The rise in e-commerce and the volatility of the rand are driving growth in LCL (Less than Container Load) cargo in Africa according to global freight forwarding and consolidator firms. Sasha Geiken, vice president ocean freight, DHL Global Forwarding, Middle East and Africa said the company had seen a 6% increase in the number of LCL shipments between September 2018 and May 2019. “In the same breath, there has been a massive shift in buyers‘ consolidations in the same period,” Geiken said. “The number of such shipments has increased by 9%, and total volume grew by more than 30%. This indicates that the importers are getting smarter with their buying behaviour while also getting better container utilisation at the same time.” The main contributors to LCL consignments are mining equipment, industrial products, automotive components and consumer goods. Geiken said e-commerce was a driving force toward productivity improvements in South Africa, leading to growing LCL volumes but the volatility of the rand against major currencies (USD, EUR, GBP) was also a factor impacting volumes. “To minimise exchange rate losses, importers tend to order what is needed to fulfil present demand rather than hold on to inventory for an extended period of time. This places undue pressure on the supply chain as delays in shipping have a direct impact on the ability to fulfil orders,” Geiken said. “In order to manage this, we are seeing shipments in smaller quantities at more regular frequencies because the LCL service is more cost effective compared to airfreight. Equally, the local landside service has recently improved so that it now takes a few days for shipment to arrive – from vessel to final cargo delivery – making LCL a more compelling option than before,” Geiken said. Geiken said she expected the growth in buyers‘ consolidations to continue. CFR Freight key account manager Nicholas Von Flemming said LCL had grown and stabilised into and out of Africa. “The CFR Group has enjoyed unprecedented success in firming up its foundations of ocean and air and has further extended and expanded the newer facets of its business under the road and depot modalities,” Von Flemming said. “The shift towards LCL is very much market dependent. FCL carrier pricing still plays a part for clients whose cargo sits on the threshold of an LCL or an FCL decision. Increased vessel capacity has seen volatility on box rates and thus has made stable volume flow – and forecast – less predictable for LCL,” Von Flemming said. He added that major factors such as Brexit, the Sino/USA trade war, and the struggling SA economy meant that the market was not performing optimally. “Equally forwarders and their clients have increasingly come to rely on the benefits of a stable, neutral and reliable LCL product. LCL has matured from opportunistic ad-hoc sailings of old, to strong portfolios of measurable milestone-based action, with which clients can increasingly forecast,” Von Flemming said.. Increased vessel capacity has seen volatility on box rates and thus has made stable volume flow less predictable for LCL. – Nicholas Von Flemming
