Warning over delivery delays, stock shortages and higher prices hitting South Africans this Christmas
Logistics firms have warned that growing backlogs at South Africa’s ports risk causing delivery delays and stock shortages in the coming months.
Meanwhile, surcharge fees payable by businesses are expected to increase in December as a result of the congestion – threatening to put pressure on the prices of goods in the country.
According to the South African Association of Freight Forwarders (SAAFF), container ships have been avoiding the congested and delayed Cape Town harbour. They are instead docking at the Port of Port Elizabeth in Gqeberha and the Ngqura (Coega) port.
However, this has led to a massive buildup of congestion on the Eastern Cape coast, resulting in 46,000 containers being stuck outside the two ports.
In addition, as of last Friday, 79 vessels and 61,968 containers remained stranded outside the Durban port, reported News24.
This means there are over 100,000 containers stuck outside South Africa’s ports, carrying an estimated R7 billion worth of goods.
According to the SAAFF, the congestion crisis at South Africa’s ports has resulted in cargo ships waiting 215 hours (nearly nine days) and 32 hours to enter Port Nqura and Port Elizabeth port, respectively.
Meanwhile, vessels are waiting 227 hours to enter the Durban port.
According to fleet management and vehicle tracking company Ctrack, the issues at these ports are compounding problems all along the value chain and logistics sector – with the congestion at sea freight having a knock-on impact on the road freight sector.
“It is clear that all these developments, cumulatively, will have a detrimental impact on the South African economy, just as we enter the festive season,” it said.
“Many retailers anxiously await stock for Christmas, which is now stuck somewhere in a container either in the port or at sea, with Transnet Port Operations indicating that the backlog created will only be cleared by February/March 2024.”
“Heavy vehicle traffic on the N4 route also continues to increase notably, as ongoing operational troubles at South African ports result in loads being redirected towards the Port of Maputo, clearly to the detriment of the South African economy.”
Costly incompetence
The problem of port congestion is a complex one, and it is something that was due to happen at some point, as a result of many years of underinvestment in equipment and its maintenance, said Transnet chairperson Andile Sangqu.
He added that the lead times for some of the equipment need will be anything from 12 to 18 months – and if the port issues continue – it will cost South Africans and the economy dearly.
Several shipping lines are now imposing surcharges of around R8,000 ($400) per container, claiming that delays in South Africa are disrupting their international schedules. Among them are Hapag-Lloyd, Maersk, MSC and CMA CGM.
Working on just the 108,000 reported delays, and these surcharges are estimated to cost South African businesses almost a billion rand – roughly R864,000,000.
Additionally, a large container vessel costs about R643,000 to operate a day.
The surcharge is likely to hit South African consumers as well, as it will make imported goods more expensive.
Businesses this week held talks with the government and shipping line representatives to discuss the implications of the surcharge and the new cargo regime. Major retailers involved included Mr Price, Toyota and Defy.
Mr Price noted that port instability could affect the local clothing industry’s autumn lines if delays persist, while frozen food and dry produce exporter and importer Hume International operations and logistics director Roy Thomas said South African consumers will inevitably be hard hit by rising prices due to the port problems.
South Africa’s table grape industry – a major source of export earnings – also voiced its concerns.
Business Day reported that delays at ports cost the industry over R600 million last year, and with shipments anticipated to increase by 12% to about 330,000 tonnes this season, the losses could be even higher.
Additionally, The industry employs 15,000 to 20,000 people permanently, but during the harvest and pruning seasons, employment increases to about 100,000 – all of which are at risk if things don’t improve at the ports.
The collapse of South Africa’s rail and port utility, Transnet, has cost the country R1 billion a day in economic output, equivalent to 4.9% of annual GDP or R353 billion. This was revealed in a study by the GAIN Group, a boutique consultancy focusing on contract research of freight transport.
Thus, the transport crisis is rapidly displacing electricity as the main hurdle to reviving South Africa’s stagnant economy. John Lawson, CEO of the Cape Chamber of Commerce & Industry, said the private sector urgently needed government support at national and provincial levels to ease port congestion.
As reported by Business Day, it will take four-and-a-half months to clear the backlog at the Durban harbour alone, while Transnet said the backlog at the Cape Town Port is close to being cleared.
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