Port Congestion was a sore point for many customers globally during COVID-19 with many ports around the world being affected. The South African market has not been an exemption to this Port Congestion. It has been an unwelcome but regular visitor to the South African ports and is back again as of November 2023.
The Port of Durban, the erstwhile gateway to Southern Africa, one of the biggest ports in Africa and a main hub for South Africa is currently mired in a congestion crisis of unprecedented scale.
The backlog is so severe that importers are facing delays of over 20 days for offloading cargo, casting a shadow over the anticipated Christmas rush. The current waiting period for ships is a threefold increase from typical turnaround times, signalling a logistical nightmare in the making.
The root cause of these delays lies in the continued underperformance and lack of infrastructure planning by Transnet, the custodian and operator of all South African ports.
Despite some improvements, the ports of Ngqura, Durban and Cape Town are still ranked unfavourably on a global scale for efficiency ranking 338, 341 and 344 respectively out of 348 ports as ranked by the World Bank as part of their Container Port Performance Index 2022.
The inability of these ports to keep pace has prompted a diversion of cargo to other ports like Maputo which outranked the above ports by more than 90 places (248), eating into South Africa’s export traffic volume.
Port Congestion Surcharge
To mitigate the additional expenses borne due to the congestion, including increased fuel consumption and maintenance costs the giants of the container shipping world, Mediterranean Shipping Company (MSC), Maersk, CMA-CGM, and Hapag Lloyd all have announced that they will be implementing a “Port Congestion Surcharge” or PCS of varying quantum.
From December 2023, MSC will charge USD210/TEU to customers while Maersk, CMA CGM & Hapag Lloyd will all charge USD200/TEU as Port Congestino Surcharge.
Port inefficiencies leading to congestion
There have also been reports about rumours of a labour go-slow at Durban, with speculation that it is a resistance movement against the introduction of private sector operators in port terminals, which has been refuted by Transnet emphasizing that there is no deliberate slowdown.
As per industry experts, the main reason for the congestion currently ranges from lack of maintenance/repair of yard handling equipment, STS gantry cranes hanging around for long periods waiting for containers to be ‘found’ and moved to the ship, to the wind factor, excessive rain, and berth maintenance.
Port productivity across SA ports is said to have dropped gradually from 18 to 14 moves per crane hour currently sitting at 4 to 5 moves resulting in poor productivity, slow ship turn-around, slow evacuation of imports, empty repositioning, and slow output of exports.
While the situation in Durban and Cape Town has mostly affected the movement of container cargo, Richards Bay has been hugely affected due to berth maintenance in addition to weather delays.
Industry people are expecting that it will take at least until mid-Jan to clear the back log. You can see the current situation in the above map from Marine Traffic.
The economic impact of the port congestion
The economic implications of this congestion and impending surcharges extend beyond the docks into the heart of South Africa’s economy as South African shippers will now be paying a premium well above the global average.
The port congestion is symptomatic of larger logistical inefficiencies plaguing the nation, with an estimated economic impact running into billions. The financial burden of these delays will permeate through the supply chain, impacting businesses and consumers alike.
While Transnet has expressed a commitment to resolving the issue, advocating for increased dialogue with stakeholders and reviewing the implementation of congestion surcharges, the challenges are manifold, mostly relating to equipment malfunctions and a container booking system which is archaic, compounding the existing bottlenecks.
While there is a consensus on the need to shift cargo from road to rail to alleviate some strain on the ports, this transition is hindered by the dilapidated state of the rail infrastructure which is also run by Transnet.
It has been reported that the estimated collective cost of port and rail failures over the last 18 months is in the region of R150 billion while the collapse of Transnet is set to cost the country R1 billion a day in economic output which is the equivalent of 4.9% of SA’s annual GDP.
The establishment of a National Logistics Crisis Committee by President Cyril Ramaphosa is a step towards remedying the situation, but the urgency for action remains high.
Shipping lines for their part are forced to adapt to this situation by reconfiguring their liner services including cancelling ship calls to SA and overhauling services using feeder services to tranship the goods to SA from other regional ports.
These schedule adjustments are set to increase transit times which may hit key export industries especially shippers of fresh produce.
Stay tuned for updates on this evolving situation.