South African container trade flows declined in H1

30th September 2016

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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Container trade flow in and out of South Africa in the first half of 2016 showed a year-on-year decline of 7%.

Maersk Line Southern Africa MD Jonathan Horn attributes the decline to reduced consumer spending and weak global demand for mining commodities.

“Largely related to the lack of available consumer spend, the imports market has been consistently under pressure each month in the first half of 2016, recording an overall drop in demand of 7% – made up of an 8% decline in quarter one, followed by a 6% decline in quarter two – with trade from Asia, South Africa’s largest importing region, dropping steeply by 13%.

Other trade lanes, by and large, also slowed down in this respect, with the exception of the Middle East, which saw moderate growth over the past six months.”

Maersk Line Southern Africa trade manager Matthew Conroy says the one positive for the imports market is a small spike in demand that was noticed over July – particularly from Asia.

“Although this seemingly stronger demand is encouraging for future import trade, there is a question mark in terms of its sustainability.”

Conroy says the performance of South African exports in the first half of 2016 was similiar to that of imports.

“The export market saw a decline of 7% year-on-year; however, in recent months the trend appears to be improving,” he notes.

“Quarter two saw the market contract by only 2%, with marginal growth reported for June.

“The fact that the market grew in June, albeit marginally, signals that there is some life in the South African export market. This growth is mostly on the back of rising mining commodity prices, which are linked to rising China demand, specifically manganese and chrome. In particular, the quarter-two selling price for manganese (compared with quarter one) was up 42%, while the chrome price was up 54%.”

Dirk Hoffmann, MD of Safmarine Southern Africa, a member of Maersk Group, says refrigerated exports from South Africa grew by 1% in the first half of 2016.

“This market would have experienced more robust growth, but was hampered by the drought. However, considering that we are still in the midst of the citrus season, the full impact on the industry will not be fully known until September.”

Conroy predicts that total container exports from South Africa will likely see flat growth in the second half of 2016, which is a considerable improvement, based on the 7% market decline seen in the first half.

“The export market is seeing a moderate uptick that we expect to continue for at least the next quarter.

This is as a result of stronger demand for mining commodities, particularly from China, which make up 45% of South African container exports.”

Maersk Group representatives in South Africa believe that, while South African container trade is still in a fragile position, there is more optimism in the market now, compared with three months ago, although the pace of the improvement is slow.

In addition to the predicted moderate improvements for the export market, imports also seem to be turning a small corner, based on the demand witnessed in July, which has likely been further aided by the recent strengthening of the rand.

“However, in order to achieve sustainable economic growth, a higher level of consumer spend is necessary, which we are not yet witnessing,” says Conroy.

“As such, for the remainder of the year, we are cautiously optimistic and anticipate a small imports market decline of . . . 2% to 4%, which is an improvement from first half 2016.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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