18


SOUTH AFRIcA


ISSUE 3 2010


Safmarine: strong away record makes up for weakness at home


While Safmarine has been seeing good overall growth in its African business, it has been a difficult couple of years in its South African home market, says Africa Region Executive, Jonathan Horn. East and West Africa’s largely commodity driven export volumes grew in 2009, despite the recession whereas South African exports were well down in 2009. In the first 4-5 months of 2010, the South African market has shown some growth too, but not at the same levels as the other African regions’ double digit increases. Rates on the South African


trades were the first to fall in late 2008 and early 2009, adds Jonathan Horn. “We have also seen rates lifting during the first half of 2010 - this is positive news for the industry, although rate levels are still some way


below where they need to be to ensure sustainable profitability. Rates in several trades are in fact currently still below the levels they were in 2008. We certainly foresee further rate rises across almost all trades in the months ahead.”


Imports into South Africa mirrored exports with a contraction in volumes; growth in the South African market was in fact stronger than in the other regions during the first 4 - 5 months of 2010, but this was due solely to the World Cup.


Overall, says Jonathan Horn, business confidence in Africa seems to be increasing and the continent is consuming and spending more even though economic growth has not yet returned to 2008 levels. “We see both Government


and private investment in Africa becoming stronger as confidence returns to world markets.” He expects trade volumes to continue to grow in the second half of 2010. More providers are serving


the market and increasing their footprint across the continent. “This is certainly positive as it will assist in further opening up the continent to trade and investment,” says Mr Horn. The hazards of doing business


in Africa are often exaggerated, he adds. More could be done to talk up the continent’s success stories to counteract all the tales of risks and scams. Perhaps because of this negative perception in the West, many of the firms that have taken advantage of the opportunities in Africa are Asian, not European. China in particular is still investing heavily in Africa’s much neglected transport and communications infrastructure. From a Safmarine perspective,


Asia has surpassed Europe as Africa’s biggest trading partner volumetrically, and now accounts for over 40% of its total cargo movement between Africa and Asia. The recession has brought


new commercial realities, Mr Horn continues. Companies have removed costs and buffer stocks and many products “are going to move in both different quantities and from different locations. There is an increased visibility requirement in the supply chain, demanding closer cooperation between shippers and shipping lines. Reliability has


become more important, there is less room for error or lack of predictability and it is becoming increasingly important for shipping lines to keep customers proactively informed about the status of their cargo.” Safmarine


has been


continuing to add to its portfolio of services. While many of these developments are outside South Africa itself, Safmarine is launching a direct container service between the Far East and West Africa via South Africa, in conjunction with Maersk Line. FEW3 was due to launch in August 2010 and will complement the existing FEW 1 and FEW2 direct West Africa/Far East routes. Safmarine’s Africa trade


director, Dirk Geens says the FEW3 service’s call in Durban will also be used to offer additional space between Southern Africa and the Far East as well as Intra- Africa. Calls will include Shanghai,


Yantian and Nansha in China, Tanjung Pelepas in Malaysia, Durban in South Africa before heading for Pointe Noire in Congo,Tin Can Island (Lagos, Nigeria) and back to Durban and Shanghai. In a slightly earlier development,


Safmarine


further enhanced its ‘225’ fully- containerised service between South African and West Africa with a direct call at Cotonou in Benin. Frequency has been improved from every 16 days to 13 days after adding a third vessel.


Jonathan Horn adds that capacity is under pressure to and from the Far East and vessels are running at very high utilisation levels. Turning to Europe, while a


strong South African Rand has hit export reefer volumes to Europe, exporters are now cautiously optimistic that European volumes will pick up in the second half of 2010. Greg Rohrs, Safmarine’s


national reefer executive says: “Overall reefer volumes are down, and the Europe trade has taken the biggest knock. This said, citrus exports have seemingly bucked the currency trend and, thanks to a good season, volumes and liftings for citrus to date are on par with 2008 volumes.” Rohrs says overall year to date


reefer export volumes out of South Africa to Europe are down by 17%. This may reflect the economic situation in Europe, but it’s also because South African apple and pear exporters are achieving better returns in the Far East and in Africa. “There certainly has been a change in destination focus - from Europe into the Far East - this year.” Weather conditions in South


Africa have also played their part, as has the industrial action in South Africa’s ports that ended in late May, which delayed cargo, led to equipment shortages and increased exporter costs. However, according to Rohrs,


“The dedicated Reefer Express (REX) service has helped to clear some of the backlog caused by the labour dispute.” The REX service was reintroduced from February to August this year to cater for an anticipated seasonal increase in refrigerated cargo volumes. it will be reintroduced next year, subject to demand. Safmarine’s South Africa trade


director Alex de Bruyn adds that overall traffic (reefer and non-reefer) is expected to grow by 2.5-3% southbound and 2% northbound. This is chiefly on the back of a recovery in car industry-related volume, which has picked up well in 2010 after a sharp decline in 2009. The Transet strike did have


a major impact, especially on South Africa’s exports and Safmarine incurred considerable extra costs including deploying extra ships to clear the backlog once the strike was over.


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