REGISTRATION NUMBER: 2014/042417/08 PRESIDENT: Sipho M Pityana VICE PRESIDENT: Martin Kingston CEO: Cas Coovadia NEDLAC CONVENOR: Kaizer Moyane DIRECTORS: Busi Mavuso, Christopher Campbell, Deidre Penfold, Gwarega Mangozhe, Joe Mwase, John Purchase, Maurice Radebe, Roger Baxter, Stavros Nicolaou, Mthokozisi Xulu

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PARLIAMENTARY OFFICE

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COVID-19: Cargo movement update Date: 4 September 2020

About this update

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

to and from South Africa over the course of 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) 33 320 44 887 78 207 31 229 41 219 72 448 8↑%

Air Cargo (tons) 1 892 1 366 3 257 1 879 1 106 2 986 9↑%

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

Key Notes

• An average of ~11,172 TEUs were handled a day over the course of the last week, ↑823 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 month’s worth of available data compared to the same month in 2019 (in this case Aug 2020 versus Aug 2020 for air cargo (both international and domestic) and containers; July 2020 versus July 2019 for the other metrics)

87%

109%

90%

95%

46%

39%

33%

0% 20% 40% 60% 80% 100% 120%

Containers (TEUs)

Dry bulk (MT)

Liquid bulk (MT)

Breakbulk (MT)

Vehicles (Units)

International Air Cargo

Domestic Air Cargo

2

• Air cargo volumes have increased by 9% since last week, with international air cargo flows at

approximately 63% compared to pre-lockdown levels. Domestic flows have also increased slightly.

• July exports to BELN countries increased by ↑1.7% to R11.3 billion, with imports from BELN

countries amounting to R3.6 billion for the month, an increase of ↑16.5%.

• Globally, average freight rates continue to increase, this time to $2,464.35 per 40', which is a 9.5%

increase on last week.

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 28 August to 3 September 4

7-day flow forecast (28.08.2020 – 03.09.2020)

TERMINAL NO. OF CONTAINERS TO DISCHARGE (IMPORT)

NO. OF CONTAINERS TO LOAD (EXPORT)

DURBAN CONTAINER TERMINAL PIER 1: 5 182 6 963

DURBAN CONTAINER TERMINAL PIER 2: 14 968 16 581

CAPE TOWN CONTAINER TERMINAL: 5 198 6 836

NGQURA CONTAINER TERMINAL: 5 521 9 169

PORT ELIZABETH CONTAINER TERMINAL: 360 1 670

TOTAL: 31 229 41 219

Source: Transnet, 2020. Updated 04/09/2020

Table 3 - Container Ports - 7-day flow forecast for 4 September to 10 September5

7-day flow forecast (04.09.2020 – 10.09.2020)

TERMINAL NO. OF CONTAINERS TO DISCHARGE (IMPORT)

NO. OF CONTAINERS TO LOAD (EXPORT)

DURBAN CONTAINER TERMINAL PIER 1: 5 734 4 950

DURBAN CONTAINER TERMINAL PIER 2: 16 156 24 660

CAPE TOWN CONTAINER TERMINAL: 5 224 5 103

NGQURA CONTAINER TERMINAL: 5 741 7 784

PORT ELIZABETH CONTAINER TERMINAL: 465 2 390

TOTAL: 33 320 44 887

Source: Transnet, 2020. Updated 04/09/2020

A recurring trend is once again present with export container volumes outstripping import container

volumes, 10,000 TEUs this week (Table 2) and more than 11,500 TEUs next week (Table 3). The Port of

Durban has again seen significant volume increases over the course of the last week. However, as mentioned

in the report last week, these figures can be an early sign of congestion, which gives some cause for concern.

Container volumes have also returned to near-normal levels at the Port of Cape Town. They will improve

further with the re-introduction of services by carriers who had temporarily suspended direct calls.

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

Overall stack occupancy is approximately 60% and 43% in Durban and Cape Town respectively. Meanwhile,

reefer occupancy currently stands at around 35% and 36% in Durban and Cape Town respectively. Cape

Town MPT, on the other hand, reports stack occupancy of 65% for general purpose TEUs, and reefer

occupancy at 49%. Durban MPT reports stack occupancy of approximately 60%.

In the last day, Durban has serviced a total of 735 TEUs on rail freight; whereas Cape Town has serviced a

total of 1,279 truck calls. The following figure provides a more comprehensive flow of container cargo to and

from our commercial ports, indicating the 7-day rolling forecast for container flows from the onset of the

lockdown period at the end of March.

Figure 2 - 7-day flow forecast for total cargo movement (TEUs: 30 March to 4 September; week-on-week)

Source: Calculated using data from the Transnet Port Terminal updates. Updated 04/09/2020

The figure above nicely illustrates the continued upward trajectory in container volumes. Due to the delayed

effects of the pandemic and standard lead times in ocean-going freight, container volumes were

exceptionally low during the early days of lockdown. Levels have subsequently increased, especially in recent

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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 1)

Linear (DURBAN CONTAINER TERMINAL PIER 2) Linear (CAPE TOWN CONTAINER TERMINAL)

Linear (NGQURA CONTAINER TERMINAL) Linear (PORT ELIZABETH CONTAINER TERMINAL)

4

weeks. As such, overall container volumes have increased by 8% since last week. As a result, levels are now

hovering around ~87% compared to the corresponding period in 2019. This noticeable improvement has

continued steadily in recent weeks, which has been encouraging, especially in terms of exports. The forecast

once again remains positive. Trend lines are present for all of the major container terminals; each indicates

a positive trajectory since the start of lockdown.

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

days.

Figure 3 - 7-day flow forecast for total cargo movement (28 August to 3 September; day-on-day)

Source: Calculated using data from Transnet Port Terminal, updated 04/09/2020.

Figure 4 - 7-day flow forecast for total cargo movement (4 September to 10 September; day-on-day)

Source: Calculated using data from Transnet Port Terminal, updated 04/09/2020.

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7 day flow - 28 August to 3 September

DURBAN CONTAINER TERMINAL PIER 1 DURBAN CONTAINER TERMINAL PIER 2

CAPE TOWN CONTAINER TERMINAL NGQURA CONTAINER TERMINAL

PORT ELIZABETH CONTAINER TERMINAL

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7 day flow - 4 September to 10 September

DURBAN CONTAINER TERMINAL PIER 1 DURBAN CONTAINER TERMINAL PIER 2

CAPE TOWN CONTAINER TERMINAL NGQURA CONTAINER TERMINAL

PORT ELIZABETH CONTAINER TERMINAL

5

Summary of port operations

An average of ~11,350 TEUs were handled per day over the course of the last week (28 Aug - 3 Sept - Table

2), with a slightly decreased average of around ~11,172 TEUs expected to be handled over the course of the

next week (4 – 10 Sept Table 3). These figures can be compared to an average of ~9 983 TEUs handled per

day in the previous report (28 August), which further highlights the recent positive trends experienced by

the industry. Overall, containerised cargo volumes are ~87% compared to the same time the previous year.

Current stack capacities at our major ports are hovering around approximately 60% and 43% in Durban and

Cape Town respectively. Concerning port operations in Cape Town, efficiency once again continues to

improve, although against the backdrop of reduced vessel calls. The sustained operational improvement is

undoubtedly a step in the right direction which will aid with overall economic recovery.

Nonetheless, some operational challenges occurred in Cape Town in recent days. These challenges included

weather delays (with high wind and heavy rain), which resulted in a loss of 36 hours working time. This loss

significantly impacted the export stacks, causing congestion as truckers endeavoured get the export boxes

in the terminal. Despite some operational challenges, the ongoing work at the dry dock continues to be a

boon to the ship repair industry and the economy of Cape Town (and the Western Cape) economy. The

short-term impetus has approximately 2,263 workers currently on-site, thanks mainly to significant work

being carried out on the De Beers vessel 'Gariep'.

In terms of the current situation in Durban, Ngqura and Port Elizabeth, port operations are back to normal

after some wind delays in recent days. The improved conditions have provided an opportunity to reduce the

backlog and reduce the berthing delays and vessels outside. Furthermore, the citrus reefer season is drawing

to a close which does allow the focus to get back to general cargo. After the derailment on the NATCOR line

earlier, things are back to normal. The NATCOR line is now fully open, apart from a short power failure in the

Newcastle area yesterday. As a consequence, there is a substantial queue of trains with container exports

given priority. The Bulk Connections truck area is working well, but it should be noted that the temporary

creation of a staging area near the old airport is not a permanent solution.

In other news concerning port operations, the Ports Regulator NPA Tariff Road Show took place this week6.

Items of note included whether the NPA should become an autonomous subsidiary rather than a division of

Transnet by the close of this financial year. Discussions still linger after many years of failure to implement

this provision of the Act. The private sector (and extended trading industry) would prefer the NPA to be

completely independent of Transnet in the interests of transparency and the removal of cross-subsidisation.

Industry notes that although it has taken 15 years for this element of the Ports Act to be enabled, there may

be increased opportunities for competition and less subsidisation. Tariff increases of 19.74% are on the table

for 2021, with a decrease of -0.29% and -7.86% for 2022 and 2023 respectively. The proposed increase,

calculated in terms of the existing tariff methodology, was as a result of the drop in volume revenue and

relatively static fixed costs. The increase has been rejected. The NPA therefore requested the Regulator to

allow inflationary increases over the next three years of 3.8% per annum. Over the three years, the impact

on NPA revenue will be similar to what was requested, at around ~11%.

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

6 Ports Regulator, https://www.portsregulator.org/economic/tariffs/2021-22-tnpa-tariff-application

6

two months before the lockdown period (January and February) was approximately 743 879 kg per day7.

The volumes depicted in the table are also in kilograms.

Table 4 - International inbound and outbound cargo from OR Tambo

Flows 27-Aug 28-Aug 29-Aug 30-Aug 31-Aug 01-Sep 02-Sep

Volume inbound 225 693 323 476 158 529 367 147 359 093 167 351 290 452

Volume outbound 222 319 129 669 153 519 312 860 173 199 193 978 180 100

Total handled per day 448 012 453 145 312 048 680 007 532 292 361 329 470 552

Updated: 04/09/2020

The average volume of air cargo handled at ORTIA over the seven days starting 27 August amounted to 270

249 kg inbound and 195 092 kg outbound, resulting in an average of 465 341 kg per day, which is

approximately 63% compared to the two months before the lockdown period and up by 9% since last week.

The following figure is a visual representation derived from Table 4, illustrating how the volumes of air cargo

have fluctuated over the course of the last seven days.

Figure 5 - 7-day cargo flow for OR Tambo

Updated: 04/09/2020

The following figure shows the long-term average of international air cargo flows to and from ORTIA since

30 March. After the initial spike in volumes in late April and early May (mainly due to the bulk imports of

PPE from the East), weekly flows, although fluctuating from day to day, have settled into a reasonably

consistent average. This average has also slowly increased over the course of the last couple of months. The

sustained increase is evident by the trend lines on both inbound and outbound cargo.

7 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.

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Inbound and outbound air cargo, 27 August to 2 September

Volume inbound Volume outbound

7

Figure 6 - Daily cargo flow for OR Tambo

Updated: 04/09/2020

The following table depicts the origin and destination of air cargo moved to and from ORTIA. Note that the

origin shown is the source of the flight, not necessarily the source of the load. The cargo originates around

the world and then moves here via the hubs of the major airlines, i.e. Doha (Qatar), Dubai (Emirates),

Istanbul (Turkish), and London (British), etc. Indications are that the bulk of the arriving cargo originates in

the Far East, since there are virtually no passenger flights, and only chartered flights and scheduled cargo

flights are arriving. Consistently high volumes between ORTIA and Nairobi are noteworthy and can be

explained by the opportunities arising out of the fresh flower export trade from Kenya to Europe.

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

Partner 27-Aug 28-Aug 29-Aug 30-Aug 31-Aug 01-Sep 02-Sep

Amsterdam 47 760 43 331 34 484 51 923 39 417 37 223 44 875

Paris 49 118 - 45 387 45 802 49 936 49 223 -

Doha 76 749 68 235 21 229 15 909 103 010 33 991 15 630

Dubai 44 066 75 664 90 967 47 698 62 703 62 798 79 107

Istanbul 50 194 - - 88 888 13 643 - -

Johannesburg 127 460 53 227 30 608 25 568 66 407 71 503 69 719

Luanda - - - - - 720 2 984

London 29 591 48 482 68 195 102 392 79 679 51 041 54 600

Luxembourg - - - 116 996 - 83 680

Nairobi 23 074 164 206 21 178 - 117 497 32 404 98 814

Singapore - - - 184 831 - 22 426 21 143

Total handled: 448 012 453 145 312 048 680 007 532 292 361 329 470 552

Updated: 04/09/2020

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Inbound and outbound air cargo, 30 March to 2 September

Inbound Outbound Linear (Inbound) Linear (Outbound)

8

When comparing the origin and destination of air cargo moved to and from ORTIA over the course of the

last couple of months, it is evident that our trading partners have mainly remained the same. The significant

omission is Addis Ababa and Ethiopian Airways, which accounted for a large portion of the air cargo during

the early days of lockdown when bulk imports of PPE from China were in full swing, and even passenger

aircraft were being used on a charter basis.

The following figure, a graphic representation of Table 8, shows the diversity of South Africa's trading

partners in terms of cargo handled per country of origin. Overall, international freight has increased by ~9%

compared to last week.

Figure 7 - Total cargo movement between OR Tambo and trading partners

Updated: 04/09/2020

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

with Swissport handling the bulk of the international freight to and from ORTIA.

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Cargo movement per flight origin country

Amsterdam Paris Doha Dubai Istanbul Johannesburg Luanda London Luxembourg Nairobi

9

Figure 8 - Cargo movement during the lockdown, per handler

Updated: 4/09/2020

The following figure illustrates the cargo moved per airline since the start of the lockdown period, with Qatar,

Martinair, Emirates, and Ethiopian accounting for the vast majority of the international freight to and from

ORTIA.

Figure 9 - Cargo movement during the lockdown, per airline

Updated: 04/09/2020

We are once again underlining the fact that most international air cargo has been channelled to ORTIA during

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

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Sum of Inbound Sum of Outbound

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Inbound and outbound cargo per airline: 30 March to 2 September

Sum of Inbound Sum of Outbound

10

movement of cargo from ORTIA to the coastal cities (primarily by road) adds to both cost and transit time,

as well as creating a need for in-bond clearances with Customs which has also presented some obstacles.

The figure below illustrates the percentage of cargo sanitised, as well as the portion of cargo checked by

Port Health.

Figure 10 - Air cargo sanitation process

Updated: 04/09/2020

Domestic air cargo

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

lockdown period, as captured by industry. The table comprises 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). The volumes depicted in the table are also in kilograms.

Table 6 - Total domestic cargo movement

DATE / AIRPORT CPT

DUR ELS JNB PLZ OTHERS TOTAL

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

April 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

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

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

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

01-Aug-20 279 126 - 595 14 134 1 148

02-Aug-20 1 128 1 153 - 1 067 94 127 3 568

88%

12%

Cargo sanitasation percentage

Cargo sanitised Cargo not sanitised

35%

59%

7%

Percentage cargo checked by Port Health

Checked Not checked Unknown

11

03-Aug-20 44 320 4 253 6 176 36 502 10 178 5 670 107 099

04-Aug-20 37 471 4 136 6 120 26 497 10 199 5 392 89 814

05-Aug-20 35 447 4 364 5 598 47 437 9 782 4 843 107 470

06-Aug-20 35 287 4 154 5 086 27 806 10 249 4 833 87415

07-Aug-20 15 844 1 234 2 222 31 645 4 953 2 786 58 683

08-Aug-20 264 250 5 1 144 20 242 1 924

09-Aug-20 1 250 43 22 293 34 386 2 027

10-Aug-20 974 606 13 943 355 289 3 179

11-Aug-20 47 285 4 140 6 345 31 730 10 627 5 944 106 071

12-Aug-20 34 617 4 433 6 370 58 218 11 600 4 615 119 854

13-Aug-20 43

909 4 063 5 633 32

156 8 653 - 97 909

14-Aug-20 19

842 970 2 997 25

532 5 140 3 291 57 772

15-Aug-20 1

840 473 -

910 17 134 3 372

16-Aug-20 2

135 541 -

616 202 363 3 857

17-Aug-20 47

596 4 175 5 996 38

875 8 421 4 916 109 980

18-Aug-20 37

725 3 228 6 263 30

279 9 911 4 704 92 109

19-Aug-20 35

594 3 957 6 640 49

819 11 133 3 837 110 978

20-Aug-20 35

610 3 480 6 545 29

447 7 747 4 307 87 135

21-Aug-20 13

448 1 111 4 195 16

109 5 749 3 323 43 935

22-Aug-20

584 432 5

383 34 327 1 764

23-Aug-20

695 296 2

513 310 21 1 836

24-Aug-20 45

779 4 479 6 954

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526 10 279 4 068 110 085

25-Aug-20 36

585 3 753 5 684

26

609 8 957 6033 87 620

26-Aug-20 35

310 4 499 6 455

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566 8 522 4377 106 728

27-Aug-20 34

376 3 816 6 078

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215 7 807 4061 82 353

28-Aug-20 12

263 878 2 930

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094 4 517 3391 47 072

29-Aug-20

256 401 59

448 67 34 1 265

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357 844 38

285 99 4 3 626

31-Aug-20 46

620 4 686 6 095

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077 9 252 4937 106 667

Grand Total 3 297

762 310 324 512 146

3 186

937 837 981 633 134 8 582 500

Updated: 03/09/2020

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

Figure 11 - Total domestic air cargo since lockdown commenced

Updated: 03/09/2020

The average domestic air cargo moved during the lockdown period has amounted to ~61 534 kg per day,

which constitutes approximately 68% of the volume moved pre-lockdown, and this reflects the current

situation as experienced by the industry. On a more positive note, however, has been the fact that the daily

flow of goods has continued to increase steadily as the trend line in the figure above illustrates.

Global air cargo traffic

The following air traffic image displays the current pattern of air traffic globally, providing a snapshot around

early-morning of 4 September.

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Figure 12 - Global air traffic: 4 September 2020

Source: FlightRadar24, 04/09/2020, 08:00

The image continues to highlight the lack of activity in African airspace, although this traffic has increased

dramatically compared to the early days of lockdown. The numbers of aircraft currently moving across

African airspace has increased, but the failure of African countries to adopt an 'open skies' policy still has a

detrimental effect. Still, as can be seen in the statistics provided in the previous section, the amounts are

not yet up to normal ranges, as the following image will show.

South African air traffic

The next image displays the current pattern of air traffic in Southern Africa, providing a snapshot around

early-morning of 4 September.

14

Figure 13 - Southern African air traffic: 4 September 2020

Source: FlightRadar24, 04/09/2020, 08:00

Although domestic air cargo volumes have stagnated somewhat in recent weeks, it remains encouraging to

witness from the figure that the number of aircraft travelling on South Africa's busiest aviation route —

Johannesburg/Cape Town — has continued to increase in recent weeks.

Regional update

a. SARS Trade Statistics

SARS has recently published South Africa's trade statistics for July 20208. Overall exports have decreased by

-1.0%, with overall imports down by -15.2% for the month of July. The recent trade surplus has therefore

continued, with the current trade balance at R37.4 billion.

In terms of regional trade in July, exports to BELN countries increased by 1.7% to R11.3 billion. Imports from

BELN countries also increased, amounting to R3.6 billion for the month, an increase of 16.5%. These figures

attest to the fact that regional economies were starting to open during the month of July, returning closer

to 'normal' levels. Cumulative trade figures for the year currently stand at R69.2 billion exported to —, and

R22.3 billion imported from BELN countries for the period January to July 2020. Compared to the same

period last year, exports are down by -14.1%, whereas imports are down by -11.8%.

1. International update

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

8 SARS Trade Statistics, 2020. https://www.sars.gov.za/AllDocs/Documents/Trade%20stats%20monthly%202020/July%202020/Merchandise%20Trade%20Statistics%20-%20July%202020.pdf

15

a. Container industry at a glance

International freight rates have continued their surge over the course of the last week, according to the

"World Container Index" (WCI) as published by Drewry, the UK-based Maritime research and consulting

firm9. The current global average freight rate currently stands at $2,464.35 per 40ft container. The WCI has

therefore increased by an unprecedented 9.5% since the previous week (27 August 2020). In broad terms,

the WCI is up by 67.8% when compared with the same period in 2019.

Drewry provides the following reasons for this continued upward trend in rates:

• The average composite index of the WCI, assessed by Drewry for year-to-date, is $1,761 per 40ft

container, which is an astounding $340, or 19.3% higher than the five-year average of $1,417 per

40ft container.

• Overall, the WCI is up by 67.8% compared to the same time last year.

• Freight rates from Shanghai to New York soared by 15% (or $606) to reach $4,647 per 40ft container.

• Similarly, spot rates from Shanghai to Los Angeles grew $362 (10%) at $3,870 per 40ft container

• Rates from Shanghai-Rotterdam gained $231 or 12% to $2,153 for 40ft container.

• In an overall sense, all eight major East-West trading routes have increased since last week.

• Not surprisingly, Drewry expects rates to fall in the coming week.

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

Table 7 - World container index per route - Assessed by Drewry ($ per 40' container)

Source: Drewry Ports and Terminal insights

International Air Transport Association

On Monday, IATA published the 'Air Cargo Market Analysis'10 for July. IATA notes that air cargo recovery

continues amid improving global economic activity, highlighting the following key points:

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 10 IATA Market Analysis, July 2020.

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• In July, industry-wide cargo tonne-kilometres (CTKs) dropped by 13.5% year-on-year. CTKs adjusted

for seasonality grew 2.6% month-on-month, similar to the pace of improvement seen in June (3.0%).

• Despite growing uncertainty in COVID-19 developments, global economic activity continued to

recover in July, especially in terms of indicators such as manufacturing output and new export

orders.

• This divergence between economic activity and air cargo is partly due to the shortage of air cargo

capacity. In July, total available cargo tonne-kilometres (ACTKs) fell by 31.2% year-on-year, a small

improvement from June (33.4%).

• Most regions are on an upward swing at different paces. International cargo volumes in Latin

America deteriorated in June and July amidst challenging economic and health conditions.

The following figure showcases the CTK levels, as well as the seasonally adjusted figures:

Figure 14 - CTK levels, actual and seasonally adjusted (2008 - 2020)

Source: IATA

From the figure, IATA notes the following vital points:

• Since the outbreak of COVID-19, seasonally adjusted CTKs are down by 19%

• Most regions are on an upward swing, however at different paces.

• International cargo volumes in Latin America deteriorated in June and July amidst challenging

economic and health conditions.

• Although African airlines reported a 14.8% y-o-y decline in CTKs in June – a deterioration from an

8.4% fall in May – African skies have been affected the least by the pandemic.

• The Asia-Africa trade lane continues to expand swiftly (+20.1% y-o-y). However, the escalation of

the pandemic in the region in July might hinder growth in the period ahead.

The following figures summarise the growth in air cargo volumes for Africa and the Middle East.

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Figure 15 - Growth in air cargo volumes (2015 - 2020)

Source: IATA Economics

Conclusion

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

as well as the current state of trade internationally. There is further positive news concerning COVID-19

infections. The reported new cases in South Africa fell to an average of around 2,100 a day in the week to 3

September. This figure is in comparison with a peak of over 12,000 in mid-July. In global terms, South Africa

has dropped another place to 7th position globally (with Colombia overtaking South Africa in the past week).

Total cases now amount to approximately 633,00011 recorded at the time of writing.

For the ocean modality, container volumes have continued to increase compared to those recorded last

week, albeit marginally. The average this week stands at ~11,350 TEUs handled daily, with a similar average

of around ~11,172 TEUs expected over the course of the next week. Overall, containerised cargo volumes

are ~87% compared to the same time the previous year, but up by nearly 8% when comparing week on

week. A recurring trend is once again present with export container volumes outstripping import container

volumes; continuing to fuel the recent positive trade balance. As such, the country's positive balance of trade

in July was R37.4 billion.

Current stack capacities at our major ports are hovering around approximately 60% and 43% in Durban and

Cape Town respectively. In terms of operations at the Port of Cape Town, efficiency once again continues to

improve despite some operational challenges with high wind and heavy rain resulting in a loss of 36 working

hours.

Concerning international air cargo flowing to South Africa, the average daily volume of air cargo handled at

ORTIA over the seven days have increased by ~9% compared to last week. The period beginning 27 August

saw daily volumes of 270 249 kg inbound and 195 092 kg outbound, resulting in a daily average of 465 341

kg, which is approximately 63% compared to the two months before the lockdown period. These air cargo

figures once again highlight the sustained negative impact of the pandemic on the global air cargo industry,

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

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as confirmed globally by Figures 14 and 15 above. In summary, despite the dire effects felt, IATA notes that

African airlines have been affected the least by the pandemic, with CTKs only down by 14.8% year-on-year.

In terms of regional trade in July, exports to BELN countries increased by 1.7% to R11.3 billion. Imports from

BELN countries also increased, amounting to R3.6 billion for the month, which sees an increase of 16.5%.

These figures attest to the fact that regional economies are further opening their economies and returning

closer to 'normal' levels. Despite these figures, the surrounding economies (including South Africa) are all

predicted to go into an extended recession, which will likely curtail any significant trade expansions that

might help to offset the disastrous figures reported for the last few months. Returning to previous levels will

be a long uphill struggle, and any growth from there will take a lot longer.

Internationally, the WCI sees average freight rates continue with their recent record run, currently at

$2,464.35 per 40'). The WCI has therefore increased by an unprecedented 9.5% since the previous week (27

August 2020). In broad terms, the WCI is up by 67.8% when compared with the same period in 2019.

Collectively, all eight major East-West trading routes have increased since last week. Not surprisingly,

average freight rates will likely decrease over the course of the next week, especially in the anticipated port

throughput figures for September.

In general terms, the available supply chain indicators point out that COVID-19 economic recovery remains

sluggish. Nonetheless, the South African supply chain and its related industries have sustained its slight

recovery since the start of Risk-Adjusted Strategy Level 2. Despite the slight recovery, South Africa is — as

always — very dependent on external global forces. This dependence is especially true in terms of the

security of the supply chain. Therefore, this report once again strongly reiterates that economic recovery

will broadly depend on three key factors: (1) upward trends in the world economy, (2) the efficacy of the

support measures taken by the country so far, and (3) the resilience of the trading community in successfully

returning to full operation when the lockdown is over, and higher volumes compared to pre-lockdown levels.