February 2018 Draft Final Report This publication was produced by the SPEED+ Project under Contract No. AID-656-TO-16-00005 at the request of the United States Agency for International Development Mozambique Mission. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government. CONTENTS CONTENTS ....................................................................................................................................... I TABLE AND FIGURES ...................................................................................................................... I ACRONYMS ...................................................................................................................................... V EXECUTIVE SUMMARY .................................................................................................................. 7 Introduction 7 Key Findings 7 Key Bottlenecks 11 Key Recommendations 11 1. INTRODUCTION .............................................................................................................. 13 1.1. Background 13 1.2. Purpose of Study 13 1.3. Structure of Report 13 2. CONTEXT ........................................................................................................................... 15 2.1. Historical Overview 15 2.2. Structure of Railroad & Port Concessions 18 2.3. Recent Strategic Investments 19 2.4. Corridor Competitiveness 23 3. CORRIDOR TRANSPORT LOGISTICS PERFORMANCE ......................................... 29 3.1. Corridor Transport Infrastructure Overview 29 3.2. Corridor Transport and Logistics Performance Assessment 37 3.3. Nacala General Freight Railway Capacity Assessment 50 3.4. Port Infrastructure and Storage 53 3.5. Beira and Nacala Corridor Performance Competitor Analysis 55 4. VALUE CHAIN AND TRAFFIC FORECAST ANALYSIS ............................................ 59 4.1. Value Chain Analysis 59 4.2. Traffic Forecast Analysis 80 5. CONCLUSIONS AND RECOMMENDATIONS .......................................................... 89 5.1. Background 89 5.2. Potential Economic Impacts 89 5.3. Transport and Logistics Recommendations 101 5.4. Value Chain Recommendations 107 APPENDIXES APPENDIX A. TRANSPORT SECTOR INSTITUTIONAL AND POLICY FRAMEWORK A APPENDIX B. TYPICAL TRANSPORT LOGISTICS CHAIN.................................................... B TABLE AND FIGURES Tables Table 1: Vale-Mitsui Consortium Integrated Mine-Rail-Port Project Investment 20 Table 2: Nacala Corridor Large-Scale Agriculture and Forestry Investments 22 Table 3: Nacala Port–Total Volumes, 2007–2016 (000’s Tons) 23 Table 4: Nacala Port–Malawi Transit Cargo, 2007–2016 (000’s Tons) 23 Table 5: Nacala vs. Beira Port - Malawi Transit Cargo, 2013–2015 (000’s Tons) 23 Table 6: Nacala Port Description 32 Table 7: Beira Port Description 36 Table 8: FastPath2 Nacala Corridor Time and Cost Summary 37 Table 9: FastPath2 Nacala Port Time, Cost, and Reliability Summary 40 Table 10: FastPath2 Beira Corridor Time and Cost Summary 42 Table 11: FastPath2 Beira Port Time and Cost Summary 43 Table 12: FastPath2 Nacala and Beira: Total Time, Cost, and Reliability Summary 45 Table 13: Summary of Bottlenecks and Recommendations 49 i | ASSESSMENT OF NACALA CORRIDOR AND PORT USAID.GOV Table 14: Green Resources Lichinga – Volumes to Harvest (000’sTons) 67 Table 15: Green Resources Nampula – Volumes to Harvest (000’sTons) 67 Table 16: Green Resources – Total Volumes to Harvest (000’sTons) 67 Table 17: Mozambique Imports: Poles, Treated and Painted with Preservatives 68 Table 18: Fiber Allocation between Poles and Woodchips (000 tons) 69 Table 19: Global Market Woodchips and South Africa’s Market Share 69 Table 20: South African Woodchip Value Chain: Transport Cost Component 70 Table 21: Woodchip Plantation Sizes, Production, Yields by Plant Source 73 Table 22: Investment and Jobs Linked to Woodchip Export Platform* 77 Table 23: Traffic Forecasts for Nacala Corridor (2015–30) (metric tons) 81 Table 24: Traffic Forecasts for Nacala Corridor by Road and Rail (2015–30) (metric tons) 81 Table 25: Traffic Forecasts for MOZAMBIQUE on Nacala Corridor (2015–30) 81 Table 26: Traffic Forecasts for Malawi on Nacala Corridor (2015–30) (metric tons) 82 Table 27: Traffic Forecasts for Zambia on Nacala Corridor (2015–30) (metric tons) 82 Table 28: Traffic Forecasts for Mozambique Exports (2015–2030) (metric tons) 83 Table 29: Traffic Forecasts for Mozambique Imports (2015–30) (metric tons) 83 Table 30: Forecasts for All Mozambique Traffic (2015–30) (metric tons) 84 Table 31: Traffic Forecasts for Malawi Exports (2015–30) (values in tons) 85 Table 32: Traffic Forecasts for Malawi Imports (2015–30) (metric tons) 85 Table 33: Traffic Forecasts for All Malawi Traffic (2015–30) (metric tons) 85 Table 34: Malawi and Mozambique–Economic Impacts of Transport Cost Savings, 2020 91 Figures Figure 7: Nacala Port Concession and Sub-Contracting Arrangements 16 Figure 8: Evolution of the Nacala Port and Rail Concession (2000–2015) 17 Figure 9: Interlocking Rail and Port Concessions on the Nacala Corridor 18 Figure 10: Modal Split of National and Transit Cargos on Nacala Corridor 25 Figure 11: Transport Costs Per-TEU Kilometers (US$) 2012 and 2016 27 Figure 12: Map of Nacala and Beira Corridor Catchment Areas 30 Figure 13: Planned Developments at Nacala Port Being Financed by JICA 31 Figure 14: Beira Port Layout 2017 36 Figure 15: Mozambican Export Cost by Transport Cost Component–Road 38 Figure 16: Nacala-Lichinga Rail Transport Cost by Type–Imports 40 Figure 17: Road Costs per Metric Ton (Link and Node) 48 Figure 18: Time Bottleneck Map 49 Figure 19: CDN’s Inflatable Warehouse at Nacala Port 54 Figure 20: Price per Tonne on the Nacala and Beira Corridors 56 Figure 21: Woodchip Exporters in US$ million (2016) 69 Figure 22: Bayfibre/Shincel Mills: Volumes vs. Lead Distances (Tons–2008) 72 Figure 23: Bayfibre/Shincel Mills: Modal Split (Tons–2008) 72 Figure 24: Planned Future/Current Realizable Woodchip Export Potential (Tons) 74 Figure 25: Best-Practice Transport/Logistics Integration for Woodchip Exports 75 Figure 26: Niassa Green Resources Lead Followed by Lurio (Cycle 1) 75 Figure 27: Lurio Green Resources Lead Followed by Niassa (Cycle 2) 76 Figure 28: Import and Road Bias on Nacala Corridor (2015–2020) (metric tons) 86 Figure 29: Potential Increase in Rail Shipments (2015–2020) (metric tons) 87 Figure 30: Projected Increase in Rail Import-Export Traffic by Commodities 87 Figure 31: Economic Impacts of Switching to Rail in Malawi (2020 vs. 2015) 90 Figure 32: Economic Impacts of Rail and Dropping TEEN (2020 vs. 2015) 92 Figure 33: Transport Costs per Metric Ton (US$, 2015) 93 Figure 34: Transport Cost Savings Achieved in Shift to Rail (US$ million) 94 Figure 35: Estimated (2015) and Projected (2020) TEEN Costs (US$ million) 95 Figure 36: Back-of-Port Redevelopment of Strategic Future Importance 96 ii | ASSESSMENT OF NACALA CORRIDOR AND PORT USAID.GOV Figure 37: Strategic Importance of the Back of Port Precinct for Warehousing 97 Figure 38: Potential Additional Cost Savings on Nacala Railway for Fertilizer Imports 98 Figure 39: Wholesale Transport Costs – Malawi FISP by Region (2020) 98 Figure 40: Transport Cost (2020) – Malawi Pigeon Pea Exports (US$ million) 99 Figure 41: Nacala Corridor Game Changer: Woodchip Export Supply-Chain 99 Figure 42: New CDN grain wagon 54.5t load, but limited to 40t because of the 15t axle 105 iii | ASSESSMENT OF NACALA CORRIDOR AND PORT USAID.GOV ACRONYMS ABC Agência Brasileira de Cooperação (Brazilian Cooperation Agency) ACE Agricultural Commodity Exchange ADL Airports Development Limited (Ministry of Transport and Public Works of Malawi) AEO Authorized Economic Operator AfDB African Development Bank AGOA Africa Growth and Opportunity Act ANE National Roads Administration of Mozambique ADM Airports Company of Mozambique BASA bilateral air service agreements CBA cost-benefit analysis COMESA Common Market for Eastern and Southern Africa CFM Portos e Caminhos de Ferro de Moçambique (Mozambique Ports and Railways) CFS container freight station CDN Corredor Desenvolvimento de Nacala CEAR Central East African Railways CTA Confederation of Business Associations of Mozambique CLN Corredor Logística de Nacala (Nacala Logistics Corridor) DCA Department of Civil Aviation (Ministry of Transport and Public Works of Malawi) DoR Department of Roads (in the Ministry of Transport and Public Works of Malawi) EDM Mozambique Electricity / Electricidade de Moçambique FE Roads Fund of Mozambique FEU 40-foot equivalent unit GoMw Government of Malawi GoM Government of Mozambique ha hectare hrs hours IAM Cotton Institute of Mozambique ICD inland container depot INATTER National Institute of Surface Transport of Mozambique INHAHINA National Maritime Institute of Mozambique JICA Japanese International Cooperation Agency km kilometer LAM Mozambique Airlines m meter MASA Ministry of Agriculture and Food Security of Mozambique MD Marine Department (Ministry of Transport and Public Works of Malawi) MEP Ministry of Economy and Finance MIC Ministry of Industry and Trade of Mozambique MINAG Ministry of Agriculture of Mozambique MPDC Maputo Port Development Company MOPH Ministry of Public Works and Housing of Mozambique MT metric ton (also denoted by T) MTPA metric tons per annum MTPW