DAL ‘quietly optimistic’ as volumes exceed expectation

What a difference a year makes. After the gloom that dominated the start of 2009, volumes this year have exceeded expectations, says DAL Agency managing director Ron Frick. While South African trade statistics for the first 11 months of 2009 indicate a decline of 23% in imports and 26.3% in exports, there was a remarkable recovery in the last quarter, says Frick. And according to economists imports are likely to show modest growth of 8.5% this year on the back of improved consumer demand for durable goods, while there has been strong growth in the agricultural export sector particularly out of Malawi. “They had a good tobacco season last year with healthy volumes to Europe, but tobacco is seasonal and this month (March) will mark the end of the 08/09 tobacco season,” he said. The perishable sector was least affected by recession, but unfavourable weather patterns played their role – as did global buying patterns. “Unseasonal rain in the Cape at the beginning of 09 affected export production – particularly of grapes. And there was a definite decline into the UK because of the economic situation, resulting in large volumes of export fruit being diverted to the Middle and Far East where better prices were achieved for the farmers. “The deciduous season started in November last year and volumes are back to normal. There’s strong demand in Europe and reefer capacity is well utilised as a result. The grape season is now tailing off and we’re about to go into the pome fruit season, with all indications that demand is strong.” The Reefer Express service introduced last month by the SA Europe Container Service (Saecs), of which DAL is a member, will continue until the end of the season in August or for as long as the demand for reefer capacity exists. Early export sailings in 2010 have been well utilised, says Frick, although port congestion remains a perennial concern for vessel operators. In Cape Town there’s a combination of wind delays, a general increase in cargo, and container berths that are not fully functional due to upgrades, while the severe European winter has also affected schedule integrity as has productivity in European ports. But despite the many challenges that lie ahead, Frick is bullish about the outlook for 2010. The main challenge is to get the freight rates back at least to where they were prior to the economic meltdown in the first quarter of 2009, he says. “The rate restoration is extremely important for the liner industry, in order to be able to provide SA importers and exporters with the necessary capacity and dependable sailing schedule that enables them to plan their inventories to minimise cost,” says Frick. “We anticipate that during the World Cup demand for space will peak in April/May and again at the end of the tournament as stock levels are replenished. “After that we expect it to level off and show modest growth. Economists estimate that the economy will grow by 5-8% but there is likely to be more growth from the Far East than Europe.” At the moment there’s been a spike in particular products imported for the World Cup – like 100 containers of confectionery and beverages that is a once-off bonus – while a lot of equipment and infrastructural cargo especially imported for the event will be reshipped to Europe. For DAL the outlook is therefore quietly optimistic. “Africa is coming into its own as a supplier partner for the rest of Africa and is seen as both reliable and costeffective.” With its regional agency network in place, DAL Agency is well placed to take advantage of the many opportunities this will present. “All indications bode well for a return to normal operation – but as always shipping lines will keep a close eye on the supply and demand ratio before introducing more capacity into the service.”