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Over 90 South African vessels stranded, costing economy billions daily

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South African

Tulani Ngwenya

Durban – The South African Association of Freight Forwarders (SAAFF) has issued a stark media statement addressing the current logistics crisis crippling the nation’s commercial ports, outlining severe economic repercussions, and urging collaborative efforts for a swift resolution.

According to the statement released on November 20, 2023, a staggering 96 vessels are stranded at anchorage outside South Africa’s commercial ports, presenting a dire situation for the nation’s logistics network. SAAFF revealed that the economic toll is staggering, with direct, sunken costs amounting to a jaw-dropping R98 million daily, coupled with indirect costs reaching at least R26 million per day. The crisis is impeding the movement of goods worth a colossal R7 billion every day.

In the words of the SAAFF, “The current situation must be put into perspective.” The association emphasises that the ongoing crisis surpasses the impact of last year’s October strike, attributing the situation to adverse weather conditions, equipment breakdowns, and shortages. While improvements have been noted in Cape Town and Port Elizabeth, Durban terminals remain severely delayed, with wait times reaching up to nine days.

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To contextualise the economic impact, the SAAFF states, “The additional direct logistics cost alone sits at a minimum of R48.5 million per day. This amount rises to R98 million per day when port congestion surcharges for containers in the queue are applied.” Additionally, the association draws attention to the opportunity cost of indirect logistics costs that impede the daily flow of goods valued at least R7 billion. Additional time delays incur indirect costs ranging from R26 million to possibly R165 million.

The international shipping industry, likened to a bus schedule, is currently disrupted as the extensive queue prevents the honouring of shipping lines’ commitments. In response, port congestion surcharges are being implemented, and cargo owners, particularly small and medium-sized enterprises (SMMEs), are adversely affected.

In the words of the SAAFF, “We must improve operational efficiency and increase throughput, or else the trade, transport, and logistics industries will continue to curtail desperately needed economic growth for South Africa.” The association stresses the need for a collective effort involving Transnet, the government, and the private sector, emphasising urgency and swift action to prevent further economic setbacks. The SAAFF calls for a revolutionised operating model and improved collaboration to ensure the smooth operation of commercial ports, vital for South Africa’s economic growth.

Meanwhile, the Durban Chamber of Commerce said Transnet’s 18 to 24-month turnaround plan “will kill the country’s economy”.

The Chamber put forward a proposal from shipping companies to the government to buy the equipment needed to fix the challenges facing Transnet over the long term and recoup their investment through relaxed surcharges.

Transnet board chairperson Andile Sangqu, speaking at a media briefing on Monday, said that they were working on a number of measures to turn the situation around but cautioned that this would take some time as the lead times for some of the equipment could be up to two years.

“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 under-investment in equipment and its maintenance,” Sangqu said.

The Port of Durban is one of the busiest in Africa, but it is also one of the most congested with an exponential increase in delayed hours, according to the Chamber, ranging from 39 hours (January), to 96 hours (July), 194 hours (August) and 364 hours (September).

The South African Association of Freight Forwarders (SAAFF), in a statement this week, also spelt out the massive daily costs to shipping companies at the country’s ports – 96 vessels waiting at anchorage outside commercial ports, directly costing the economy R98 million a day in direct, sunken costs, at least R26m a day in indirect costs, and impeding at least R7 billion worth of goods from moving every day.

The Chamber also wants chambers and businesses, including the shipping lines, to be on the national logistics crisis committee, and an independent engineering consulting firm with strong project and programme management expertise to be appointed to run the equipment.

The Chamber’s CEO, Palesa Phili, said as organised business they were opposing the privatisation of the container terminal but had suggested the solution that shipping companies buy the equipment needed and Transnet charge less for the docking of ships at port.

Phili said the delay at the port of Durban meant an estimated 35 000 containers were stuck at sea.

“As organised business, we believe this delay is due to lack of equipment maintenance, failure to buy equipment and run the straddles, stacks and tugs effectively.

“Furthermore, the lack of maintenance and ageing equipment continues to disturb port operations,” Phili said.

Phili said the exponential increase in delayed hours was unacceptable as businesses had to bear the brunt of these delays.

“The delays are costing the shipping companies an estimated R7m, resulting in job losses and leading to a negative economic impact across crucial economic value chains and sectors.

“Our members in the clothing and textile sector, automotive sector and producers of major appliances have been stuck for the past 12 days. We need tangible reforms to turn around Transnet.”

She said the ports could not wait 18 to 24 months for a turnaround but needed immediate solutions.

Transnet did not respond to requests for comment on the Chamber’s statement. SAAFF said there had been an improvement in Cape Town and Port Elizabeth in recent days but Durban terminals remained severely delayed at around nine days.

It said the congestion at ports was the reason why shipping lines were choosing to ship cargo to and from South Africa via the hub port of Port Louis in Mauritius.

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