Global shipping liner company Hapag-Lloyd has announced it will offer its services to export citrus from the ports of Durban and Gqeberha.
The new service will be active by the end of May in time for the bulk of the 2024 citrus season — harvesting begins in April — and will run until September.
The service will to some extent mitigate the underperformance of Cape Town port where equipment breakdowns and lack of maintenance have caused backlogs and delays resulting in lower export volumes and loss of revenue for fruit exporters. It could also help alleviate high shipping rates.
Citrus Growers Association of Southern Africa (CGA) CEO Justin Chadwick welcomed the announcement saying recent shipping price spikes due to attacks on vessels in the Red Sea, as well as drought-related complications affecting the Panama Canal “have shown how exposed many fruit exporters are to increases in shipping rates and the CGA views any measure that can introduce some stability and competition into the shipping market as a step forward”.
“The citrus industry and the broader economy need as much access to shipping as possible,” said Chadwick.
“Apart from keeping the market competitive and flexible, a new entrant is also welcome in the context of the large projected increase in citrus yield over the next few years. If all role players work together in securing market access and more streamlined logistics, SA could very well increase its citrus exports with 20-million 15kg cartons of citrus in the coming season. It is the CGA's goal to export an additional 100-million cartons by 2032. Last year we exported 165.1 million cartons.”
Congestion at ports and a dysfunctional freight rail network hobbled the citrus industry last year, resulting in its missing its export target of 170-million cartons by about 5-million cartons.
Chadwick said Hapag-Lloyd’s entry into the market was a result of an advisory project launched by a number of fresh produce associations including the CGA, in 2022. In that year, a study by the Bureau for Food and Agricultural Policy (BFAP) found that four out of five citrus growers made a loss with extremely high shipping rates being a major contributing factor to the decrease in profitability.
“The CGA's role in facilitating Hapag-Lloyd’s entry into the market was undertaken in the hope of increasing both capacity and competition, so that long-term sustainability for the sector can be ensured,” said Chadwick.
Business Day reported this week that shipping constraints in the Panama Canal and the Red Sea, where Houthi rebels attack ships, could create a market opportunity for SA fruit exports to Europe.
SA’s fruit export competitors in Chile and Peru face constraints in getting their products through the Panama Canal.
“Given the problems at the Panama Canal, we suspect that fewer Chilean products will reach the European market and possibly also reach there at a later stage, which would come in handy for SA fruit exporters, given the demand and supply situation,” said Jacques du Preez, GM: trade & markets at Hortgro, the governing body of the SA deciduous fruit industry.
As for the Suez Canal situation, he said that should also benefit SA fruit exporters in terms of markets in the Middle East and Far East if EU products cannot reach those markets. It will also be more difficult for Indian table grapes, for example, to reach EU markets.
Chadwick said the CGA was watching the situations in Panama and the Red Sea closely. “These two shipping route developments cause risks and inject uncertainty into the market. The crises in the two routes also increased shipping rates, affecting growers “considerably”.
“So, it remains to be seen whether SA citrus can in any way benefit from the situation,” he said.
Roelf Pienaar, MD of Tru-Cape Fruit Marketing, said infrastructure problems at SA ports are “probably too big” for SA fruit exporters to benefit from Panama Canal congestion.
Citrus producer and exporter Jan-Louis Pretorius, CEO of Groep 91 Uitvoer and a director of the CGA, cautioned that while developments in the Panama Canal and the Red Sea could result in short windows of undersupply in certain markets and commodity types — which could be seen as an opportunity by some players — the longer-term effect of rising shipping costs and related logistical inefficiency could do a lot more harm than good to export-orientated producers.
“With our entire citrus season lying ahead of us, we see the current situation, specifically in the Red Sea, as a significant risk to our business and industry.”
With Carin Smith
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