Feeble year - moderately positive prospects

It has been a feeble year on the SA ocean trades for both imports and exports, and executives of major shipping lines are hoping for an upturn only in the second half of 2015. Incoming trade has been badly hit by the effects of the weak rand and industrial action in the mining and automotive sectors, according to Ron Frick, MD of Deutsche Afrika-Linien (DAL). “The latest Transnet Port Terminals (TPT) stats,” he told FTW, “show that 2014 imports are down 7.2%. The second half has been better than the first half year, showing a slight recovery pre-Christmas shutdown. Automotive sales have picked up – also supporting this theory. Frick also felt that the weak rand had done little to stimulate exports. “Manufacturing for export is not as vibrant as in the past,” he added, “as some foreign buyers don’t see SA as a reliable supply partner due to the disruptions of industrial action.” However, he did point to fruit looking promising between now and February. “The quality of the crop is good,” said Frick. “However, there is a question mark on how the apples and pears season will develop with the possible over-supply of European fruit in the European cold stores as they cannot sell their produce into Russia due to the sanctions imposed. “For citrus, it’s too early to tell the possible effects of the EU restrictions on SA fruit (due to black spot), which minister Rob Davies has taken to the World Trade Organisation (WTO) to contest as EU protectionism.” The bulk of the exports to Asia are largely resource minerals – which are estimated to make up about 35%-40% of the total SA exports in 2014. “And,” as Frick phrased it, “those are subject to the vagaries of the Chinese economy and the strong dollar”. In his crystal-ball gaze into 2015, Frick suggested seeing it as moderately positive. “This is due to new contracts secured,” he said, “and we are confident it will be a better year volumewise. But freight rates are still under pressure due to excess capacity being offered.” Glenn Delve, marketing director of MSC, also had his mind on China – the world’s top trading nation, and a major influence on the global trade figures. “The reports from China have been buoyant in the September/October/November period,” he told FTW, “which will taper off now mid- November. “The year remains soft as global markets are still fragile.” Delve added that Europe had been flat, and so there had only been a marginal increase in imports from Asia to Europe. “China has had a slower growth rate than anticipated, and the year has been worse than expected,” he said. “But there is talk of a small revival in Chinese imports from SA in the first quarter of 2015. “Europe, meantime, may experience a small recovery mid-2015. “Therefore 2015 looks more positive from midyear onwards.” Maersk Line’s country MD, Jonathan Horn, is also China-phobic. He cited the slowdown in this, our biggest trading partner, as being a significant factor counting against SA, with approximately 40% of SA’s exports destined for China. “And that,” Horn added, “is weighed significantly in favour of raw minerals, metals and wood products. “But China has been experiencing slower economic growth for the past three years, while there’s been sluggish economic recovery in Europe and the US.” For this year, Horn said that the company’s volume performance in southern Africa was expected to be in line with the market – which, as at the end of the third quarter, was a decline of around 3%. “This is likely to improve marginally in the fourth quarter,” he added, “as a slight improvement in import volume before the festive season is being experienced by the industry.” INSERT & CAPTION 1 The latest Transnet Port Terminals (TPT) stats show that 2014 imports are down 7.2%. – Ron Frick INSERT & CAPTION 2 The year remains soft as global markets are still fragile. – Glenn Delve