SA was one of only two countries surveyed by UN Trade and Development in the first quarter of 2024 to experience a decline in trade, which was attributed to a large drop in both imports and exports as SA ports grapple with operational challenges.
Asia’s economic powerhouse, Japan, was the second country to suffer trade losses. According to the UN agency’s data, SA imports dropped by 8% in the period under review, while exports decreased 8%.
“The decline in merchandise trade among major economies in 2023 reversed in [the first quarter of] 2024, but only for some. Specifically, imports increased for Brazil, the Russian Federation, and the US. On the export side, China and India exhibited very strong quarter-over-quarter export performance. Exports also grew for the Russian Federation and the US. In contrast, trade continued to decline for Japan and SA,” the agency said in its latest trade update.
The inefficiency of SA ports has curtailed economic growth, particularly for fruit exporters and mining houses.
Kumba, the country’s largest iron ore producer, has lowered its production outlook for the next three years to between 35-million and 37-million tonnes, down from the 37-million to 39-million tonnes it had previously planned for 2024 and 39-million to 41-million tonnes in 2025.
The latest World Bank Container Port Performance Index (CPPI) report, ranked SA poorly, with the Port of Cape Town the worst performing in the world.
Transnet has denied this, saying the report did not consider corrective actions implemented since Transnet came under new management as part of a recovery and transformation strategy.
In June Transnet appointed Lekau Letsoalo as group COO to oversee the work of the CEOs of all Transnet’s operating divisions.
During his previous tenure at Transnet, he was charged with overseeing the expansion of the Pier 2 Container Terminal in Durban, the construction of the Pier 1 terminal and the modernisation of the Cape Town Container Terminal.
Since 2010 SA has forfeited about $26.7bn in iron ore and coal export trade. The Absa purchasing managers index (PMI) released last week showed that imports were still being delayed as SA battled port congestion.
The PMI report states: “Supplier deliveries are worsening, with the index increasing relative to May (this is indicative of slower delivery times). Port issues are likely to have remained an issue. For example, at the Durban Container Terminal, only seven of the 16 ship-to-shore cranes were operating, and about 55 straddle carriers were available compared with the planned 67.”
Danish integrated logistics major AP Moller-Maersk is challenging Transnet’s appointment of International Container Terminal Services (ICTSI) to develop and upgrade Durban Container Terminal (DCT) Pier 2.
DCT Pier 2 is the crown jewel in Transnet’s port portfolio. It handles 72% of the Durban port’s traffic and 46% of SA’s import and export traffic.
UN Trade and Development said global trade growth in the first quarter of 2024 was primarily driven by increased exports from China, India and the US, while Africa’s exports decreased by 5%.
“Industrial policy is likely to increase the concentration of the global supply of strategic products in even fewer economies. By providing heavy subsidies to their own industries, developed countries and major emerging economies are expected to enhance their global competitiveness in these sectors,” the UN body said.
“This will impact not only their domestic markets but also global trade, potentially marginalising smaller economies from entering these lucrative markets. This may have important implications for developing countries.”
SA’s trade is likely to be affected by the current inclement weather ravaging the south coast. Maersk has warned that vessels will be delayed in SA’s south coast, which has been battered by inclement weather over the past few days.
On Monday the company told its clients that weather conditions on SA’s coastline would delay the arrival of vessels, adding further woes to the congestion that have become a near permanent feature of the country’s ports.
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