Nigeria is an important market for us – Andersen

Mr. Nils Andersen is the Group Chief Executive Officer of A.P. Moller-Maersk; a Danish business conglomerate with 117,000 employees in 130 countries.
Mr. Andersen joined A.P. Moller-Maersk in 2007 when he took over as the fourth Group CEO. Up till then, he had been on the Board of Directors.
The Group is the parent company of several major brands including Maersk Line, APM Terminals, Maersk Oil and Maersk Drilling; operating in the company’s two main industries: shipping and oil and gas.
Andersen, who was in Nigeria a few days ago, in this interview, spoke on the operation of Maersk Line and APM Terminals in the country.
Excerpt: 

Maersk shipping line deployed bigger vessels on West African shipping route a couple of years ago. What informed this decision?
The vessels you talked about are the WAFMAX vessels.
The expansion of the West African markets and the strategic location combined with infrastructure bottlenecks were major reasons for introduction of the WAFMAX vessels. The vessels with their greater capacity and energy efficiency support our ambition and extend our commitment to this important growth market.
Once a market served entirely by small ‘feeder’ vessels operating from hubs like Algeciras, Spain, the 4,500 TEU WAFMAX vessels were purpose-built to provide Maersk Line’s Asian customers with direct services to West African ports. The ships are 250 metres long with a draught of 13.5 metres, the maximum size allowable in West African ports. Some of the vessels are equipped with onboard cranes to enable calls at ports without standing cranes.
The growth of the African market, combined with physical infrastructure not developing at the same speed, has created a demand for ships with special designs that are able to match the maximum capacity of the ports.
The WAFMAX has enabled Maersk Line to sustain and evolve its market leadership position.

What are your investment plans in Nigeria over the next few years?
We have invested over USD200 million in modernizing and upgrading the Apapa terminal. We are making additional USD135 million investment in the expansion of the Apapa terminal and more opportunities might turn up in coming years.
The additional USD135 million investment is for modernization and upgrading of the terminal which includes terminal yard redevelopment and expansion, new staff amenities and customer service building, acquisition of more container handling equipment, implementation of new terminal operating systems and a new Customs container inspection facility.
The yard redevelopment and expansion is to the enable the Apapa terminal increase capacity to cope with increased volume till 2016.
The project will include development of new container stacking areas such as the old Sunshine Oil and Dangote Cement areas, which were part of the original Apapa concession but not handed over to APM Terminals until recently.
The project will also convert the terminal to full RTG (yard crane) operations, and includes purchase of many items of container handling equipment, a new customer service building, new employee amenities buildings as well as office for Customs, and a new Customs container inspection area. The project will also include state of the art terminal control systems including a satellite based container positioning system.
The growth in container volumes will require additional capacity beyond 2016 and that is why we are embarking on the Badagry green-field port project.

What are those things that are peculiar to Nigeria in business that you don’t find in other countries where your presence is prominent?
The combination of significant energy resources, a large population and a growing middle-class with buying power is a very strong combination.

APM Terminals has been operating in Nigeria for some years, how would you rate Nigeria in terms of competitiveness?
It is a competitive environment and we’re very satisfied operating in Nigeria.

Can you relate some of you good and bad experience since you started operating in Nigeria?
We are happy to operate in Nigeria and contribute to the growth of its economy.
We have enjoyed good collaboration with the government, partners and our customers.
There is tremendous growth in the Nigerian economy.
APM Terminals Apapa has solved congestion issues which had significant cost to the Nigerian economy. We have promoted trade, growth and transparency to the benefit of our business and the local community.
We use Apapa as a best-practice example in other parts of the world.
Further development of the infrastructure such as roads and rail are needed but I know also that the government is working towards these.

What is the significance of the ground breaking ceremony that you performed at APM Terminals Apapa? 
The groundbreaking ceremony is to flag off final phase of redevelopment and expansion of the Apapa container terminal. It will make the terminal the largest and most modern terminal in West Africa with a capacity of 1.2 million TEU per year.
It will benefit the people working in the terminal, who will have better, safer conditions, it will be good for the environment, because pollution will be reduced, and it will further enable Nigerian business to import and export goods and products.
Apapa has already for years promoted trade and development and attracted customers, making it the busiest terminal in West Africa. This is another important step in this exciting journey.
Many efficiency measures and modernisations have been carried through in recent years, lifting the productivity and developing safety and transparency, so much so that we use it as a best-practice example for terminals in other growth markets. We hope and believe that Apapa will continue to be a terminal we can all be proud of.
The expansion shows that the Nigerian economy is still growing and has potential for more growth. A more efficient and larger terminal will be good for Maersk, for the Nigerian economy and for the Customs officials.
Container volume to Nigeria was low last year. APM Terminals Apapa could not even meet its projected volume of 700,000 TEUs, but despite this you’re planning to develop a new port in Badagry. Don’t you think this will lead to overcapacity?
No, not necessarily. The growth in volume is solid and new capacity will be needed in the medium term. With the current rate of container volume growth, the ports in Lagos will be out of capacity by 2016.

Why exactly are you developing Badagry port?
APM Terminals is currently one of the largest port and terminal operators in Africa, and in West Africa in particular, where APM Terminals Global Terminal Network include nine facilities in eight West African nations, including Apapa Container Terminal, and West Africa Container Terminal in Onne, Nigeria.
APM Terminals Apapa, which assumed operations at Lagos’Apapa Container Terminal in 2006 is now the busiest container terminal in West Africa, handling 600,000 TEUs in 2011 with throughput for 2012 projected to be 720,000 TEUs.
Nigeria’s container volume, which totaled 1.4 million TEUs last year will outstrip existing port capacity by 2017. At present, about 85 percent of all Nigerian non-oil cargo passes through the port of Lagos.
Over the next three decades, Nigerian annual container traffic is expected to grow to 10 million TEUs.
The Badagry Mega-Port project fits well into APM Terminals’ strategy of infrastructure development in targeted high-growth markets.
The Badagry port project fits well into our strategy and competencies. When Badagry is developed, we will have three ports to call with WAFMAX which will reduce waiting time for importers and exporters as well as pollution.
We are very pleased with the support this project has received from authorities and key stakeholders. The business case is good for all parties.

How much are you planning to invest in the Badagry port project?
It is too early for us to comment on investment amounts. Currently, we are working with the state and federal government on the permission process with a goal of opening the first phase of the project in 2016.
It is a huge project with the first phase – the construction of the breakwaters costing over a billion dollars.

You’re in oil and gas business elsewhere. Is there a possibility that Maersk Oil will do same in Nigeria in the near future? 
We continue to look for investments opportunities within the energy sector, not least around oil service, supply and towage-safety vessels. Oil exploration can’t be ruled out completely but we already have made sizeable oil discoveries in e.g. Angola and Norway which will have strong focus in coming years, so I doubt if we will invest in oil in Nigeria in the foreseeable future.

You met with President Jonathan in Abuja yesterday. It was not the first time you met with the President. Do you think his administration is creating the right policies for economic development?
President Goodluck Jonathan is leading the country in the right direction.
He has an Economic Management Team that is composed of knowledgeable individuals and I believe the Nigerian economy will continue to grow under his leadership.
President Jonathan told us that his administration was working hard to diversify and expand the Nigerian economy. And I think that is commendable. We have also assured Mr. President and the good people of Nigeria of our contributions to the growth of the economy.
Africa has become increasingly important to our group and it has potential for much more. Nigeria, as the second largest economy on the continent, is important to us.
The region’s needs and our offers and services are a perfect match.
We will continue to support Nigeria’s growth by enabling trade, making transport more efficient and investing in developing local talent. We have a significant presence and long-term commitment in the country and have made major investments here. We strive to be a company which can be trusted to deliver what we promise. Containerized trade between African countries has significant potential – for African business, for the environment and for us. Containerised intra-African trade makes up around 5% of the total trade whereas Intra-American trade is 48% and Intra-Europe is at 72%. APM Terminals is also researching how to connect the ports on the coast with hinterland markets for landlocked countries. Our investment in WAFMAX vessels which I talked about earlier is USD 2.1 billion with the last sets of vessels scheduled for delivery in 2013.
Nigeria will, along with other growth markets, be a driver for future global growth. It is rich in natural resources, not least agriculture and oil& gas. Wealth as well as education is increasing.