17th March 2022
Many unexpected logistical and political challenges: GoGlobal helping others.
There is a Chinese saying that goes: “If you want happiness for an hour, take a nap. If you want happiness for a day, go fishing. If you want happiness for a year, inherit a fortune. If you want happiness for a lifetime, help somebody.” For centuries, the greatest thinkers have suggested the same thing: Happiness is found in helping others. There are a myriad of statistics on this subject which all conclude that the happiest workers around the world are ones who contribute to making a difference in some way. Despite the many unexpected logistical and political challenges which have plagued this industry and the world at large, once thing stands out, certainly for us here at GoGlobal, that we are united as a team to the cause of helping others: our clients, our service providers and our colleagues who are both friends and family at the office. Our weekly updates are a small gesture towards hopefully making a difference and empowering those who need to be in the know. So without further adieu…
Local Ports
SOUTH AFRICA
LOAD SHEDDING
Power utility Eskom has warned that the power system remains compromised, despite having recovered sufficiently to suspend all load shedding. Eskom brought load shedding to a halt on Sunday evening following a tumultuous week for the energy giant, where it lost at least 20 000 megawatts of generation capacity, forcing it to implement stringent Stage 4 load shedding. The power utility added that although load shedding had an impact on all sectors, it is “ unfortunately, at times, becomes necessary to implement load shedding in order to protect the system and prevent a blackout.” While we are sitting in the dark, Eskom are also tackling issues of theft and vandalism of infrastructure, where an employee was recently arrested for allegedly stealing at least 40 pieces of structural cross-members of a pylon at the power utility’s academy. The employee was nabbed when he allegedly attempted to sell the units to a scrap metal dealer.
TRANSPORT
The National Bargaining Council for the Road Freight and Logistics Industry (NBCRFLI/Council) has proposed extreme measures of ‘shutting the industry down’ for a period of time” until the “senseless attacks” on the freight industry stopped. This comes after local truck drivers, embers of the All Truck Drivers Forum and Allied South Africa (ATDFASA), marched to the bargaining council offices last week, in various provinces, to demand that the industry does away with the employment of foreign nationals. These threats runs parallel to governments efforts in trying to resolves matters relating to ongoing truck shutdowns.
International
Changes are ongoing due to the volatility of the current situation.
NAMIBIA
The strong historical link Namibia has with South Africa, the complete absence of language barriers and the relative ease of doing business, make it a go-to country for shippers looking for logistical alternatives across the region. In terms of imports, South Africa, Zambia, DRC, UAE and Bulgaria were the major source of imports for Namibia, with these markets supplying Namibia with 69.7% of all imports required by the country. China emerged as the main export market for Namibia, absorbing 32.3% of all goods exported, ahead of South Africa in the second position with a market share of 18.3% of total exports to the Far East.
ZIMBABWE
The latest throughput figures recorded from dawn to dusk at Beitbridge supports the notion that the recent introduction of standard operating procedures (SOPs) at the border post is continuing to prevent congestion. The figures reinforce, and speak to the effectiveness of SOP’s currently used at the border, such as separating transporters complying with preclearing requirements from those who aren’t. The figures of non-compliant hauliers removed into truck waiting areas also appear to be tapering off and this could suggest that the penalties recently introduced by Zimbabwe for idling at the border, due to clearing documents and the like that are not in order, are having the desired effect.
MAPUTO CORRIDOR TALKS
The trade barriers at the notoriously problematic transits of Lebombo and Ressano Garcia, were tabled for discussion by the two heads of state, Presidents Cyril Ramaphosa and Mozambican counterpart, Felipe Nyusi, last week, in a bid to looking at ways of unlocking the corridor’s true potential and increasing the logistical efficiencies between South Africa, Mozambique and the Port of Maputo. While the implementation itself, of the over 70 bilateral agreements between the two sister republics was being reviewed, it was agreed that the operation time at Lebombo border post will be extended to 24 hours, in order to cope with the trade activities between the two countries and the increase on the fleet of trucks to Maputo. This intervention may provide little hope in the midst of contentious customs practices and non-tariff barriers, which have only heightened the antagonism and cross-border issues. An example being Mozambique’s Transport Important Permit (TIP), which used to be valid for a month, but now has to be renewed each time a transporter sends a truck into Mozambique. In the meantime, South African citrus farmers in Limpopo are on the verge of starting their next export season but, despite Maputo being much closer, might have to send fruit all the way to the Port of Durban because of congestion and ‘TIPping’ corruption at the corridor’s crossing.
And Abraod
RUSSIA/UKRAINE
As the conflict with Russia and Ukraine heightens and sanctions are imposed by the US and European countries, Russian shoppers are flocking to Victoria’s Secret stores to stock up, with the news that this major western brand is pulling out of Russia. With priorities slightly askew, depending on which way you look at it, perhaps they should be stocking up on essentials as their economy has been hard hit from the conflict and trade supplies being cut off. The price of Brent crude, the global benchmark for oil prices, rose to around USD130 a barrel last week, following reports that the US and UK will announce its own ban on Russian oil imports. Russia is the world’s second largest gas producer and third largest oil exporter, generating huge sums from the sales thereof, and any move to impose sanctions on its energy industry would badly damage its own economy. Russia is threatening a tit-for-tat embargo – cutting off its gas exports if the West goes ahead with a ban on Russian oil. But despite pressure from the US, such a ban is unlikely. European leaders have already snuffed the idea, so Russia’s counter-threat carries relatively little weight.
- Currently all shipments that are sitting in Rotterdam are going to be severally delayed due to customs checking all containers;
- Transhipment through other EU ports i.e. Antwerp and Hamburg, are also experiencing the same delays due to all EU ports imposing additional sanctions against Russia;
- Vessels are also struggling to berth in St Petersburg, which is primarily subject to the country in which the vessel was registered. This could mean additional approval processes may be implemented before the vessel can berth;
- Maersk are urging clients to COD their Russian destined containers due to the delays and challenges in berthing in Russia. They will waiver the COD fee, however the client will be responsible to settle any restow and related charges. They are also advising clients to look at the shelf life the products on the water to determine if it can withstand further delays and if not, then COD the cargo.
LATIN AMERICA
The main disruption for Latin American traders comes from increased shipping costs and long delays to products arriving at their destinations. Latin American exporters of fruit, meat, and other perishables were not critically affected by delays until mid-2021, with perishable goods being shipped through direct routes which often avoid bottlenecks. Delays on imports of inputs and shortages of raw materials will continue to affect Latin America’s manufacturing output in the one-year outlook. Latin American exporters of perishable agriculture goods face shortages and high prices of fertilizers into early 2023. Strikes by truck drivers’ associations in Argentina, Brazil, Chile, and Peru are also an additional risk.
NORTH AMERCIA
Fuel price spike reshaping US shipping networks as the crude oil price surged to the highest in almost 14 years last week, after the US and the UK said they will ban Russian oil imports.
The large North American railways cannot shake off accusations of profiteering from supply chain congestion. Like ocean carriers, they have allegedly raised and imposed demurrage fees to boost profits.
MIDDLE EAST
Ramadan 2022 will begin in the evening of Friday, 1 April and ends on the evening of Saturday, 30 April.
FAR EAST
Ocean carriers are scrambling to adjust their trade networks, as Shenzhen, a major tech hub in southern China, began a week-long lockdown. With China’s zero-tolerance Covid-19 policies, Major cities in China have placed fresh restrictions on business activity to fight the outbreak, and companies have been ordered to halt all non-essential business activity or have employees work from home. This will no doubt cause further delays to both road, air and sea shipments post Chinese New Year.
SHIPPING LINES
- Maersk is selling its stake in a publicly traded Russian ports operator, whose market value has plunged in recent weeks owing to the war in Ukraine;
- DAL agrees to the Hapag-Lloyd acquisition deal. Established in 1890 and headquartered in Hamburg, DAL runs containerised cargo using four liner services between Europe, South Africa and the Indian Ocean. Only last year, Hapag-Lloyd had acquired Africa-specialised carrier NileDutch, which significantly strengthened the carrier’s presence and service offering to and from West Africa. The completion of Hapag-Lloyd’s buy-out of DAL is still subject to the approval of the relevant antitrust authorities;
- ONE: Japanese container line ONE has suspended all cargo bookings in and out of major Russian and Ukrainian seaports due to the effects of the Russian invasion of Ukraine.
- MSC advised on the 1st March that it had introduced “a temporary stoppage on all cargo bookings to/from Russia, covering all access areas including Baltics, Black Sea and Far East Russia.”
- CMA CGM have joined Maersk, MSC, Hapag-Lloyd and Ocean Network Express (ONE) in suspending bookings for Russian cargo, with the exception of foodstuffs, medical, and humanitarian supplies.
AIRFREIGHT
- Zambia, Zimbabwe and South Africa were the most affected in terms of capacity due to the flight restrictions that were imposed on the region at the outset of the Covid Omicron variant. More than half of all the air freight in the world usually travels via ‘belly cargo’ in the holds of passenger planes, but with far less of that space available, airlines have been scrambling to convert passenger aircraft into freighters, and bring older models out of retirement.
- Sending goods by air has always been expensive, but now it is more expensive than ever. In addition to increasing oil prices, ripples from the war are already disrupting air cargo – especially Asia-Europe operations. Fighting has grounded much of the Ukrainian Antonov freighter fleet and has destroyed the world’s largest freight aircraft, removing that capacity from the market. European, American, and other carriers who do fly, will take alternate, longer, more costly routes. Carriers will pass along the additional fuel costs and many are already introducing War Risk Surcharges to compensate for the costs of adjusting operations. Cargolux, for example, announced a $0.20/kg surcharge for all their Asia cargo.
