SA remains key sector in shipping industry

25th April 2012 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

South Africa remained a significant component of the global shipping industry, shipping line Safmarine CEO Grant Daly said on Wednesday.

Daly, who took the reins on February 1, told Engineering News Online that Africa accounted for more than 50% of all Safmarine import and export volumes, with South Africa contributing about 40% of those volumes.

South Africa was strategically positioned along world trade routes, held a prominent economic position in Africa and hosted a strong economy and growing market.

Further, the country, which Safmarine sees as a ‘gateway into Africa’, was well positioned to exploit global shipping trends of increasing trade with emerging markets.

“It has been one of the stronger performing economies over the last seven years,” said Daly, adding that it would continue to be a significant and essential market for Safmarine.

Meanwhile, Safmarine Southern African cluster manager Jonathan Horn noted that South Africa’s commitment to invest in infrastructure was a positive move.

Investments in infrastructure, particularly ports, terminals and rails, need to be “ahead of the curve” if the country was to remain efficient and competitive, he said.

Safmarine pointed out that more than 90% of South Africa’s imports and exports were transported by sea.

Horn said that while the company was not currently involved in any infrastructure projects, Safmarine was interested in becoming part of a public-private investment partnership.

Talking to Maersk’s intention of integrating the corporate and regional management activities of Safmarine into those of sister company Maersk Line, Daly pointed out that, despite undergoing internal changes, the consistency of what the group offered and represented, as well as its value proposition, remained the same.

Safmarine, which would remain focused on its core markets, namely Africa, the Middle East and the Indian subcontinent, was implementing new processes and establishing new structures in its operations.

Meanwhile, Daly said the industry was currently under significant pressure and that industry profitability was low.

He pointed to an imbalance between supply and demand, with supply increasing 10% compared with 5% demand growth and industry fragmentation, where the top ten carriers accounted for just over 60% of the cargo being moved globally.

Further, the cost of shipping a container was about the same as the cost in 2005. However, with inflation increases and reduced average freight rates, this was not sustainable, he said.

Safmarine intended to restore profitability by, besides others, increasing freight rates and continuing to deal with costs and seeking efficiency gains wherever possible.