South Africa can play an important regional role in container trade

Ports, in any part of the world, are critical enablers of a country’s competitiveness. In a global economy led by market-run supply and demand, ports today need to be oriented towards supply chains to meet the changing needs of their customer base. This is the premise behind Transnet’s strategy for managing port and intermodal demands in the modern economy.
At the Annual Railways and Harbours Conference held recently in Cape Town, South Africa, Transnet Port Terminals’ Senior Manager: Strategy, John Oosthuizen, presented the company’s two supply chain focused strategies for ports and rail, namely an integrated corridor strategy that will align port and rail capacity and operations, and a container hub strategy that will provide supply chain benefits not only to cargo owners but to Sub-Saharan Africa as a whole.
“At the core of these strategies is the need to develop port infrastructure at all levels,” said Oosthuizen. “Ports, besides providing the basic infrastructure foundation of a country’s international trade, are the umbilical cord linking local markets to global supply chains. The efficient transportation of goods in international trade is vital for the economic welfare of a country. Efficient ports are directly proportional to national economic competitiveness.”
He added that as a vital cog in the supply chain, ports needed to evolve along with the economic environment they support.
“Globalisation of production and consumption has led to rapid development of the supply chain and the role of modern ports is now more related to efficient distribution of products than simply loading, offloading of ships and berth availability. A supply chain strategy for ports therefore needs to be orientated towards the changing needs of customers in order for ports to fulfil their new role in the chain,” he said.
Oosthuizen pointed out that African ports shared some of the highest global logistics costs per TEU with poor infrastructure only adding to these costs. However, bar Mauritius, South Africa is still cheapest in Africa and the most accessible via most trade routes.
Several countries and international terminal operators in the Sub-Saharan region are pursuing hub capacity developments in spite of the current economic situation, acknowledging that developing south-south trades, changing trade route dynamics and growing regional volumes offers opportunities for regional transhipments and interlining.
“South Africa itself can play an important regional role in container trade through the establishment of a container hub which boasts transhipment volumes as well as gateway volume to feed cargo to other destinations in Africa including ports within South Africa,” said Oosthuizen.
This would generate additional economic activity and employment opportunities, stimulate growth, and increase national trade competitiveness through economies of scale, scope, and density.
Transnet is actively pursuing such a hub strategy, seeking to grant the South African economy access to the global markets and lowering the cost of doing business in South Africa. To that effect, it will start operations in Ngqura later this year, as the port ideally placed to attract transhipment cargoes through state of the art operations and facilities and a deep draft, thus offering an effective initial base for hub activity.
“We will however continue the development of existing ports like Durban and Cape Town to satisfy the market ahead of demand in the spirit of a complementary port system,” said Oosthuizen.
He said in the short term Transnet would provide capacity by focusing on efficiency and maximising the use of existing assets, by engaging with customers and other stakeholders and by sourcing seed volumes for the hub.
“As a focused freight transport company, we remain committed to delivering integrated, efficient, safe, reliable and cost-effective services to promote economic growth in South Africa. This is to be achieved through increasing our market share, improving productivity and profitability and by providing appropriate capacity to our customers ahead of demand,” he said.
In these recessionary times container volumes have declined rapidly all over the globe with decreases of as much as 24% in Hong Kong and 7% in major US ports creating excess vessel and port capacity and plummeting sea freight rates.
Global container growth averaged 10% over the last 10 years, however for 2008 volume growth fell to 8% with the sharpest decline seen in December. According to the Drewry Container Forecaster Annual Supplement, growth for 2009 is expected to be at 3.1%, recovering to 7% in 2011/12.
Transnet is however hopeful that it will have created sufficient capacity when the market turns, with several ambitious terminal investments and operations improvements earmarked across a number of key corridors.
These include the Cape Corridor or Capecor connecting the Port of Cape Town with Gauteng, where  the Cape Town container terminal is currently undergoing expansion and the multipurpose terminal undergoing refurbishment; the Natal Corridor or Natcor which connects the Port of Durban with Gauteng and includes upgrades of the Durban and Pier 1 container terminals, the Durban car terminal, Agriport and Maydon Wharf; the Richards Bay Corridor which connects Richards Bay with Gauteng and includes a coal line expansion and re-engineering of the dry bulk and multipurpose terminals, and  the South corridor of the Eastern Cape hinterland where the Port of Ngqura and its container terminal are currently being constructed. 

Source: Portnews