SA has ‘most expensive’ cost chain

Exporters are feeling the
pain of South Africa’s
high port costs as margins
are squeezed in an
increasingly competitive
environment.
“What is clear to me is
that South Africa has the
most expensive cost chain
between South Africa,
Spain, Morocco, Chile
and Peru by far,” Piet Van
Rensburg of perishable
specialist LGS Exports
told FTW.
“Some of these
countries’ costs are about
30% lower than South
Africa. There is a certain
component of shipping
in the cost chain, but our
competitors actually pay
the same or more for their
shipping.”
He explained that the
biggest cost difference lay
in the country’s port costs,
some of which “just don’t
make sense”.
Port costs, coupled with
royalties and levies from
the US Department of
Agriculture, CPF levies,
Perishable Products Export
Control Board levies,
and the Citrus Growers’
Association levy are
hitting exporters.
“Most countries have
one or two of these and
even then levels are lower
than South Africa’s,” said
Van Rensburg.
“So, I think we are
starting to feel the pain –
less and less profit. The
prices in the market stay
the same. The squeeze lies
in between.”
He said that the high
costs would not result
in any changes to the
way LGS does business.
However, lack of profits
could force it to structure
things differently.