South Africa missed the boat
South Africa’s port crisis has cost the economy an estimated 5% of its GDP, and now the country is losing out on revenue generated by the mass increase in cargo ships being rerouted around the southern tip of Africa.
The collapse of South Africa’s rail and port utility Transnet, which was in sharp focus at the end of last year, cost the country R1 billion a day in economic output, equivalent to 4.9% of annual GDP in 2023 or R353 billion.
This was revealed in a study by the GAIN Group, a boutique consultancy focusing on contract research of freight transport.
The congestion at the end of the year resulted in cargo ships waiting as much as 19 days to offload their shipments, forcing many of the world’s biggest shipping lines to impose “congestion surcharges”, with some now opting to fly goods into South Africa at a higher cost, while others are avoiding South Africa’s port altogether.
This has meant South Africa had missed a significant opportunity to generate revenue this year, compounding the losses from port inefficiencies.
Since Iran-backed Houthi rebels, based in Yemen, began targeting commercial ships on the Red Sea in solidarity with Palestinians in November 2023, shipping companies have been forced to reroute their ships to avoid using the Suez Canal.
Around a tenth of the world’s maritime trade volume typically passes through the Suez Canal.
However, The Outlier highlighted that more than 50 ship attacks between January and March caused companies to double the number of ships rounding the Cape of Good Hope to 7,078, up from 3,815 last year.
According to Transnet statistics, despite the increase in shipping traffic along Africa’s east coast, Durban, the busiest container port in South Africa, seems to have been unaffected.
In the first three months of this year, 744 ships arrived at the port, 29 fewer than the number of ships that arrived in the same period last year (773).
The time ships have to wait to dock at Durban port could be a reason for this. According to the port congestion dashboard provided by Portcast, the average wait time in mid-April was 4.4 days.
In comparison, the average wait time in Mombasa (Kenya) or Pointe Noire (Republic of the Congo) is just over a day.
In China’s Shanghai port, where 336 ships were waiting to dock between 15 and 21 April, the wait time was only 1.1 days.
Furthermore, in contrast to Durban, the number of ships docking at Mombasa and Pointe Noire has significantly increased due to the redirected shipments.
In April, Transnet chair Andile Sangqu acknowledged Durban’s congestion issues during a media briefing.
He pointed out that the Durban Container Terminal, which manages about 65% of the port’s container cargo, has not undergone any significant changes since 1963, and a Recovery Plan is currently being implemented to address inefficiencies.
“As part of implementing the Recovery Plan, we have developed several tactical initiatives to drive volume recovery and improve efficiencies across our divisions.
“As we pursue the Recovery Plan’s objectives, we rely on our employees, labour unions, and customers to execute with urgency and efficiency and on structured collaboration with our trusted partners, especially through the National Logistics Crisis Committee,” said Sangqu.
“Of course, we are not out of the woods yet. But the progress is real, the business is being stabilised, and we are increasingly optimistic about the future,” he added.
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