Dive Brief:
- CMA CGM will establish a logistics hub in the Northern Lebanese city of Tripoli after an explosion at the Port of Beirut Tuesday, according to a press release. “The Group is ensuring everything is in place to guarantee perfect business continuity and to maintain the supply of primary necessities to the country,” stated the press release. The carrier is in the process of accounting for its 261 port staff, one of whom was still missing as of Wednesday. CMA CGM’s Beirut headquarters were “severely damaged” in the explosion.
- MSC will reroute ships to alternative sites in the region. The carrier named Gioia Tauro, Italy; Tekirdag, Turkey; Mersin, Turkey; and Piraeus, Greece in its Wednesday statement. Hapag-Lloyd is also diverting existing calls to Tripoli and accepting no freight headed to or from Beirut. The carrier’s office was destroyed, but no staff members were affected.
- The explosion was the result of 2,750 metric tons of ammonium nitrate stored at the port since 2014, Lebanese authorities have confirmed. The cash reportedly originated on a Moldovan flagged ship which arrived at the port in 2013 when the vessel was impounded in Beirut on its way to Mozambique for failing to pay dock fees, according to The New York Times. The crew eventually returned to their home countries, but the cargo remained in a Beirut warehouse. As of Thursday morning, more than 130 people were killed by the explosion, more than 5,000 are injured and an estimated 300,000 are homeless.
Before/After satellite image over Beirut, #Lebanon Flag of Lebanon taken by Pléiades satellites???? Before: 25 Jan. 2020 After: 5 Aug. 2020 Copyright @Cnes / @AirbusSpace.
— MSC Cargo (@MSCCargo) August 5, 2020
Dive Insight:
The Port of Beirut is primarily an import hub. Lebanon relies on the port for much of its goods, fuel, food and building materials. In 2016, the country’s imports were 10 times the country’s exports by volume, according to the Ministry of Economy and Trade. As a result, the temporary loss of Beirut’s port will have a relatively small impact on global trade but significant consequences for Lebanon’s domestic supply chains.
The port is a transshipment hub for CMA CGM and MSC. CMA CGM’s transshipment volume through Beirut declined 5% year over year in the first half of 2020 to 71,432 TEU, while MSC’s transshipment volume declined 32.% year over year to 82,268 TEU as of June, according to the same bank.
Lebanon’s geopolitical situation, along with the ongoing global coronavirus crisis, makes finding contingencies for freight difficult and any delay in freight movement dire. Determining an alternate plan for continuity of service is up to the individual ocean carriers, according to Lars Jensen, CEO of SeaIntelligence Consulting.
“It is entirely up to the carriers to figure out a plan B,” he said, adding that Tripoli is not a like-for-like replacement for Beirut. “This will have to entail some cargo being transshipped as some of the large vessels calling Beirut cannot be handled in Tripoli.”
Lebanon has especially relied on Beirut’s location on the Mediterranean Sea in the last decade due to the degraded conditions in neighboring Syria.
From 2010 to 2016, imports from Syria decreased 80%. As of 2016 (the most recent figures available from the government), the country relied heavily on imports from Kuwait and Egypt. The port is also a primary method of getting United Nations aid into Syria.
Business at the port grew as a result of Syria’s war, with imports peaking in May 2019. But an economic crisis in the country sent imports at Beirut’s port to a nine-year low in March 2020. The port posted a 33% decline in container activity in the first half of 2020 year over year, according to Blominvest Bank.
“We expect that the damage to the port will significantly exacerbate the economic and food security situation in Lebanon, which imports about 80-85% of its food”, United Nations Deputy Spokesperson Farhan Haq told reporters Wednesday, according to the UN’s news service. Lebanon’s bulk grain and cement silos were destroyed in the blast.
Shefali Kapadia contributed to this report.
