About 70,000 shipping containers are stranded on ships off Durban in a congestion crisis that threatens festive season shopping and the economy as a whole.
Delays of 14 days to offload cargo this week prompted one of the world’s biggest shipping lines, Maersk, to dump Cape Town as a port of call on a major Far East route to avoid disruption and spiralling operating costs.
The move sent shock waves through the business sector, which says the economy is being held hostage by Transnet’s inability to fix or replace basic equipment at its ports.
Maersk Shipping, which carries a large proportion of South Africa’s imports and exports, will from next month tranship all Cape Town cargo in Port Louis, Mauritius. Containers will be loaded onto a smaller “feeder service” to the Cape. Outgoing cargo from the Cape to the Far East will similarly have to be transshipped.
Maersk and other shipping lines — including the world’s biggest, MSC — will from next month impose a “congestion surcharge” of about R8,000 per incoming container due to the delays. “We’ve been saying for years it will come to a crunch, and it has,” said Mike Walwyn, vice-chair of the South African Association of Freight Forwarders (Saaff).
The surcharge is likely to make imported goods slightly more expensive. It is still unclear how the shipping service change will affect container turnaround times.
Maersk is throwing up a red flag and saying, ‘For God’s sake people, do something’
— John Lawson
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. Ford has had to fly in vehicle parts to get round the shipping delays, reported Business Day.
Industry experts said the cargo crunch was not unexpected and follows the steady deterioration of port infrastructure managed by Transnet.
People in the freight and cargo sector reported that:
- There were 41 container ships waiting off South African ports last week, unable to offload cargo;
- Ships are waiting up to two weeks to dock in Durban and the backlog of shipping containers waiting to be unloaded at the port stands at about 70,000, according to the latest freight forwarders’ report;
- Container volumes handled at local ports were down 19% this month compared with a year ago;
- Port throughput efficiency is now 25%-30% below Transnet’s own target;
- Container processing is down to the same level as 2009; and
- The crisis is largely related to a shortage of suitable gantry cranes. Eight such cranes are now en route to Cape Town from Los Angeles.
“Cape Town port needs about 28 cranes but [one day this week] they started work with 18 — and five broke down during the day,” said Walwyn. Port delays up and down the coast were likely to cause “huge complications in terms of not enough arriving in time for Christmas”.
Port sources said more shipping firms were likely to reconfigure their routes to save money and time. A large container vessel costs about $35,000 (R643,000) to operate a day.
Business has expressed frustration over the government’s apparent reluctance to allow private sector investment to help solve the problems. One shipping line, they said, was eager to help upgrade and operate Cape Town and Saldanha’s future container terminals. The company already manages container terminals globally.
Transnet has selected a Philippines-based operator, International Container Terminal Services (ICTSI), as the preferred bidder for a joint venture at the Durban container terminal. However, it has postponed finalisation of the contract until April next year.
South Africa is falling behind Namibia and Mozambique, which have lured ships away from its harbours thanks to successful public-private partnerships. Local ports are among the worst in the world with Durban ranked 341 and Cape Town 344 out of 348 global ports surveyed in the World Bank’s container port performance index 2022.
John Lawson, CEO of the Cape Chamber of Commerce & Industry, said the private sector urgently needed government support, at national and provincial level, to ease port congestion. The chamber mobilised stakeholders to co-operate in conceptualising and drawing up plans for a Western Cape logistics cluster. The plan awaits government backing.
Local exporters, importers and international partners were increasingly frustrated by government delays in addressing the crisis, Lawson said, adding that citizens would pay the price of inaction. “Maersk is throwing up a red flag and saying, ‘For God’s sake people, do something’,” he said.
Amdi Krogh, Maersk head of Africa Ocean Customer Logistics, said the route change was necessary to reduce spiralling costs associated with congestion. “In recent times, we have experienced longer waiting times to berth at the ports, leading to increased operating costs. For example, if a vessel waits for seven days to berth, we have to add one more vessel to the rotation so that the weekly service is maintained. Then there are additional fuel expenses, which are not only a cost point but also are not sustainable.
“To ensure that we can find the best solutions for our customers and the trade taking place in and out of South Africa, we are collaborating with the authorities and the rest of the ecosystem,” Krogh said.
Saaff research head Jacob van Rensburg said: “It can be argued that we are losing our ‘gateway to Africa’ status. Losing this tag happens slowly … however, what is clear is that we are seeing ever more businesses looking into alternative ports.
“We desperately need to increase our equipment availability, as it is not a case of port operations waiting for vessels coming in — it is a case of terminals not being able to handle vessels quickly enough. Just for Durban, the congestion figures show there is around nine days’ worth of cargo waiting outside the port — desperately needing to be offloaded.
“This is affecting the time and cost of doing trade, especially for small and medium enterprises, who cannot afford to add two weeks to their lead times, especially around this time of year, which is notoriously busy for shipping and moving cargo,” said Van Rensburg.
Meanwhile, Transnet Port Terminals warned on Friday that it may suspend the processing of trucks bringing cargo into Richards Bay. It said only trucks carrying cargo for vessels that are ready for loading or offloading would be permitted to proceed.
Acting Transnet group CEO Michelle Phillips said the SOE was considering this drastic step to avoid bottlenecks on roads leading to the Richards Bay port. “There are trucks coming into the port, some legally and some illegally. We are saying if we are unable to control the situation, unfortunately, we are going to have to stop the trucks,” she said.
— Additional reporting by Dineo Faku
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