Namibian freight companies seek new market niches

Companies operating in
the Namibian freight
sector are reinventing
themselves, consolidating
and aggressively seeking new market
niches in response to a dramatic
drop in volumes due to the regional
slowdown.
The Bank of Namibia warned
in December 2015 that “risks to
the domestic outlook include low
commodity prices that may lead
to deterioration in the country’s
external position and exert pressure
on both the current account balance
and the international reserves”.
Commodity prices have not
recovered, and the country is feeling
the effects – as predicted by the
bank.
Adding to Namibia’s woes has
been the deterioration in the rand
following Nenegate.
The consensus in the local freight
industry is that it had an almost
immediate impact on the already
constrained domestic market.
With just around 2.3 million
people the local market is too small
to support the logistics sector, which
relies on transit cargo.
Volumes of freight passing through
the port of Walvis Bay and along
the corridors serving it have nearly
halved year-on-year, according to
some estimates and figures released
by the port authority.
The most recent World Bank
overview of Namibia identifies a
number of threats that have the
potential to affect the growth of
trade flowing through the country.
“All major production sectors
– mining, tourism, livestock and
meat production, and fisheries – are
vulnerable to external economic and
ecological shocks.
“Foreign demand in each
industry is cyclical, seasonal, or
unpredictable, with downstream
effects for employment, income, and
government revenue.
All face risks from
climate change
and/or other
countries’
policies
to address
climate
change,’ says the
World Bank.
Recognising the
risks, the managers
and owners of companies
interviewed by FTW had
one of two responses – the
first being to contract and
attempt to wait out the storm,
and the second to use the lull to
invest in identifying new markets
and better ways of doing business.
They recognise that it is not all
doom and gloom in the Namibian
economy.
According to the World Bank
overview, political stability and
sound economic management have
helped anchor economic growth
and poverty reduction.
Low interest rates, fiscal
stimulus, and unusually
high foreign direct
investment
(FDI) in
mining
resulted in “a
construction
boom, fast
household
consumption
growth, and solid growth
in tradable services,” it says.
However, the government
is cutting back on spending in
response to a growing fiscal deficit
and “an unfavourable external
environment”.
The Bank of Namibia in its latest
report says over the medium term
growth and job creation will be
supported by increased mining
output from new mines, recovery in
agriculture and sustained growth in
wholesale and retail trade.
It warns that “increasing
uncertainties in the South African
economy, mainly in the form of
worsening drought conditions and
low growth are likely to increase
exchange rate volatility further, with
consequential effects on inflation.
“Finally, the negative impact of the
decline in oil prices on the Angolan
economy is likely to dent Namibia’s
growth, mainly through wholesale
and retail trade,” it adds.
It is that “dent’ that has hit
the shipping, freight and related
industries hard – and will see the
survivors emerge leaner, smarter and
more diverse.
CAPTION
An oil rig lies at anchor in the mist near Walvis Bay. The near collapse of the oil industry in Namibia and
farther up the west coast is reflected in the number of rigs and vessels lying idle in the safety of the bay.