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Cablegate: Casablanca Port's Congestion Crisis

VZCZCXRO5062
PP RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHCL #0192/01 2651047
ZNR UUUUU ZZH
P 221047Z SEP 07
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC PRIORITY 7844
INFO RUEHRB/AMEMBASSY RABAT 8092
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHLO/AMEMBASSY LONDON 0306
RUEHFR/AMEMBASSY PARIS 0593
RUEHNK/AMEMBASSY NOUAKCHOTT 2287

UNCLAS SECTION 01 OF 02 CASABLANCA 000192

SIPDIS

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD EWWT MO
SUBJECT: CASABLANCA PORT'S CONGESTION CRISIS

REF: (A) 06 RABAT 527; (B) 06 RABAT 2248

1. (SBU) Summary. Explanations abound for the Port of Casablanca's
congestion crisis, which has emerged over
the last month as a major threat to Moroccan exports. Government
and port officials suggest that an increase
in imports and an overabundance of containers left in storage have
precipitated the problem. Others cite
more deeply rooted issues, including ineffective port reform,
related labor unrest and poor infrastructure.
The crisis could be construed as a side-effect of the recent
reorganization or an indication of faltering
reform. Either way, efforts to improve the port's competitiveness
are floundering, and port officials
and operators are seeking ways to weather the storm.
End Summary.

-------------------------
INCREASED SHIPPING VOLUME
-------------------------

2. (U) Throughout the summer and into the fall,
congestion has plagued the Port of Casablanca.
Normally, Casablanca receives more than 3,400
vessels annually which account for over 37 percent
of the total commercial shipping arrivals in Morocco. According to
Jamal Benjelloun, Director General of
the National Port Agency (ANP), an unanticipated rise
in shipping volume during the summer of 2007 explains
part of the problem. The agency predicted a nine
percent increase over 2006, but the current figure is closer to 15
percent.

3. (U) The fact that the situation came to a head over
the past month is not surprising, given the confluence
of the Islamic holy month of Ramadan and the start of school this
year. Both bring a large volume of
specialty imports. Another factor in the high shipping volume this
year is increased grain imports, made
necessary by Morocco's drought. The country imported
80 percent more corn, wheat and barley by the end of
July 2007 than it had during the same period in 2006.
69 percent of this grain went through Casa Port.
Mohamed Abdeljalil, Director of the Port Management
Company (SODEP) - the state commercial operator that replaced the
state's monopolistic Office of Port
Management (ODEP) - also points out that Morocco
is engaged in numerous, large-scale construction
projects. As a result, the country imports sizeable quantities of
steel and timber. (Note: In summer
2007, SODEP rebranded itself as Marsa Maroc,
creating a new, more "patriotic" corporate identity).

---------------------------------------
TOO MANY CONTAINERS, NOT ENOUGH STORAGE
---------------------------------------

4. (U) Increased imports aside, government officials
blame port congestion on companies leaving too many containers in
the port's limited storage areas. The problem has gotten so bad
that some containers are
stored outside the port's confines. At a September 12 meeting held
by the Wali of Casablanca and attended
by a range of port actors, the Wali urged importers
to move their containers in less than 15 days or face
heavy fines. Mohamed Chaibi, Vice President of the
General Federation of Moroccan Enterprises (CGEM),
made a similar plea the week before at a well-attended roundtable on
promoting Morocco abroad.

--------------------------------------------- -
PORT REFORM, POOR INFRASTRUCTURE ROCK THE BOAT
--------------------------------------------- -

5. (SBU) The port's problems run deeper than increased imports or an
overstock of containers, however, and
some fault port reform itself. Mohamed Karia,
Director General of Morocco's second largest shipping company, the
International Maritime Transport
Corporation (IMTC), blames the current crisis on the state's failure
to carry out reform effectively. A December 2005 law
ended ODEP's monopoly and created two new entities:
ANP, an independent port authority, and SODEP, a
state-owned operator to manage cargo handling and commercial

CASABLANCA 00000192 002 OF 002


services. The law's goal was to open
the field to private operators, creating competition
and reducing costs to make Moroccan ports more
competitive (ref: A). In Karia's eyes, however, the reorganization
is "a disaster thirty years in the
making," with SODEP merely replacing ODEP as a state monopoly.

6. (U) Not everyone is as pessimistic about port
reform as Karia, but others agree that the recent reorganization has
rocked the boat. Amina Lamrani,
Deputy Director of CGEM, characterized the port's
current problems as a side-effect of reform and noted
that workers feared losing their jobs, "as happens
when you end a monopoly." For their part, dockers
have been disappointed that promised salary increases
and benefits have not materialized. In addition, they bemoan the
lack of skilled labor, charging that new
workers do not have the necessary experience or qualifications,
particularly for dealing with the
current crisis. Benjelloun alleged that the problem
is not so much the cargo handlers, who have stepped up their hours
to help clear the port's backlog, but the ground transporters, who
lack a sense of urgency.

7. (SBU) Not only do ongoing labor issues impact the
port's ability to operate efficiently, but so do
equipment, transport and infrastructure deficiencies. Surveying the
port from the wall-length window of his seventh-floor office, Karia
shook his head in dismay
at the long line of trucks trying to leave the port.
If there were an accident, he explained, the port's
only exit would be paralyzed. Workers complain that
cranes and other key equipment are often out-of-order.
A recent news article reported that trucks had left
the port empty for lack of sufficient stackers to
load cargo. As Said Elhadi, Chairman of the
Executive Board of the Tangier Med Special Agency
(TMSA) phrased it, "Casa Port is not up to
world-class standards." Karia put it more
bluntly: "It's a shantytown, not a port."

---------------------------------
CRISIS CONSEQUENCES AND SOLUTIONS
---------------------------------

8. (U) Unfortunately, Casa Port's congestion has significant
negative consequences. Although port
reform was instituted to increase competitiveness,
the port in Casablanca remains more expensive than its regional
counterparts. According to an article in the daily newspaper
l'Economiste, a 40 foot container that spends 27 days in port as a
result of congestion would
cost USD 1112 in Casablanca, but only USD 747 in Marseilles. As the
current crisis continues,
shipping lines are forced to charge their clients congestion fees,
which get passed on to customers in
the form of higher prices. Benjelloun believes ships remaining in
port beyond their allotted time should be penalized with progressive
fees, but acknowledges
that such a system raises costs and makes Casa
Port less appealing. Some ship owners have become so frustrated
that they avoid Casablanca.

9. (U) The situation at Casa Port has reached such
dire straights that the GOM recently announced new measures. On
September 18, it pledged USD 11.3
million for new equipment and 5.2 million to clear
14 hectares of additional space. Port officials and operators will
also work to simplify procedures, and improve logistics and
coordination.

10. (SBU) Comment: The GOM's party line seems to be
that high shipping volume and an overabundance of containers in
storage have precipitated Casa Port's
crisis. Ongoing issues such as labor unrest and shoddy
infrastructure clearly played a role as well, however. Port
officials and operators must move quickly to
improve efficiency if they hope to make the port more competitive
and ensure that last year's ambitious port reform achieves its
objective. The port's importance
to the Moroccan economy makes their task all the more urgent. End
Comment.

COLE

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