Portek is a Singaporean subsidiary of Mitsui, the Japanese industrial conglomerate. Portek has offices in more than nine countries around the world, and four major operations in Africa. African Business spoke to the chief executive officer, Takao Omori.
Could you describe what a port operator is doing in a land-locked country like Rwanda?
In Rwanda we are trying to focus on developing routes to the Indian Ocean, to Mombasa, Kenya and Dar es Salaam, Tanzania. In 2009, a large entourage of Rwandan government officials visited Singapore. They wanted to co-operate with a Singaporean company such as Portek to take over the largest distribution operator, Magerwa in Rwanda.
That was really the start of Portek’s initiatives to operate the inland container depot. It’s not a container terminal as such, but it handles containers and various commodities to improve the country’s productivity.
Rwanda said they wanted to be a “Singapore in Africa”, to somehow centralise the function of their trade and the logistics of commercial transactions. They really are striving to deliver to surrounding countries.
It is located on 160,000 square meters of the land, in the heart of the Kigali capital, the largest logistics operation in Rwanda. Originally this company was established in 1967 during the term of the first chairman of National Bank of Rwanda, a Japanese seconded from the IMF. An excellent logistics facility to warehouse and transport agricultural products both within the country and for export was established. It now handles all manner of cargo, from steel products to containers to vehicles. As you know, the five East Africa Community countries have signed up to a single custom union. When importers make a declaration at the entry terminals like Mombasa, it is not necessary to do the same at borders, as long as it is within the East African Community.
We operate five warehouses and the Rwandan government is trying to push the kind of blue channel for the really reliable importers.
Right now, we are trying to convert the business, moving the emphasis downstream to handle perishables and medical supplies deliveries to customers making direct deliveries and diversifying our current business model to more of a ‘final distribution’ service.
You are currently in Gabon and Algeria as well as Rwanda?
Yes, these are the countries in Africa where we operate. Algeria was our first container terminal, initiated in 2004. It was a joint venture partnership with the local port authority. They had a conventional berth, but through the JV competitive refurbished equipment was installed to start container operations as quickly as possible.
We helped them improve the terminal’s productivity, so the shipping companies began enjoying shorter turn-around times.
In Gabon we don’t really operate the terminals, but we manage them in terms of berth, equipment maintenance and also some of the facilities. We brought in three mobile harbour cranes almost three years ago to improve port productivity, leasing them to terminal operators.
We always take the opportunity to choose the most economic or efficient way to operate, initially in terms of obtaining equipment, or maybe refurbishing existing equipment to economise on CAPEX, later adding more equipment and expanding the berth.
They are, comparatively, fairly small ports. I guess you are trying to make them competitive on a cost basis?
Right, and also even those small terminals are really the most important gateways for domestic imports and people who live there. Before the oil price fell sharply, although we saw a sign of fall in construction materials imports, new cargoes like precious metals and FMCGs meant the overall volumes of our terminals were retained. Although the Euro has depreciated strongly against the Singapore dollar by almost 15% during FY 2014, the bottom line in Singapore dollars was higher than the previous year thanks to the volume increase.
Are you considering any other business deals in Africa?
In Africa we are trying to replicate the business model in other markets. Our target is to revitalize middle-sized or small terminals, not really green-field projects.
This article was first published in African Business magazine, June 2015 issue. Copyright IC Publications 2015. Published under permission by IC Publications www.africanbusinessmagazine.com.