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Trade Winds bimonthly update volume 51

A very warm welcome back to all our valued customers and our best wishes for a positive and successful year ahead.

As we ease into January, herewith a brief update on latest news. We will resume with our full and more comprehensive Tradewinds edition later in the month.

Steel increases continue! Once again, the industry was notified of prices increases effective 1 January 2022.

All three major mills in South Africa have increased their pricing on products such as mining bar, smooth round bar, deformed bar, mesh bar and mill rods to name a few in the region of R700 – R850/Ton.

It seems the trend of import parity pricing is set to continue.

The PVC sector has also announced an increase of 8-10% on all products for the month of January, this comes after back-to-back increases totalling a whopping 63% increase on raw product throughout 2021 as well as force majeure announcements amongst global producers last year.

Truck drivers being harassed by ATDF again, eThekwini Metro police dispersed a crowd of illegal protesters who were stopping trucks near the old Durban airport site on Wednesday demanding to see truck drivers’ permits to check whether they are foreign employees or locals.

A post circulated on WhatsApp groups on Wednesday alleged that the protesters were members of the All Truck Drivers’ Forum (ATDF).

However, ATDF denied that it had been behind the protest action. 

Road Freight Association has requested that ATDF supply details of non-compliant companies, which it had earlier alleged were flouting labour and tax legislation in the employment of foreign nationals, so that action could be taken against them.

Container shipment delivery times double, Data of container timelines measured by a San Francisco brokerage over the festive season period does not bode well for ongoing delays experienced along the transport value chain.

According to the latest information released, containers going via east trade lanes are taking twice as long as they did in 2019.

Shipments which would take roughly 45-50 days from the States to reach its destination out east are now taking around 110 days to complete the journey, the longest it has ever taken for a shipment from the States to reach Asia.

Moreover it is also noted that it now takes roughly 108 days for container in the Far East to reach its import destination in Europe, pre-pandemic trips would take 55 to 60 days on average.

Container availability is severely impacted across the globe because of double-time holdups on certain trade lines. According to the maritime consultancy’s own data, holdups rose by 9% last year, there are fears that freight rates will increase even more.

Freight rates are expected to climb as Lunar New Year approaches and any additional slow down due to COVID will likely exacerbate the congestion and backlog, causing higher container rates. Container rates quoted for January 2022:

  • Global freight rates decreased 5% to$8,917 which is still 140% higher than this time last year
  • Asia – US West Coast rates decreased 14% to $12,524 which is still 218% higher than this time last year
  • Asia – US East Coast container rates stayed basically the same as the last week of 2021 at $16,495, which is 232% more expensive than last year
  • Asia – North Europe container shipping rates also remained level, decreasing 2% to $14,240, nearly double last year’s rate
  • North Europe – US East Coast rates decreased 10% to $6,230, however this is nearly 240% higher than December 2021

Airfreight rates out of China on the down for now, airfreight rates out of China to leading international destinations have fallen 30% since their mid-December peak of $15.13 per kilogram, rates to the United States were at an all-time high but has since sharply decreased to $10.68.

China-Europe rates, in comparison, are down 17% to $7.34 p/kg since reaching a festive season peak of $8.82 by the end of December.

With indications that port-side constraints and associated containerisation shortfalls will continue to put pressure on efficient flows, expectations are that a likely airfreight rate rise is again on the cards.

“Life is like a coin. You can spend it any way you wish, but you only spend it once.”

Trade Winds bimonthly update volume 1

In Moçambique, the Port of Beira has set up various disinfectant posts to cope with an increase in cargo brought in by sea freight diverted away from South African ports which have been operationally closed due to the coronavirus pandemic (Covid-19).

According to Jan de Vries, CEO of Beira concession holder Cornelder de Moçambique, the port’s container volumes are in excess of projected figures released earlier this year, this is mainly due to the increased volumes of food and fertilizer being moved to Zimbabwe and Zambia.

Meanwhile in South Africa, to ensure reduced congestion once lockdown has ended, Government has lifted regulations requiring goods to be sanitised on arrival, Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini Zuma has been quoted saying; “If goods have been at sea for many days, there is no need for them to be sanitised because the virus will have died by the time they reach the port”.

South Africa and the European Commission have agreed to calm the current required regulations that expects the submission of original certificates of origin to prove the originating status of goods at the time of clearance – copies or electronic versions will be accepted.

SARS released the following statements:

“While Article 26 to Protocol I of the SADC-EU Economic Partnership Agreement (EPA) requires the submission of an original proof of origin within ten months, SARS will honour or accept copies or electronic versions of certificates of origin while awaiting the submission of the original versions within twelve months of their being issued in the EU,”

“Traders are encouraged to register for the generous Approved Exporter Scheme, within the meaning of Article 25 to Protocol I of the SADC-EU EPA, which allows an origin declaration to be presented in the importing country no longer than two years after the importation of the products to which it relates.”

Over in Zambia excitement is growing as the Kazungula bridge is nearing completion, the bridge was expected to be functional in 2018 but due to labour unrest and payment issues this delayed the construction of the bridge.

This “game-changing” bridge close to 1km long,  will shorten travel times quite substantially compared to the current out-dated ferry service being used.

No official dates have been given for when the bridge will be opened but construction is expected to be completed in June this year.