General Overview
A sigh of relief – The anticipated International Longshoremen’s Association strike at US ports began at the beginning of the month. Around 45,000 workers walked out on October 1, but returned to work just days later, suspending the strike until January 2025 while wage negotiations continue.
Preparing for the future – It was reported that the top 10 global ocean carriers have 431 ships on order, representing a total capacity of 5,9 million Twenty-Foot Equivalent Units.
Fuel supply security worries – Transnet has warned that the growing demand for refined product, reduced refining capacity and a resultant dependence on fuel imports exposes the South Africa’s fuel pipeline system and supply chain susceptible to interruptions that “may result in temporary fuel shortages.”
In 2023 South Africa relied on imports for 61% of its petroleum product supply.
BRICS Payment system – BRICS Pay currency seeks to be a potentially viable alternative to the SWIFT payment platform and optimizing cross-border payment processes among BRICS countries.
South Africa’s growth lags – According to International Monetary Fund projections, global growth will be improved by 3.2% in 2024, with South Africa’s growth being 1.1%.
Global Shipping
Port connectivity dropping – The various problems in South Africa’s ports is impacting their connectivity and integration into global shipping networks. Increasingly, South Africa’s commerce, transport, and logistics sectors are showing a growing interest in global terminal operators which could revitalize our ports.
Strike disruptions – At the beginning of October, the global container shipping industry was severely disrupted by the International Longshoremen’s Association strike at US East Coast and Gulf ports.
Over 60 deep-sea services from Asia, Europe, and South America were at risk in terms of operational ramifications; many vessels had to anchor outside East Coast ports or divert to other destinations like the West Coast or Canadian ports.
Ageing fleets – While carriers have ships on order, many of these vessels will replace some of the estimated 683 vessels that are older than 20 years.
Need for tonnage – As we head for the end of the year, carriers are grabbing hold of all tonnage that becomes available on the charter market, indicating that the need for more tonnage is not slowing down.
LNG outpaces methanol – Methanol-powered ships so far represent just 21% of new capacity ordered in 2024, a significant drop on the 51% seen in 2023. Underlining the decline, methanol capacity contracted this year and has fallen below demand for conventional tonnage again.
Fears of insufficient methanol supply have multiplied this year as the fuel’s processing costs have proved higher than expected and planned production has failed to take off.
Capacity demand keeps ships afloat – 2024s new container ship deliveries have already eclipsed last year’s record of 2.3 million TEUs. The need for capacity has also seen a marked drop in the number of ships being scrapped, with many older vessels enjoying extended service.
International Air
Air freight volumes continue to grow – The industry is approximately 28% higher than September 2023 and still higher than pre-pandemic levels (11% higher than September 2019), which is encouraging and partially illustrates the industry’s continued benefit from the growth in e-commerce.
August had a double-digit increase in air freight for the ninth consecutive month, according to the International Air Transport Association (‘IATA’) (up 11,4%).
Rates on the rise – The growth of e-commerce and regional tensions have resulted in persistently strong rate trends, particularly from the Asia Pacific, Middle East, and South Asia regions.
Rates from Africa increased by almost 4%, with spot values rising by approximately 17% to $2,18 per kilogram, the highest weekly increase worldwide.
Local volumes up and down – Air freight into and out of South Africa continues to fluctuate week by week.
However, the overall trend seems to indicate steady growth.
Most expensive – Africa has the highest average into-wing jet fuel prices in the world, according to the International Air Transport Association “Chart of the Week.” This is primarily because of limited supply competition, government or monopoly control over pricing, and logistical difficulties.
Spot rates increase – The end of the month saw spot rates for China-to-Europe rates have increased dramatically hovering at $4.29 and Hong Kong-to-Europe costs above $5 per kilogram, indicating a year-over-year rise of approximately 13%.
Port Operations
Concern in the Eastern Cape – The month began with the build-up of congestion in the Eastern Cape beginning to become concerning, as there were about 30,000 TEUs outside at Ngqura Container Terminal and Port Elizabeth Container Terminal collectively, with Maersk noting the current delay at six to eight days waiting time at NCT and one to two at PECT.
Weather adds to challenges – Severe winds caused the Eastern Cape to lose over 40 operational hours, while equipment failures combined with unfavourable weather caused some operational difficulties in Richards Bay.
General improvement – TNPA published consolidated port statistics for September, showing a second straight improved return for the corresponding sub-sectors.
Container traffic increased by a significant 15% (m/m), with notable increases from Durban (10%), Ngqura (22%), and Cape Town (41%).
Dry bulk climbed significantly this month (up 16%) in the bulk sectors, which had an overall growth of 15 %.
With break-bulk much higher (67%) and liquid bulk comparable to August, it was the highest-level recorder since December of last year.
Local and Cross-Border
Minister’s warning – Minister Schreiber claims that the Border Management Authority (BMA) lacks funding and personnel.
Over the next three years, the BMA of South Africa will not have the funds to hire the requisite number of employees or make the necessary investments in technology to safeguard the nation’s borders due to an R4,35 billion funding shortfall.
The BMA faces challenges in filling over 8,500 positions out of 11,115 authorized and lacks funding for advanced technologies like drones and satellite systems.
Co-operation eases process – The Federation of East and Southern Africa (‘FESARTA’) is collaborating with the Cross-Border Road Transport Agency (‘CBRTA’) on spot fines.
Under this arrangement, FESARTA will receive the fine directly from a CBRTA officer who stops a cross-border driver. FESARTA will then communicate with the appropriate regional CBRTA Manager.
FESARTA will give a copy of the fine and vouch for the transporter’s commitment to paying the fine within the allotted time. As a result, the truck will be released right away, and payment will not be needed in person.
If the offense does not fit the predetermined parameters, FESARTA will challenge the case before the local CBRTA Manager.
Beitbridge operation woes – Complaints have grown about drivers being compelled to wait for over a day due to delays in confirming vehicle contents.
In addition, even though they are billed as 24-hour, operations end at 8 PM. It is crucial to remember that although the border itself is open around the clock, Customs Agents do not work 24/7.
The new system causes mid-month delays – The new biometric identification system implemented by the Border Management Agency (‘BMA’) resulted in major delays at the border stations at Groblersbrug, Kopfontein, and Skilpadshek.
Groblersbrug received complaints on Monday regarding wait times of more than two days because of staff shortages and lengthy processing periods (up to 35 minutes for each traveller).
The rerouting of transporters, which included an 850 km detour, caused similar delays at Skilpadshek and Kopfontein.
Problematic system withdrawn – After a week of delays, the contentious biometric identification system that caused the delays was removed.
At Groblersbrug, however, transporters continue to report clearance waits of two to three days.
Because cars are only moving a few hundred meters every day, some drivers are parking their trucks in front of the border, completing immigration on foot.
Border officials have attributed these delays to transporters and agents presenting uncleared documentation.