With South Africa’s shipping season for apple and pear outflows about to get under way, spiralling logistical costs both at home and on the waterside are driving home the market impact that the Middle East is having on exports.
This week, the price of diesel is expected to increase by at least R10 per litre as a direct result of Iran's squeeze on the supply chain through the Strait of Hormuz.
At the time of preparing this post, there were reports of appeals being made to the country’s Treasury to throw a lifeline to consumers, and the Central Energy Fund had yet to make an announcement on Wednesday’s fuel price increase.
However, after a month, the impact of the war in the Persian Gulf is spreading further and deeper, the longer the conflict rages on.
Fuel stocks in South Africa are already under pressure, and when the new fuel price takes hold, the packaging-to-port prices of the country’s fruit are expected to skyrocket.
According to Riaan Ferreira, director of fresh fruit export management company GF Marketing, shipping costs for stone fruit already on the water to importers in the Middle East have tripled since the US and Israel started attacking Iran on February 28.
He told Logistics Update Africa (LUA) that the increasing risk was making for an intolerable situation and that shipping lines willing to still sail to the Middle East had levied surcharges of 300% and more.
"Shipping to the Middle East has increased to $10 000 per container. Even if the war ends immediately and prices drop, who will cover the increased costs?”
But despite tough conditions, supply chain operators like Saudi shipper Kashif Shahzad of Global Star in Damman are looking to reconfigure offset points to keep cargo flowing.
Based in a port on the Kingdom’s Persian Gulf coast, he said they were looking at landing goods at Khorfakkan and Fujaira on Oman’s Arabian Sea coast, provided shipping lines were willing to sail there.
He told LUA: “Prices have increased crazily, as the movement of the fruit is limited." He warned that war surcharges and rising domestic transport costs would add further to the final landed cost.
