As lockdown restrictions ease and the world gets back on its feet opportunities for project cargo are expected to increase, but the sector will face some tough challenges – rates being one of them.According to Willie Nel, managing director of ZacPak, long-standing local service providers with existing project handling infrastructure are likely to lead the market.“The outlook is not good for general cargo warehouses that also want to pivot to handling large-scale projects,” he said.
“Rates are not determined by the value of cargo but rather by the scope of work required. This presents a cost challenge when competing against comprehensive service providers that bundle the clearing costs with the warehousing.”
He said there was every indication that quotes for project work would be extremely low as companies tried to get business to counter losses during lockdown. Sub-Saharan Africa, however, had always presented opportunity for logistical support, said Sean Menzies, Johannesburg ocean freight branch manager for neutral consolidator, CFR Freight – from solar power projects to mining infrastructural development.
“Despite the disruption that Covid-19 has foisted on the world, project development in the region is still going ahead.”
While there were additional consequential constraints that needed to be dealt with along the supply chain, project cargo by nature was fraught with challenges, from inadequate road infrastructure to remote areas to lengthy delays at border posts.
“These challenges make it imperative that third party evaluation is conducted to ensure that competencies are matched and risk is mitigated,” said Menzies.According to Nel volumes have declined, but it's not all doom and gloom as the company is currently holding steady.Both he and Menzies remain optimistic that there will be more project opportunity post-Covid-19.
“The independent power producers (IPP) that are set to come online locally come to mind as well as China’s Belt and Road Initiative which is increasing its inf luence on the Southern African Development Community regions – not to mention South Africa’s plans for widespread infrastructure implementation that could potentially see a scaling up of project cargo in the country.”
CFR Freight airfreight director Stephen Bishop said from an air cargo perspective access to capacity for project cargo was the biggest challenge. “There is a severely limited amount of air freight capacity in and out of South Africa. While traditionally we have relied heavily on commercial passenger f lights, we have needed to pivot quickly to look at available charter solutions.
We have relied on current and new service providers, among them Operation Warhorse and our AirCargoGroup network partners.”