Welcome to another Logistics News Update.
The logistics buzzword of the week seems to be “delay.” Delays are being experienced globally in international logistics, so it’s crucial to be prepared and plan effectively.
Recent shipping data highlights significant delays at the Port of Durban, with ships waiting an average of 8 days (189 hours) (reported by BUSA last week) to dock after arriving last week. Additionally, adverse weather has halted all ship passage through the Cape Horn since July 8, 2024. Despite weather-induced disruptions last week, the port is gradually resuming operations. The Cape Town Container Terminal continues to face challenges due to high swells.
Important to note sailing times have changed: Pre-Covid, the standard shipping time from China to South Africa was around 25-30 days. Currently, total shipping time has increased to about 44-45 days, representing a 50% rise compared to pre-Covid times. Please factor these delays into your planning, considering the time required to place an order, load it into a container, and ship it. A practical guide for importers is to take the estimated time of arrival (ETA) and add 14-21 days to determine when you will receive the goods. This affects exporters as the vessels arriving later and the delays at the ports need to be factored in.
Forex Tip of the week – Incoterm Ex-Works
Ex Works (EXW)What Is Ex Works (EXW)? And what are the risks?Ex Works (EXW) is an international trade term that describes when a seller makes a product available at a designated location (normally their factory/warehouse), and the buyer of the product must cover the transport costs.Understanding Ex Works (EXW)Ex Works (EXW) requires a seller to safely package goods, label them appropriately.Once the buyer has the goods, it is up to the buyer to cover any expenses and account for any risks that pertain to the goods. Risks could include loading the products onto a truck, transferring them to a ship or plane, dealing with customs officials, unloading them at their destination, and storing or reselling them. Even if the seller helps the buyer by loading the product onto a ship, it’s still up to the buyer to pay if anything goes wrong during the loading.
On The Ground Report
- Due to the bad weather this past week in Durban and Cape Town, there are extended delays due to this.
- Split berthing issues continue to cause disruptions for importers.
- Transporters face difficulties securing bookings, impacting their planning.
Disclaimer: Please note: All information presented in this newsletter is based on reputable sources and has been referenced accordingly, this Logistic News is obligation free and if you wish to be removed from the mailing list, please reply to this mail requesting to be removed – all news is adapted or specifically quoted
NEWS
Ramaphosa and Creecy commit to supporting logistics sector
15 July 2024 – by Staff Reporter
South Africa’s President Cyril Ramaphosa and Transport Minister Barbara Creecy have expressed strong support for the freight and trade industry amidst ongoing challenges that are hampering economic growth and job creation. Speaking at the Climate Resilience Symposium in Pretoria, President Ramaphosa highlighted the recent closure of the Port of Cape Town due to extreme weather, emphasizing the significant impact of such disruptions on the country’s economy, particularly the agricultural sector, which is currently the most successful economic sector in South Africa.
President Ramaphosa noted that prolonged port closures and delays in transit for perishable goods result in substantial losses for exporters and have a cascading effect on the entire agricultural industry. The closure of the port during the busy fruit export season has underscored the urgent need for climate resilience and more robust infrastructure to mitigate the effects of extreme weather on key economic activities.
Adapted from Source: Freight News – here
Vessels wait 189 hours at anchorage at Port of Durban
12 July 2024 – by Staff Reporter
The Port of Durban’s container terminal (DCT) continues to be underserved by the amount of straddle carriers in service compared to the number of carriers required to boost box handling.
According to the latest throughput data collated by the South African Association of Freight Forwarders (Saaff) and Business Unity SA (Busa), 50 straddles were in service at DCT Pier 2 on July 11.
It translates into decreased capacity compared to just over a week ago when Absa’s Purchasing Managers’ Index (PMI) red-flagged equipment shortfalls as a primary reason for slowed cargo movement at the port. It was found then that out of 67 straddle carriers that should be available, only 55 were in operation.
Adapted from Source: Freight News – read the full here
PORTS
South African Port Delays Summary (as of July 16, 2024)
Shipping schedules: Expect disruptions due to blank sailings, port omissions, rollovers, and last-minute changes.
Weather and Other Delays
This week, strong winds and heavy rain have significantly disrupted operations in Cape Town. A.P. Moller-Maersk had previously warned customers of potential shipping delays due to extreme weather conditions, which materialised as expected. An intense cold front brought snow to some areas, damaging coastal infrastructure with strong winds, rains, and waves.
During a turbulent voyage around South Africa, the CMA CGM Benjamin Franklin lost 44 containers overboard and sustained damage to another 30 containers due to unexpectedly severe weather conditions. This incident has caused significant disruptions to shipping schedules. Additionally, the 18-member crew of the MV Ultra Galaxy was rescued northwest of Cape Town after their emergency beacon was detected.
Durban also experienced operational delays due to equipment breakdowns and shortages, compounded by strong winds. In the Eastern Cape, strong winds and vessel ranging contributed to further operational delays. However, the Port of Richards Bay reported minimal delays this week.
Port Delays:
- Durban:
- Pier 1: 11-13 days delay
- Pier 2: 10-18 days delay
- Durban Point: 3 days delay
- Booking appointments are difficult due to high container volume.
- Cape Town:
- CTCT Terminal: 0-2 days delay (expect delays to increase)
- MPT Terminal: 0-2 days delay (expect delays to increase)
- Port Elizabeth:
- PECT Terminal: 1-2 days delay
- NCT Terminal: 0-3 days delay
Overall: Significant delays are happening in Durban and expected to worsen in Cape Town due to recent bad weather. Port Elizabeth has some delays, but less severe. Booking appointments are difficult in Durban.
Container freight rates seem to have peaked out of the East; however, it is important to book any cargo from the East at least 3 weeks before you need the booking, this will secure your booking. One report read “The first cracks in the incredible container boom of 2024 are emerging with shippers ready to bargain hard.” We should only see rates coming down after October 2024.
Global Container Freight Rates
Container freight rates have stabilised this week, as Drewry’s “World Container Index” increased by ↑0,6%. It is up by $33, trading at $5 901 per 40-ft container.23 For charter rates, the Harper Petersen Index (Harpex) has also stabilised and increased this week by almost the same magnitude as spot rates, with the index trading at 1 990 points on Friday, up by another ↑0,8% (w/w) and ↑65% (y/y) compared to this time last year.24 The following figure shows the movement of both of these indices since the start of the year: The average price for shipping a 40ft container is now ↓43% lower than the pandemic peak in September 2021 but still ↑315% higher than the pre-pandemic average in 2019. Year-to-date, the average composite index is $3 744 per container, significantly above the 10-year average by $981, influenced by high rates during the 2020-22 COVID-19 period. While freight rates for some routes like New York to Rotterdam and Shanghai to New York have recently increased, others like Rotterdam to Shanghai have declined, with Drewry forecasting continued high rates through the peak season.
Container freight rates seem to have peaked out of the East; however, it is important to book any cargo from the East at least 3 weeks before you need the booking, this will secure your booking. One report read “The first cracks in the incredible container boom of 2024 are emerging with shippers ready to bargain hard.” We should only see rates coming down after October 2024.
BUSA-SAAFF Summary
The latest trade figures for South Africa, released by UNCTAD, indicate a significant decline of approximately 8% both quarterly and yearly. This underscores the critical need for an efficient logistics network, which has been lacking in South Africa. While logistics operators cannot generate more trade, they play a vital role in facilitating it. Efficient logistics systems are crucial for economic prosperity, streamlining global value chains, and enhancing the ease and cost-effectiveness of international trade, a major contributor to global GDP.
A robust logistics infrastructure reduces trade costs and timelines, boosting trade volumes and driving economic growth. This virtuous cycle is essential for trade-dependent nations like South Africa, where improved logistics can significantly uplift socio-economic standards. Effective participation in global value chains is not just strategic but necessary for socio-economic advancement. For South Africa, optimising logistics performance is key to achieving higher economic development through international trade.
Adapted from :BUSA
This week’s news was brought to you by:
FNB First Trade 360 – a digital logistics platform and Exporters Western Cape
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