strike

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”

Trade Winds bimonthly update volume 45

NUMSA strike to start next week! Confirmation is out that the anticipated, dreaded steel strike action will commence next week Tuesday, confirmation has come from NUMSA themselves that they will embark on industrial action at 5am on the day.

Over 430,000 workers across 9,000 steel and engineering companies will down tools.

NUMSA initially demanded a 15% increase across the board, however in August, it revised the wage demand down to 8% after declaring a dispute at the Metal and Engineering Industries Bargaining Council.

NUMSA says the strike can only be avoided if employers meet workers’ demands.

We will keep our customers up to date with the latest developments as and when received.

Please note that we will be working tirelessly around the clock to ensure that all orders can be dispatched prior to the strike and we will evaluate the situation on a day-by-day basis.

Border updates, over a month, 44 days to be precise, that’s how long the current phase of bottlenecking in the northbound lane south of Beitbridge has lasted.

On the bright side, the queue of trucks waiting to cross into Zimbabwe is around 6kms currently which could also be seen as a norm, drivers on average having to wait roughly four days to get through the border.

Word is out that there is a new charge system being implemented next month that will see transporters fork out additional costs that have been put in place by the Zimbabwean minister of transport, as it stands heavy vehicles will be paying an additional $100, goods vehicles $175 and abnormal load operators will have to pay out $300 a load.

With just a few days remaining before the revamped facilities at Beitbridge come online on the Zimbabwean side of the notoriously congested crossing, transporters are eager for relief from long delays in the northbound queue south of the border. Some of the upgrades to note is a new weighbridge, refurbished scanners a warehouse and newly built roads and a parking area.

The teething issues at the Kazungula Border Post, which a month ago still meant trucks took 30 hours on average to pass through a single-window system, have been sorted out that there is no processing queue at the moment.

It is noted that transporters who are currently using that route can do Johannesburg to Lusaka and offload in three days.

US ports battling record volumes, a behemoth of carrier queues, building up at anchorage off the United States west coast, has over 60 box ships waiting to berth at the ports of Long Beach and Los Angeles.

65 container vessels were waiting for slots as the US economy gathers momentum and importers rally to meet demand by building up their inventories., The two ports, which are said to handle about 40% of America’s inbound goods, used to record maybe one ship waiting to offload in pre-Covid times.

With containers at sea, US retailers and suppliers are running short of everything, from toys to timber, clothes and construction materials, most of which are coming in from China.

Container rates and availability having negative impact, the worldwide container crunch is continuing to weigh heavily on the bottom line of shippers as the unavailability of boxes and related costs mount up while freight forwarders increasingly find themselves unable to cope with rising costs and crippling delays.

The backlog for booked containers continues to grow with current container availability reaching a two-week backlog and on top of that, almost no carrier space to be had until the middle of October all whilst carriers are still charging for detention and demurrage.

US shippers and truckers are still awaiting feedback from a Federal Maritime Commission undertaking to take action against the liner industry for D&D charges, agricultural and industrial exporters in the US have approached President Joe Biden to intervene in week-long delays for containers, related costs and loss of income.

China completes Maersk deal, a transaction said to be netting Maersk $987.3 million reportedly the most lucrative in the line’s history of some 94 odd years, will see the Danish line part with its container manufacturing subsidiary after China International Marine Containers succeeded in the purchase of Maersk Container Industry.

With the deal now finally in the bag, after months of negotiations, Chinese factories will be responsible for manufacturing 96% of the world’s dry bulk containers, and 100% of all reefer boxes effectively handing China a monopoly in the global container business.

China power constraints cause havoc, Copper prices fell on Wednesday as investors reduced risk exposure amid uncertainty caused by a power restriction in China.

Power restrictions in China have hurt supplies of some metals in recent months, but electricity curbs recently spread to more downstream sectors such as tech giants Apple and Tesla which poses a threat to supply chains and could break at the peak season for the sale of electronic goods and items in China.

A trade squabble with Australia has led to the shortage of coal where almost 60% of the Chinese economy is powered by coal, it is estimated that up to 44% of China’s industrial activity has been affected by power shortages which has enraged the public and has also caused shutdowns to traffic lights and 3G mobile phone coverage in some areas.

President Xi Jinping’s decision for Beijing to stop building new power plants overseas is bad news for Zimbabwe too as the African country is heavily dependent on China after it had sanctions imposed on it by the United States and some European countries because of former President Robert Mugabe’s human rights abuses and a policy of seizing land from white farmers.

Zimbabwe was planning to build several coal-fired power plants costing a total of US$15 billion, with Chinese lenders initially committing to fund them.

However, earlier this week, in a pre-recorded speech to the United Nations General Assembly, Xi sounded a death knell for several coal projects, including in Zimbabwe, for which Chinese lenders were expected to provide financing.

China is going on a week-long holiday starting October 1, with investors squaring positions ahead of the break to reduce exposure in a volatile market environment.

Zimasco completes feasibility Study, the Zimbabwean ferrochrome producer has completed a feasibility study for the construction of the Mberengwa furnaces, where it also hopes to open new mines in the same district.

The company announced a US$35 million investment in new furnaces at its Kwekwe smelting facility, as part of a goal to expand output by 40% by the end of next year.

Zimasco had plans previously to create a joint venture with Afrochine, a Chinese mining firm for the Neta project however, after Afrochine, a subsidiary of Tsingshan Holding Group, backed out of plans to build an iron ore mine and a carbon steel plant in Zimbabwe, the company will now pursue this alone.

The Mberengwa furnaces will have the capacity to produce 160,000 tonnes of ferrochrome per annum

The new Kwekwe furnaces will have a capacity of 72,000 tonnes per year, increasing Zimasco’s ferrochrome production from 180,000 to 252,000 tonnes.

A 300,000-tonne-per-year sinter plant is part of the project, where the company will be able to exploit its crumbly ore resource, something it has previously been unable to accomplish due to obsolete technology at existing chrome smelters.

Liquidator at KCM arrested, State-appointed provisional liquidator of Konkola Copper Mines has been arrested and charged with laundering more than $2million.

The commission alleged that Milingo Lungu, acting with others, engaged in theft involving 110.4-million Zambian kwachas and $250,000 between May 22, 2019 and August 15, 2021, he also obtained money by false pretences amounting to $2.2-million.

Lungu’s appointment at KCM in May 2019 triggered a legal battle with Vedanta Resources, KCM’s parent company.

Zambia’s president to meet IMF, Zambia’s president Hakainde Hichilema is due to meet officials at the International Monetary Fund and World Bank in Washington, as the southern African nation tries to secure a lending programme to help it emerge from a debt crisis.

Zambia became the first African country to default on its sovereign debt during the COVID-19 pandemic after failing to keep up with payments on nearly $13 billion of international debt where a quarter of this debt is held by China and Chinese entities via deals shrouded in secrecy clauses, complicating negotiations for IMF relief.

Finance minister Situmbeko Musokotwane said last month securing an IMF programme was critical to restoring creditor confidence and giving the government access to cheaper and longer financing.

Moz government needs $300 Million to rebuild, Mozambique needs $300 million to rebuild insurgency-hit Cabo Delgado Province, the country’s Prime Minister said earlier this week.

The funds will go towards footing the bill for an emergency plan for post-conflict recovery and restoring normalcy in recovered districts in the north of Cabo Delgado.

In July, SADC countries started deploying forces to assist the Mozambican Defence Forces to fight insurgency and terrorism in the northern region.

The joint force in Mozambique is made up of the country’s Security and Defence Forces, the SADC mission to Mozambique as well as a deployment of the contingent comprised of members of the Rwanda Defence Force and the Rwanda National Police.

Rwanda was the first to send 1,000 troops to Mozambique, followed by Botswana with 296 troops whilst South Africa deployed 1,500 soldiers. Zimbabwe also sent 304 military instructors to train Mozambican soldiers to fight insurgents.

“It doesn’t matter how slow you go as long as you don’t stop”