Major importer’s despair as carriers bypass Durban

A major South African importer has criticised the Port of Durban for its “notorious” poor performance and congestion woes, noting that some lines are now bypassing the harbour.

Hudaco Industries, which specialises in the importation and distribution of high-quality branded automotive, industrial and electrical consumable products, mainly in the southern African region, made the remarks in its latest preliminary financial report for 2021.

The firm also reported that as the economy improved, with hard lockdowns easing globally, it had struggled to find containers and vessels prepared to move its cargo, while freight forwarders had taken advantage of the congestion to hike their prices.

Hudaco said that its businesses had recovered “exceptionally well” from the ravages of the Covid-19 pandemic and associated lockdowns, growing headline earnings by 21% over 2019 to 1 641 cents, and comparable earnings by 30% over 2019 to 1 613 cents, during a time when difficulties had beset business in South Africa.

“KwaZulu-Natal (KZN) and Gauteng experienced eight terrible days of dramatic and violent riots and looting in July.
“Hudaco lost two KZN branches and had to close several businesses for the week.

“Then, in October, we had the three-week Numsa metal industries strike, which affected most of our engineering consumables businesses.

“Load-shedding was intermittent throughout the year, demonstrating Eskom’s lingering inability to supply adequate energy to meet demand.”

Supply chain constraints, internationally and locally, most of which had started with Covid lockdowns early in 2020, had been a persistent challenge for the business, Hudaco added.

“Many factories, particularly in China, still have production backlogs.

“There is still a worldwide shortage of semiconductors and certain raw materials, which has a knock-on impact on many other products,” the firm said.

“Once we were allocated products by suppliers, finding shipping containers became the next hurdle, followed by challenges finding ships prepared to carry our cargo.

“Shipping lines are increasingly becoming reluctant to dock in Durban and endure docking and offloading delays and the ensuing related congestion, for which our largest container port has become notorious,” Hudaco said.

Freight forwarders and suppliers had immediately taken advantage of supply chain congestion and product shortages to increase prices, the company added.

The cost of shipping a container had risen to more than tenfold the pre-Covid cost.

“Fortunately, for most of our products, Hudaco has the pricing power to pass these increases on to our customers and thus protect our margins.

“Having stock available is critical for Hudaco, so the decision to increase stock early in the year by one month of sales stood us in good stead because we could supply when many of our competitors could not.

“This supreme effort by all our businesses in the strategic management of their entire value chain kept us a step ahead.”

Information courtesy of FTW.

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