REGISTRATION NUMBER: 2014/042417/08 PRESIDENT: Sipho M Pityana VICE PRESIDENT: Martin Kingston CEO: Cas Coovadia NEDLAC CONVENOR: Kaizer Moyane DIRECTORS: Angela Russell, Bongi Kunene, Busisiwe Mavuso, Christopher Campbell, Deidre Penfold, John Dludlu, John Purchase, Roger Baxter, Stavros Nicolaou, Zoleka Lisa

NATIONAL OFFICE 61 Katherine Street, Sandton, 2196

P.O. Box 652807, Benmore, 2010 www.busa.org.za +27 11 784 8000

PARLIAMENTARY OFFICE

9 Church Square, 1st Floor Graaffs Trust Building, Cape Town, CBD

COVID-19: Cargo movement update Date: 6 November 2020

About this update

This update — the 14th of its kind — contains a combined overview of the flow of air, sea, and road freight

to and from South Africa in the last week. The report provides a consolidated view of the different modalities

published earlier by the Business for South Africa supply chain team.

Weekly snapshot Table 1 - Port volumes and air cargo flows compared to last week

Flows Current1 Previous2

Growth Import Export Total Import Export Total

Port Volumes (TEUs) 27 263 26 297 53 560 30 121 36 273 66 394 ↓19%

Air Cargo (tons) 4 321 3 202 7 524 4 464 3 282 7 746 ↓3%

Monthly snapshot Figure 1 - Monthly3 cargo flows compared to the same period in 2019

Key Notes

• An average of ~7,651 TEUs were handled a day over the course of the last week, ↓19% from last

week.

1 ‘Current’ means the last 7 days’ (a week’s) worth of available data. 2 ‘Previous’ means the preceding 8-14 days’ (a week’s) worth of available data. 3 ‘Monthly’ means the last full months’ worth of available data compared to the same month in 2019 (in this case Sept 2020 versus Sept 2020; except for air cargo, as well as containers, which compares the most recent month Oct/Nov 2020 versus Oct/Nov 2019).

79%

120%

139%

146%

52%

74%

33%

0% 50% 100% 150% 200%

Containers (TEUs)

Dry bulk (MT)

Liquid bulk (MT)

Breakbulk (MT)

Vehicles (Units)

International Air Cargo

Domestic Air Cargo

2

• International air cargo volumes have decreased by ↓3% since last week, currently at ~91%

compared to pre-lockdown levels, and ~74% compared this time last year. Domestic cargo is ↑2%

from last week.

• Regionally, cross-border road transport into Zimbabwe continues to be delayed, with average queue

time around 74 hours or (three days) and average border crossing times at around 23 hours.

• Global freight rates have increased by ↑0.5% for the week, with the WCI now at $2,627.94 per 40’.

Ports Update

This section provides an overview of the flow of containerised cargo to South Africa’s commercial ports.

Container flow overview

The following two tables indicate the container flows for the last 7 days, as well as the projected container

flows for the next 7 days.

Table 2 - Container Ports - 7-day flow forecasted for 31 October to 6 November 4

7-day flow forecast (31.10.2020 - 06.11.2020)

TERMINAL NO. OF CONTAINERS TO DISCHARGE (IMPORT)

NO. OF CONTAINERS TO LOAD (EXPORT)

DURBAN CONTAINER TERMINAL PIER 1: 3 945 5 211

DURBAN CONTAINER TERMINAL PIER 2: 13 707 9 643

CAPE TOWN CONTAINER TERMINAL: 3 796 5 451

NGQURA CONTAINER TERMINAL: 5 645 5 752

PORT ELIZABETH CONTAINER TERMINAL: 170 240

TOTAL: 27 263 26 297

Source: Transnet, 2020. Updated 06/11/2020

Table 3 - Container Ports - 7-day flow forecast for 7 November to 13 November5

7-day flow forecast (07.11.2020 - 13.11.2020)

TERMINAL NO. OF CONTAINERS TO DISCHARGE (IMPORT)

NO. OF CONTAINERS TO LOAD (EXPORT)

DURBAN CONTAINER TERMINAL PIER 1: 4 057 4 650

DURBAN CONTAINER TERMINAL PIER 2: 17 275 16 583

CAPE TOWN CONTAINER TERMINAL: 4 950 5 187

NGQURA CONTAINER TERMINAL: 6 333 5 977

PORT ELIZABETH CONTAINER TERMINAL: 0 0

TOTAL: 32 615 32 397

Source: Transnet, 2020. Updated 06/11/2020

An average of ~7,651 TEUs were handled per day over the course of the last week (31 Oct - 6 Nov, Table 2),

with an increased average of around ~9,287 TEUs (↑21%) expected to be handled over the course of the

next week (7 - 13, Nov Table 3).

Overall stack occupancy is approximately ~64% and ~25% in Durban and Cape Town, respectively. In terms

of the multi-purpose terminals, stack occupancy is around ~51% and ~42% (general cargo) and ~18% and

4 It remains important to note that a fair percentage (approximately 28%) of containers are neither to be imported nor exported, but rather consist of empties and transhipments. Due to container imbalances, this proportion is fluctuating more than usual. 5 As noted in footnote 1.

3

~10% (refrigerated cargo) in Durban and Cape Town, respectively. Stack occupancy in Ngqura and Port

Elizabeth is ~54% and ~10% (general cargo) and ~11% and ~1% (refrigerated cargo) respectively.

The following figure displays the rolling 7-day average flows of total cargo movement for our respective

commercial ports since the start of the nation-wide lockdown.

Figure 2 -7-day flow forecast for total cargo movement (TEUs: 30 March to 7 November; week-on-week)

Source: Calculated using data from the Transnet Port Terminal updates. Updated 06/11/2020

The figure above serves as a summary of the cargo flows since the start of lockdown. The longer-term

average trend remains upward; however, we are only expecting overall port volumes to reach ~92-94% of

2019 levels across the board.

The figures below show the weekly container flows for the last 7 days, as well as projections for the next 7

days.

-5

0

5

10

15

20

25

30

35

40

45

30

/03

- 0

6/0

4

07

/04

- 1

3/0

4

17

/04

- 2

3/0

4

23

/04

- 2

9/0

4

29

/04

- 0

5/0

5

05

/05

- 1

1/0

5

11

/05

- 1

7/0

5

17

/05

- 2

3/0

5

23

/05

- 2

9/0

5

29

/05

- 0

4/0

6

04

/06

- 1

0/0

6

10

/06

- 1

6/0

6

16

/06

-2

2/0

6

22

/06

- 2

8/0

6

28

/06

- 0

4/0

7

04

/07

- 1

0/0

7

10

/07

- 1

6/0

7

16

/07

- 2

2/0

7

22

/07

- 2

8/0

7

28

/07

- 0

3/0

8

03

/08

- 0

9/0

8

09

/08

- 1

5/0

8

15

/08

- 2

1/0

8

21

/08

- 2

7/0

8

27

/08

- 0

2/0

9

02

/09

- 0

8/0

9

08

/09

- 1

4/0

9

14

/09

- 2

0/0

9

20

/09

- 2

6/0

9

26

/09

- 0

2/1

0

02

/10

- 0

8/1

0

08

/10

- 1

4/1

0

14

/10

- 2

0/1

0

20

/10

- 2

6/1

0

Tho

usa

nd

s

7-day flow period

DURBAN CONTAINER TERMINAL PIER 1 DURBAN CONTAINER TERMINAL PIER 2

CAPE TOWN CONTAINER TERMINAL NGQURA CONTAINER TERMINAL

PORT ELIZABETH CONTAINER TERMINAL Linear (DURBAN CONTAINER TERMINAL PIER 2)

4

Figure 3 - 7-day flow forecast for total cargo movement (31 October to 6 November; day-on-day)

Source: Calculated using data from Transnet Port Terminal, updated 06/11/2020.

Figure 4 - 7-day flow forecast for total cargo movement (7 November to 13 November; day-on-day)

Source: Calculated using data from Transnet Port Terminal, updated 06/11/2020.

Summary of port operations

An average of ~7,651 TEUs were handled per day over the course of the last week (31 Oct - 6 Nov, Table 2),

with an increased average of around ~9,287 TEUs (↑21%) expected to be handled over the course of the

next week (7 - 13, Nov Table 3). The overall monthly containerised cargo volumes are slightly down once

again, currently at ~79% compared to the same time last year. Nonetheless, when surveying the monthly

figures compared to the previous year, the previous two months’ average stood at ~350 000 TEUs. As such,

-2

0

2

4

6

8

10

12

31-Oct 01-Nov 02-Nov 03-Nov 04-Nov 05-Nov 06-Nov

Tho

usa

nd

s

7 day flow - 31 October to 6 November

DURBAN CONTAINER TERMINAL PIER 1 DURBAN CONTAINER TERMINAL PIER 2

CAPE TOWN CONTAINER TERMINAL NGQURA CONTAINER TERMINAL

PORT ELIZABETH CONTAINER TERMINAL

-2

0

2

4

6

8

10

12

14

16

18

07-Nov 08-Nov 09-Nov 10-Nov 11-Nov 12-Nov 13-Nov

Tho

usa

nd

s

7 day flow - 7 November to 13 November

DURBAN CONTAINER TERMINAL PIER 1 DURBAN CONTAINER TERMINAL PIER 2

CAPE TOWN CONTAINER TERMINAL NGQURA CONTAINER TERMINAL

PORT ELIZABETH CONTAINER TERMINAL

5

early projections are similar for November and December of this year, meaning that in an overall sense,

containerised cargo for 2020 is projected to be ~92-94% capacity levels compared to 2019.

Weather-wise, wind, rain and fog disruptions hampered port operations over the weekend. Wind disrupted

operations in Cape Town for 35 hours. In contrast, Kwa-Zulu Natal received some welcome heavy rain over

both Saturday and Sunday. The situation resulted in slow working at both piers and virtually no work at

Maydon Wharf since all vessels bar one working there were handing rain sensitive cargo. Despite some

delays, the situation abated to bring improved conditions around the coast which have enabled terminal

operations to commence catch-up from the weekend delays.

Over the course of the last week in Durban, port operations were near average, despite some ongoing truck

congestion in Maydon Wharf caused by TPT’s weighbridge failure. Some suggestions have been made to

alleviate this by the introduction of a booking system. However, the introduction of such a system at Maydon

Wharf would necessitate an off-site staging area as most trucks servicing the area are long-haul for whom

advance booking would be impossible.

Maydon Wharf TPT management, along with NPA security, have indicated that they are addressing the

matter where they can. However, the unfortunate fact is that Maydon Road remains a public municipal road,

which means that the smaller roads feeding into the quays are affected by whatever happens along Maydon

Road.

Concerning the recent service disruptions experienced by Transnet Freight Rail (TFR), problems in Gauteng

have unfortunately continued. The affected section outside Kaserne was temporarily operated with diesel

locomotives, which slows down overall train times. However, more importantly, a shortage of diesel

locomotives means further delays are projected. TFR is working on supplementing units from other areas

Furthermore, TFR continues facing issues in the Jupiter area as the major fault with ESKOM power having

broken down. Luckily, the power failure at Jupiter was fixed a day before plan. Unfortunately, as a continued

pain point to report on, there was another incident of cable theft in the area overnight.

Plans are now in place to resume the movement of over border cargo and ramp up movement on the

NATCOR line. Minister Mbalula addressed parliament on this matter stating that “the jig is up”. This

apparently means that some action is planned around security improvements, with Minister Mbalula adding

“The harsh reality is that security-related incidents in the rail environment are out of control and need urgent

attention”.

The rail delays and lack of movement had a knock-on effect as equipment as both wagons and locomotives

not arriving means a build-up of container traffic held in the Durban terminals. Some traders are cancelling

train loads and moving to the road, which in turn hurts landside performance and traffic on the N3.

Moreover, containers for Botswana continue to build up at DCT with Pier 2 holding approximately 1,170

TEUs which is unlikely to be materially improved before the “Jupiter” issue mentioned above is finalised.

In Cape Town, the adverse weather conditions over the weekend have eased to some extent. The improved

conditions have meant that near-normal handling rates were reported for the rest of the week. There were

forecasts of continued strong winds into the weekend, but luckily, the port has not reported any additional

operational challenges in terms of equipment and active gangs. Furthermore, the port is continuing with its

COVID-19 screening efforts, as well as reporting efficient truck turn-around times even with more than 1,000

daily calls.

6

Air Update

• International air cargo

The following table depicts the inbound and outbound air cargo flows to and from ORTIA in the last week.

For comparative purposes, the average air freight cargo (inbound and outbound) handled at ORTIA in the

two months before the lockdown period (January and February) was approximately 743 879 kg per day6. The

average air freight cargo (inbound and outbound) handled at ORTIA in October 2019 was about 946 660 kg

per day7.

The volumes given in the table are also in kilograms.

Table 4 - International inbound and outbound cargo from OR Tambo8

Flows 29-Oct 30-Oct 31-Oct 01-Nov 02-Nov 03-Nov 04-Nov

Volume inbound 474 146 352 112 422 137 529 827 498 025 187 898 395 197

Volume outbound 260 392 295 519 341 051 316 585 247 085 177 070 243 411

Total handled per day 734 538 647 631 763 188 846 412 745 110 364 968 638 608

Updated: 06/11/2020

The average volume of air cargo handled at ORTIA over the seven days starting 29 October amounted to 408

477 kg inbound and 268 730 kg outbound, resulting in an average of 677 208 kg per day, which is

approximately ~91% compared to the two months before the lockdown period and down by ↓3% since last

week. Interestingly, current levels correspond to circa ~74% when compared to the same period the previous

year. The current situation reflects the traditional seasonal imbalance in volumes.

The following figure paints a better picture for the monthly flow of international air cargo to and from ORTIA

for October. This average has also slowly increased over the course of the last couple of months.

Figure 5 - 7-day cargo flow for OR Tambo

6 Note, when including statistics from South Africa’s other two international airports, Cape Town International and King Shaka (Durban) International airports, the total figure rises to 916 175 kg per day. 7 As with the previous footnote, the total figure rises to 1 165 984 kg per day. 8 Note, some of the very latest statistics for both Menzies and Aero-link stats are still outstanding. Therefore, the overall statistics are expected to increase somewhat and will be amended in subsequent reports.

0

100

200

300

400

500

600

29-Oct 30-Oct 31-Oct 01-Nov 02-Nov 03-Nov 04-Nov

Tho

usa

nd

s

Inbound and outbound air cargo, 29 October to 4 November

Volume inbound Volume outbound

7

Updated: 06/11/2020

The following figure shows the cargo movement per carrier since the start of the lockdown period.

Table 5 - Total international cargo movement to and from OR Tambo

Partner 29-Oct 30-Oct 31-Oct 01-Nov 02-Nov 03-Nov 04-Nov

Amsterdam 42 037 50 052 39 086 71 767 46 576 50 432 74 143

Doha 79 623 108 291 24 692 25 939 105 528 25 360 33 228

Dubai 24 758 100 244 168 230 119 319 65 444 74 796 92 564

Frankfurt - - 22 844 - 22 091 - 33 728

Istanbul - - 37 174 - 104 514 - 36 715

Johannesburg 53 568 33 003 65 525 24 778 6663 4,8 20 713 62 986

London 73 192 29 480 71 023 78 347 914 72 91 935 39 802

Luanda 8 - - - - 6 091 -

Luxembourg - - 78 946 - 68 552 - 79 916

Nairobi 150 372 127 484 33 842 161 385 109 350 34 365 116 117

Paris 43 128 43 330 81 026 47 980 41 291 39 317 40 777

Singapore 18 339 25 321 177 752 23 657 21 959 28 196

Unspecified 192 295 99 149 115 479 139 145 - - -

Windhoek - 58 - - - - 436

Zurich 57 218 56 540 - - - - -

Total handled: 677 320 591 091 763 188 846 412 745 110 364 968 638 608

Updated: 06/11/2020

The following figure gives a graphic representation of the table above, which shows the diversity of South

Africa’s trading partners in terms of cargo handled per carrier. Overall, international freight has decreased

by ↓3% compared to last week.

8

Figure 6 - International air cargo movement per country of origin

Updated: 06/11/2020

The following figure shows the cargo movement per carrier since the start of the lockdown period.

Figure 7 - Total cargo movement between OR Tambo per carrier

Updated: 06/11/2020

0

50

100

150

200

250

29-Oct 30-Oct 31-Oct 01-Nov 02-Nov 03-Nov 04-Nov

Tho

usa

nd

s

Cargo movement per flight origin country

Amsterdam Doha Dubai Frankfurt Istanbul

Johannesburg London Luanda Luxembourg Nairobi

Paris Singapore Unsepcified Windhoek Zurich

02468

1012141618

Mill

ion

s

Cargo movement per Carrier, 30 March to 4 November

Sum of Outbound Sum of Inbound

9

The next figure illustrates the cargo moved per ground handling agent since the start of the lockdown period,

with Swissport, Worldwide Flight Services and Aero-Link handling most of the international freight to and

from ORTIA.

Figure 8 - Cargo movement during the lockdown, per handler

Updated: 06/11/2020

Once again, it is worth noting that most of the international air cargo has been channelled to ORTIA since

the start of the lockdown period, with very little foreign cargo consigned to or from Durban and Cape Town.

The occurrence is changing slowly as more passenger flights arrive at our coastal airports.

Figure 9 - Total cargo movement during the lockdown

Updated: 06/11/2020

0

10

20

30

40

50

60

70

80

SWISSPORT WORLDWIDE FLIGHTSERVICES

AERO-LINK MENZIES CARGO BIDAIR CARGO

Mill

ion

s

Cargo movement per Handler, 30 March to 4 November

Sum of Inbound Sum of Outbound

-200

0

200

400

600

800

1000

1200

1400

Tho

usa

nd

s

Total movement of international cargo, 30 March to 4 November

Inbound Outbound Linear (Inbound)

10

The final figure above shows the overall international air cargo flow to South Africa since the start of the

lockdown period. As can be seen, the flow has been on a continued upward trajectory after the initial

abnormal spikes caused by the movement of large quantities of PPE, and this trend provides some

illumination on an otherwise gloomy picture.

• Domestic air cargo

The following table shows the domestic inbound and outbound air cargo flows for the duration of the

lockdown period, as reported by industry. The table includes the main domestic hubs, with a summary for

the other airports. For comparative purposes, the average domestic air freight cargo (inbound and

outbound) for ORTIA handled before the lockdown period was approximately 75 000 - 90 000 kg per day

(calculated from industry feedback). For further comparisons, the average domestic air freight cargo

(inbound and outbound) for ORTIA handled in October 2019 was approximately 98 000 kg per day.

Table 6 - Total domestic cargo movement

DATE / AIRPORT CPT DUR ELS JNB PLZ OTHERS TOTAL

Mar Average 8 581 823 1 728 4 020 2 912 1 555 19 619

Apr Average 14 664 900 2 152 13 911 3 814 1 760 35 956

May Average 28 421 1 639 4 677 25 282 7 333 1 099 58 064

Jun Average 24 256 2 137 5 105 23 935 8 601 3 324 63 236

Jul Average 23 395 2 759 4 896 24 255 6 550 5 139 63 116

Aug Average 22 860 2 418 40 93 22 142 5 643 2 819 59 559

Sept Average 24 735 2 682 3 712 24 003 6 126 3 315 64 572

Oct Average 25 317 2 931 3 552 22 085 6 475 3 315 63 676

28-Oct-20 38 481 5 009 4 903 38 637 9 429 5 385 101 843

29-Oct-20 39 414 4 767 5 641 33 475 9 015 4 704 97 016

30-Oct-20 13 840 2 126 3 112 21 301 5 204 2 275 47 858

31-Oct-20 1 319 431 2 584 375 125 4 833

01-Nov-20 1 204 178 27 544 7 142 2 102

02-Nov-20 43 599 5 543 6 628 44 215 10 922 5 737 116 645

03-Nov-20 40 340 5 750 5 738 35 611 9 666 4 994 102 101

Grand Total 4 909 795 493 130 745 993 4 672 028 1 243 096 846 207 12 714 463

Updated: 04/11/2020

The following figure is an illustration of the total air cargo moved per day as per the table above:

11

Figure 10 - Total domestic air cargo since lockdown commenced

Updated: 04/11/2020

The average domestic air cargo moved during the lockdown period has amounted to 62 204 kg per day

(~↑2% compared to last week), which constitutes approximately 69% of the volume moved pre-lockdown.

Global air cargo traffic

The following air traffic image displays the international air traffic at around mid-afternoon of 6 November.

Figure 11 - Global air traffic: 6 November 2020

-50

0

50

100

150

200

250

27-Mar-20 27-Apr-20 27-May-20 27-Jun-20 27-Jul-20 27-Aug-20 27-Sep-20 27-Oct-20

Tho

usa

nd

s

12

Source: FlightRadar24, 06/11/2020, 16:00

Southern African air traffic

The next image shows the air traffic across Southern Africa at around mid-afternoon of 6 November.

Figure 12 - Southern African air traffic: 6 November 2020

Source: FlightRadar24, 6/11/2020, 16:00

The image above illustrates that air traffic in and around Southern African has undoubtedly increased in

recent weeks, which is a positive sign for the industry.

Road Update

i. Beit Bridge Border operations

On a regional road freight note, recent investigation has continued into the operational aspects of several

SADC border posts, notably the cross-border delays experienced at Beit Bridge. The following analysis

illustrates the trade flows (and accompanying delays experienced) currently at Africa’s busiest border

crossing. The research utilised data from TLC and FESARTA.

Table 7 - Cost of delays Northbound at Beitbridge (from 21/10/2020 to 06/11/2020 - 17 days)

Queue Time

(Hours)

Border Time

(Hours)

Border time

exceeding two

hours

HGV Arrivals per day

HGV Tonnage per day

HGV Tonnage

HGV Arrivals

HGV Delay Hours

Queue Time

Delays

74h15 23h00 21h00 600 18 000 126 000 10 200 214 200 756 330

13

Source: TLC & FESARTA, Updated 06/10/2020

The following graph shows the staggering estimated cost to industry over a period of a mere 17 days.

Figure 13 - The projected cost of delays Northbound at Beitbridge (from 21/10/2020 to 06/11/2020 - 17 days; @ $20 per hour)

Source: Powered by Bing; compiled with statistics generated from NPA, TLC & FESARTA

The queue time over the period in question has average ~74 hours (or three days), which has cost the

transport industry an estimated $15 126 600 (or R242 025 600); while the average border crossing time has

average ~23 hours, which has cost the transport industry an estimated $4 284 000 (or R68 544 000). The

total cost for the period mentioned above amounts to an astounding R310 million.

For trade to prosper through the North-South corridor, this is unacceptable and can no longer be tolerated.

Further to the cost — especially in this critical period — is the humanitarian aspect of drivers spending three

days in the queue with little or no sleep, since, if the rest they will lose their place in the line. Moreover,

there are no sanitation facilities, no running water to wash or bath, with the drivers even forced to cook

food on the side of the road or in their trucks.

With the atrocious costs to industry and the dire conditions for the drivers as they are, the industry calls on

all border post stakeholders on both sides of the border (namely DHA, SARS, SAPS, Port Health, Limpopo

Traffic Police, CBRTA (South Africa), ZIMRA, ZINARA Port Health and VID (Zimbabwe)) to collectively take

responsibility for this disaster of catastrophic proportions. It is quite clear that one of the major problems is

posed by the corrupt activities of law enforcement officers “selling” expedited transit to the front of the

queue. Add to this the activities of criminals preying on stationary vehicles, especially at night, and you have

a genuinely nightmarish situation, perhaps even surpassing that experienced at the Kalumbalesa

Zambia/DRC crossing earlier in the year.

1. International update

The following section provides context as to the health of the global economy and the impact of COVID-19.

a. Container industry at a glance

International ocean freight rates have once again slightly increased this week according to Drewry, the UK-

based Maritime research and consulting firm9. The “World Container Index” (WCI) increased by 0.5%

compared to the previous week (29 October 2020). Consequently, the current global average freight rate

9 Drewry Supply Chain Advisors, World Container Index. https://www.drewry.co.uk/logistics-executive-briefing/logistics-executive-briefing-articles/world-container-index-detailed-assessment

14

now stands at $2,627.94 per 40ft container. This rate was roughly the same as the beginning of September

when the most recent surge in the index took place.

The following figure summarises the current trend.

Figure 24 - World Container Index - Assessed by Drewry ($ per 40ft container)

Source: Drewry Ports and Terminal insights

Although the rate of increase has in recent weeks levelled off, the WCI is still up by 81.5% compared to the

same period in 2019. In general terms, ocean-going freight rates have maintained their levels in recent

weeks, with the excess demand resultant from the forced decrease in air traffic and the subsequent lack of

supply continuing to be mopped up by the ocean freight carriers.

The following table consolidates the monthly and annual changes for the eight major East-West trades.

15

Table 81 - World container index per route - Assessed by Drewry ($ per 40’ container)

Source: Drewry Ports and Terminal insights

As a summary of the WCI, Drewry provides the following reasons for their recent assessment:

• The average composite index of the WCI for year-to-date is $1,927 (↑$16 from last week) per 40ft

container.

• The current figure is an increase of $454 on a five-year average of $1,473.

• Regionally, three of the eight major East-West trading routes have increased this week, with only

Shanghai - Los Angeles decreasing. The other four routes remain approximately the same

• For next week, Drewry expects rates to increase marginally once again.

Aviation industry at a glance

For the month of September, economic recovery was varied in the aviation industry, according to the

economic analyses published this week by the International Air Transport Association (IATA). Growth

accelerated in the air cargo sector, whereas progress in the passenger sector slowed down.

According to IATA10, industry-wide cargo tonne-kilometres (CTKs) fell by 8.0% year-on-year compared with

a 12.1% decline in August. Month-on-month, CTKs showed the fastest growth since May, at 3.7%.

For air travel, on the other hand, industry-wide revenue passenger-kilometres (RPKs) fell by 72.8% year-on-

year despite a continued surge since an all-time low was recorded in April. The following figure aptly

illustrates the current diverging predicaments of the respective sectors.

10 IATA, COVID-19: Air travel slows in September, but cargo speeding up, 2020. https://www.iata.org/en/iata-repository/publications/economic-reports/air-travel-slows-in-september-but-cargo-speeding-up/

16

Figure 15 - Growth in global passenger-km (RPKs) and cargo km (CTKs) flown

Source: IATA Economics

Although all regions have reported better numbers for September compared to August, the industry

rebound remains largely driven by North American airlines. Key demand drivers of air cargo remain

supportive despite the resurgence of COVID-19 cases, especially seen in Europe. The following figure

indicates the respective resurgence per region. The impact of the re-introduction of strict quarantine

measures in Europe remains to be seen.

Figure 16 - Growth by major trade lane (CTKs)

Source: IATA Economics

Whilst the North Atlantic has soared, the trade lane connecting Europe with Asia has regrettably stalled. The

Middle East-Asia lane has joined the North Pacific in positive territory when compared to this time last year.

17

In summary, IATA predicts that cargo demand for the final quarter of 2020 will remain reasonably strong

amid traditionally large e-commerce events with widespread launches of popular consumer electronics.

Moreover, the industry has been assisted by better than expected orders for exports of manufactured goods.

Despite some positive reports for the air cargo industry, several concerns still linger, most notably the lack

of passenger fleet belly capacity. Since RPKs have not picked up significantly, lack of cargo capacity remains

a key obstacle for faster recovery in air cargo business. Globally available cargo tonne-kilometres fell by

25.2% year-on-year in September – more than three times faster contraction than in demand.

Conclusion

This update — the 14th of its kind — contains a consolidated overview of the South African supply chain, as

well as the current state of trade internationally. The country’s COVID-19 curve has flattened in recent

weeks, with new cases in the last week amounting to an average of just over 1,521 per day. The daily rate

has therefore remained within similar bounds since the second week of August (at around ~1,800 new cases

per day). Despite the seeming containment of the virus, the country needs to be watchful of a potential

second spike in cases, as has been the experience in many countries. In a global context, South Africa

dropped a further position to 13th position internationally, with Italy overtaking us in the last seven days as

most parts of Europe experienced a resurgence of the virus. Total cases in South Africa now amount to

approximately 732,40011 recorded at the time of writing.

For the ocean modality, container volumes have decreased marginally compared to those recorded in the

previous week. The overall monthly containerised cargo volumes have once more declined, currently at

~79% compared to the same time last year. The average this week stands at ~7,651 TEUs handled daily, with

an increased average of around ~9,287 (↑21%) expected to materialise over the course of the next week.

On the international air cargo front, the average daily volume of air cargo handled at ORTIA over the seven

days decreased by ~3% compared to last week. The period beginning 29 October amounted to 408 477 kg

inbound and 268 730 kg outbound, resulting in an average of 677 208 kg per day. These figures correspond

to approximately 91% compared to the two months before the lockdown period and around 70% compared

to the same time last year. As is the case with ocean cargo, the seasonal variation is apparent. Average

domestic air cargo moved during the lockdown period has amounted to ~62 204 kg per day, which

constitutes approximately 69% (↑2% compared to last week) of the volume moved pre-lockdown.

Regionally, the current cross-border constraints experienced at Africa’s busiest road border crossing

continue to hamper trade. Analysis utilising data from NPA, TLC and FESARTA, including the use of GPS data

obtained from Globaltrack indicate that queue times have recently averaged around 74 hours (or three

days), with the average border crossing times 23 hours over the same period. The estimated cost to trade

has amounted to more than R310 million. The entire cross-border road transport sector operating in the

North-South trade corridor hopes the situation will be alleviating somewhat in coming weeks. The current

operational challenges are severely debilitating trade, quite apart from the humanitarian impact of the

bottleneck on our northern landlocked neighbours, not to mention the bonus presented to our regional

competitors whose borders are not similarly constrained.

Internationally, the WCI is currently at $2,627.94 per 40’, which is a 0.5% increase on last week. The maritime

industry continues to lap up the lack of supply coming from the international air industry. Also, there have

been some concerns voiced by the industry that the major carriers are taking the opportunity to get their

rates up by artificially stimulating demand (to boost profits) with blank sailings and port omissions.

Fortunately, long term contracts are unaffected by these occurrences, as the reported WCI only concerns

11 John Hopkins, Coronavirus Resource Centre. https://coronavirus.jhu.edu/map.html

18

the spot rates. As such, IATA notes that although growth accelerated in the air cargo sector, the progress in

the air travel sector continues to drag behind. Currently, industry-wide cargo tonne-kilometres (CTKs) stands

at ↓8.0% year-on-year compared to 2019, whereas industry-wide revenue passenger-kilometres (RPKs)

stands at a staggering ↓72.8% year-on-year below 2019 levels.

In conclusion, the available supply chain indicators point out that there will be no “quick-fix” recovery from

the COVID-19 induced economic contraction. Furthermore, the indicators continually show that the effects

will last long into 2021, and probably even 2022. We continue to hope that the South African supply chain

and greater trading community continue to pull together and ensure that everything possible is done to

mitigate the impact of COVID-19 on the industry.