Shipping containers, made in Egypt: The government is in the process of launching a project to build Egypt’s first factory to build shipping containers alongside a private sector firm, the Transport and Industry Ministry announced at the end of last month. The move comes as a means to serve the needs of local industry and to reduce FX outflows by cutting imports of containers.

The logistics sector and its need for containers are growing: Egypt’s logistics market is expected to reach around USD 14.6 bn this year, before growing by another USD 18 bn by 2029 — an annual growth rate of 4.3%, the secretary-general of the Federation of Egyptian Chamber of Commerce’s international transport and logistics division, Amr Al Samdouni, told Enterprise. A local industry would represent a “very positive” step forward, Al Samdouni said.

But how are Egyptian companies currently acquiring containers? Local companies are currently forced to rent or purchase the containers they need at USD rates that vary based on the size of the shipping container and the type of goods being transported. A local manufacturing industry would save Egypt a significant amount of FX by allowing payments to be made in EGP, Al Samdouni added.

Now is a better time than any as container prices have skyrocketed amid soaring demand: Since Houthi attacks on passing vessels in the Red Sea have disrupted the international shipping industry, prices of containers have gone up to an average of USD 7.5k per container — up from around USD 1.9k previously, as demand has outstripped supply, Al Samdouni said. Domestic shipping costs have also gone up by 25% and could go up to a further 10% on the back of the government’s recent decision to hike diesel prices.

There’s still a long way to go before we will start seeing locally made containers: The plan to manufacture containers locally — while representing a good first step to solving the problem — is still lacking the necessary studies and preparations to make it possible, a source from the Chambers of Commerce’s transport and logistics division told Enterprise.

Some of the problems to overcome are legislative: There are currently no Egyptian-owned cargo ships due to ownership laws for vessels and the flying of the Egyptian flag on privately owned ships, which has led the local commercial maritime fleet to decline in size over the years, the source added. This, coupled with the lack of raw materials provided and soaring input costs have made the market largely dominated by foreign companies, the source added. This was echoed by Ibrahim El Dessouky, head of the Federation of Egyptian Industries’ Maritime Transport division, who highlighted the need for amending laws related to maritime transport, especially with regards to the building of ships and their components, as well as removal of all obstacles to the entry of foreign and local operators.

A local accreditation body will help speed the process along: Container manufacturing currently requires a type of steel that is subject to approval from international bodies — a process which can take up to six months, El Dessouky tells us. Having a local accreditation body would make the local sector more competitive in terms of time and cost efficiency.

The success of the project should pave the way for a fully Egyptian shipping line: The government’s foray into the container manufacturing sector will eventually lead to the launch of a local shipping line that will ship to neighboring areas, including East Asia and Europe, a source in the maritime transport sector told Enterprise. This will help position Egypt as a logistics hub in the region, the source added.

The state has a few options for where to launch the proposed container manufacturing factory: The government could select the industrial area of Sixth of October city— which serves eight industrial and logistics areas and is linked to Alexandria Port — or the industrial zone in Tenth of Ramadan City, the source said.

The factory could be constructed alongside the Arab Organization for Industrialization — which, El Dessouky says, would enable the completion of a comprehensive system for logistics areas, corridors, and port development. El Dessouky also emphasized the need for prioritizing the Egyptian fleet for transporting goods as soon as the first Egyptian container is produced, as factories currently incur heavy fines due to the lack of containers for loading goods.

The industry needs land for building ships and their components, with the Federation of Egyptian Industries’ Maritime Transport division set to hold a meeting with Transport and Industry Minister Kamel El Wazir to provide industrial land for shipbuilding and its components. Despite the building of ships being a prominent activity in Rashid, Damietta, and Kafr El Sheikh, the land is still under the jurisdiction of the water, agriculture, and local development ministries, due to the manufacturing being done on the coast of the Nile. Having the lands under the jurisdiction of the Industrial Development Authority will lead to a boom in manufacturing operations for the sector, and will give manufacturers access to tax benefits and other incentives directed to the industrial sector, El Dessouky tells us.

Big investments are needed for the sector: The growth of the sector depends on whether or not it’s receiving the necessary funding, El Dessouky said, adding that it should be placed among the sectors that receive funding from banks with the necessary guarantees, as it requires sizable investments to function. The federation has reportedly received a number of enquiries concerning the lack of industrial land for maritime-focussed activities in the state's industrialization plan, despite there being six companies manufacturing ships for foreign clients and exporting them abroad.

Connecting ports with a transport and container network compatible with the infrastructure is another important step, El Dessouky told us. The infrastructure in Egypt’s ports is quite robust, and entering the container manufacturing field will turn Egypt into a logistical hub, but it’ll take time before it is able to compete with global shipping agents, El Desoukky added.

Your top industrial development stories for the week:

  • Efforts to localize the auto industry get a push: The government wants to set upthree factories with investments of USD 1.4 bn to produce parts and materials to support the country’s efforts to localize the auto industry.
  • A new phosphate fertilizers plant is in the works: Singapore-based chemical company Indorama — in partnership with Phosphate Misr — is building a USD 400-500 mn phosphate fertilizers plant in Ain Sokhna. Preliminary work on the plant is expected to wrap up by year end, with actual implementation starting in 2025.
  • Another industrial zone in Alexandria: The government is planning to set up anindustrial zone focused on chemical and plastic industries — as well as engineering industries complementary to the chemical sector — in Alexandria.
Tags: