There could be an element of trade 'switching'
WHILE THE SA-EU (European Union) free trade pact can be expected to generate a lot of new business, it's a bit early to start itemising or quantifying just exactly what and how much extra freight volume could be generated.
That summarises the feelings in the SA shipping industry, expressed to FTW in this case by Brett Gray, liner director of Safmarine, and John Turner, m.d. of P&O Nedlloyd.
We certainly applaud the fact that this pact has now reached signing stage after four years of hard negotiation, said Gray. And we can look forward to an increase in trade from this.
But the exact detail of inward and outward flows is all dependent on the two economies, and how cost-competitive SA can be in the free trade scenario.
The level of interest rates, the state of the rand, and the economic situation are bigger role players in trade trends than the trade pact will be, Gray added.
Given the present state of the economy, for example, it is questionable if we have the ability to buy very much more in the way of imports - never mind the pact, he said.
However, if exports improve, so much the better. But this depends on the efficiencies, productivity and competitiveness of SA.
That's more or less how Turner sees it. It's a bit early to make exact predictions, he said, but it undoubtedly will help growth in trade.
Questioned on whether the pact would not, in fact, only lead to traders relocating their business from other markets to those of Europe, Turner agreed that there would be an element of switching.
But anything which frees up trade, tends to give more overall growth, he said.
