Trade Winds bimonthly update volume 46
NUMSA strike, devastating blow to the industry! The national steel strike in South Africa, which has been ongoing now since the 5th of October is showing its true ugly face as the steel sector and downstream industries are the feeling the blow.
Since last week Tuesday, majority of companies within the sector are unable to produce or deliver material which in turn is having a hard knock-on effect to downstream players and other industries involved.
Since the start of the strike up until earlier this week Tuesday, BMW has advised that they have lost production on 700 cars, in one week, that is a tremendous loss, loss in wages has accumulated over 100million rand at this stage and continues to climb as there is a no work no pay clause due to the covid-19 pandemic.
Companies are being forced to shut their doors due to intimidation and violence from striking workers, there have been reports on companies being burnt and innocent people being badly beaten.
The strike is likely to lead to job cuts, further hammering an industry that’s been in decline for several years which in turn threatens to derail the potential recovery of South Africa’s economy from the coronavirus pandemic, which triggered the biggest annual contraction since 1994, and worsen an employment crisis. The joblessness rate rose to a record 34.4% in the second quarter.
On Tuesday, NUMSA rejected another wage offer as it stands firm on the 8% demand, however there is speculation that they may give in sooner rather than later.
Border updates, chaos ensues at Beitbridge border post as the 10km queue remains in place. The backlog at the border has been present over the last two weeks with no real light at the end of the tunnel.
Border officials are suspected of allowing as many trucks as possible into the Zimbabwean border control zone at Beitbridge, upsetting the go-live chances of concession company Zimborders unblocking bottlenecking on its first day of operating new facilities at the congested crossing earlier this week.
Trucks had been allowed to park in each and every conceivable space north of the Limpopo, numbers of trucks entered the border post the night before go-live, officials had even pushed trucks into the old parking area which sent the border into absolute chaos the following morning before Zimborders started charging processing tariffs from 8am this past Monday morning.
Adding to the mess that Zimborders will have to untangle is the temporary expectation that drivers will have to pay border tariffs in cash until electronic payment facilities are switched on later this month.
The tariffs are as follows:
24-ton Triaxle – $175
34-ton Link – $175
Abnormal Loads – $300
The above charges all exclude VAT, VAT should be reclaimed, provided the transporter is registered in Zim.
For the time being, foreign-registered operators cannot reclaim their VAT, although this had been taken up with the relevant authorities.
As it stands as of today, there is currently a 20km queue south of the border.
Things aren’t much better east as the Groblersbrug/Kazangula passage is facing challenges itself, transporters are shaking their heads in disbelief and frustration over what’s happening on the cross-border road freight line from South Africa through Botswana into Zambia.
The newly built Kazangula bridge is finding itself troubled with a lesser bridge across the Limpopo River further south where truck traffic is building up much faster than expected at the Martins Drift-Groblersburg crossing, which has become frustrating of late for long-distance hauliers serving the Copperbelt region.
Transporters cannot expect any relief by opting for this route rather than the conventional north-south way through the already overburdened Beitbridge Border Post which is a 200 kilometre shorter trip, but unfortunately, the single-lane Limpopo bridge, coupled with stringent covid-testing requirements, is choking traffic flow towards Kazungula.
Sometimes drivers waiting in the queue to cross into Botswana are already Covid-cleared, but because PCR results are only valid for three days and often, drivers have to be retested by the time they finally cross the Limpopo.
At least the queue in South Africa had shrunk to three kilometres earlier this week.
Airfreight expecting growth in revenue, The International Air Transport Association has noted that they predict a healthy future for airfreight, expecting that demand will exceed pre-covid levels by 8% while revenues are expected to rise to a record $175 billion and in 2022 demand is expected to exceed pre-pandemic levels by 13%, with revenues expected to rise to $169bn.
The is all thanks to favourable indicators such as inventory levels and manufacturing output. World trade is anticipated to grow at 9.5% this year and 5.6% in 2022, e-commerce continues to climb at a double-digit rate, and demand for high-value specialised cargo such as healthcare goods and vaccines are on the rise.
Although this is good news, it does not come without complications as pandemic restrictions have led to severe global supply-chain congestion and created hardships for aircrew crossing international borders. Resourcing and capacity, handling and facility space and logistics will be an issue.
August port volumes the lowest in three years, Transnet’s ransomware attack in August had a greater impact on volumes than the July protests which closed the port of Durban for several days.
According to Transnet statistics, it was the slowest August in three years, with 2020 volumes surpassing it.
In August 2021 a total of 330 109 TEUs was handled, compared to 354 015 in 2020, and 447 072 the year before that and 652 vessels were worked in August 2021, compared to 801 in August 2020 and 835 in August 2019.
In addition to a stuttering economy, riots and now elections, shipping volumes in South Africa are also being affected by global supply chain disruptions. At the end of August, over 40 container ships were waiting to berth outside the ports of Los Angeles and Long Beach alone, with 90% of those arriving at a port having to wait at anchorage before a berth became available.
Shipping lines are focusing on high-revenue routes at the expense of Africa, with capacity in Africa having fallen by 6.5% year-on-year.
Some traffic is also being lost to ports in neighbouring countries as news from Dar es Salaam is that volumes are up following investment in port infrastructure, systems and people and a number of lines have introduced new services.
Namport has reported a 15% growth in container volumes year-on-year.
Supply chain disruptions should be expected for the next two years at least. The global supply chain was in crisis at the beginning of the pandemic, and it is expected that there may be an easing in 2023.
Earlier this week, Moody Analytics warned that the disruptions will get worse before they get better, citing delays at key US ports, as well as the national labour shortage.
The agency went on to say that there are “dark clouds ahead” for the global supply chain as there is no clear solution to work out issues between subsections of the supply chain around the world, the alarming shortage of truck drivers in particular has been identified as the weakest link in the supply chain causing equipment shortages as shipping yards are left swamped with excess containers.
The supply-chain crisis has caused major shortages of everything from foods to electronics, cars, furniture, and general household goods. Automakers have slashed production goals on more than one occasion, whilst major clothing companies like Nike have warned that products will be harder to find over the holiday season due to the bottlenecks.
Analysts at RBC Capital Markets have agreed with Moody’s concerns. Earlier this month, the bank analysed the 22 most influential ports around the world and gauged how long it takes for cargo ships to enter and unload.
They found that 77% of ports have experienced above-average wait times this year. Of the 22 ports, ports in Los Angeles and Long Beach had the most inefficient wait times of any other top port in the world with turnaround times for a container nearly doubling in 2021 as compared to averages seen pre-pandemic.
Turnaround times increased from just over 3 days to around 6 days which is almost five days longer than several ports in Asia which operate 24/7. The white house has announced that the the Southern California ports would move toward 24/7 operations in a move to reduce waiting times.
Copper price climbs again, The global energy crisis that has led to power shortages and factory shutdowns did not stop copper prices from climbing to their highest levels since the beginning of August.
On Wednesday this week, copper futures for December delivery erased earlier losses to trade at $4.499/lb for a gain of 4.0%.
The rebound in copper prices comes amid short-term concerns surrounding China and its debt riddled property sector, plus the ongoing economic threat posed by the covid-19 delta variant.
However, Citigroup has warned that prices could fall another 10%, with demand shrinking over the next three months.
Possible mining tax changes coming to Zambia, President Hakainde Hichilema earlier this week mentioned changes to Zambia’s mining taxation policies must not be frowned upon.
Zambian mining companies have long complained about what they call “double taxation” because since 2019 mineral royalty payments are not treated as a deductible expense when calculating corporate income tax.
Although President Hichilema did not provide details on the potential tax changes, he did express his concern that policies and laws for mining should be “appropriate and attractive”.
Finance Minister Situmbeko Musokotwane will present Zambia’s new budget on October 29 where further details will be released.
Zimbabwe temporarily lifts ban on coal exports, Zimbabwe has allowed the export of 200,000 tonnes of excess power coal because of limited intake at its biggest coal-fired power plant, which is affected by frequent breakdowns.
Zimbabwe’s six major coal miners have a standing arrangement to supply 300,000 tonnes of coal to Hwange Power Station on a monthly basis but constant breakdowns of ageing equipment has resulted in the plant taking in less coal.
The coal will be exported to other countries in Southern Africa but producers could look beyond the region if port facilities are available.
The Hwange plant has a design capacity of 920 megawatts but is currently producing 410 MW. The power station is being expanded by China’s Sino Hydro to add another 600 MW capacity.
Moz president urges terrorists to surrender, President Filipe Nyusi last week, urged the ISIS-linked terrorists operating in parts of the northern province of Cabo Delgado to turn themselves over to the authorities.
Speaking to reporters in Maputo, immediately after laying a wreath at the Monument to the Mozambican Heroes, to mark the 29th anniversary of the 1992 peace agreement between the government and the Renamo rebels, President Nyusi stressed that the terrorists “have nowhere to go”.
The terrorists are being relentlessly pursued by the Mozambican and Rwandan security forces and their allies and have been driven out of their main bases.
There is hope that Mozambique’s giant liquefied natural gas project run by Total Energies in the north of the country will be revived.
Reopening of the LNG project will be a major boost for the logistics sector in Mozambique, which has invested heavily in preparing for the much-delayed start of construction, work came to a standstill in April 2020 when Total Energies withdrew all its staff after Islamist insurgents attacked the northern town of Palma.
Production was due to start in 2024. At the time of its withdrawal, Total said it would be at least a year before it returned, and that it was looking at guarantees for the safety of its personnel and infrastructure.
The Jacaranda’s are now in full bloom transforming many of our streets and parks into places of magnificent beauty with brilliant blues and purples heralding the change of Season.
Upcoming Public Holidays:
18th October 2021 – Zambian National Day of Prayer (ZAM)
25th October 2021 – Zambian Independence Day (ZAM)
“If you don’t like something change it; if you can’t change it, change the way you think about it”