While it’s never easy to predict what is going to happen in the world of freight, one of the positive indicators for the year ahead is growing export activity from South Africa into the rest of Africa, says Value Logistics divisional director Stephen Segal.
“We are seeing a lot more export activity into other African countries – one example being the solar power industry. We have noticed a massive increase in storage of solar power equipment in our bonded warehouses. Most of these goods are being imported to South Africa, bonded with us, and then sent on to other African countries on demand. We see this as a precursor of good things to come on the continent, where there is a massive drive for intra-regional trade.”
For importers and exporters, things will however get tighter in 2016, says Segal. “This tells us that traders are experiencing tighter and tighter cash flows – and sadly, there’s not much chance of this improving in the near future. In fact, it’s likely to get worse as the new Customs Act, set to come into effect in the latter part of 2016, will in all likelihood affect the way VAT is claimed by importers. Sars wants to implement a payment date of 7th of each month for all deferred payments, which means importers will no longer be able to defer VAT payments and keep the cash in their businesses.”
On the seafreight front, Segal believes an increase in the size of shipping vessels will create the opportunity to transport more goods without necessarily adding too much to shipping costs.
But after 17 years of no increase, he expects freight rates could start to rise. “Freight companies have been offering really low rates as loss leaders to attract business. We don’t see this practice being viable for much longer as margins are being squeezed in so many other areas that freight companies will have to start looking to cut losses wherever they can in their businesses.”
On the trade side, he sees the decline in mineral exports continuing in 2016 after China’s stock market crash and currency devaluation. “This will obviously have a negative impact on not only South African exports, but also on many countries in Africa where raw materials are a primary generator of export income.
“So a few things to look forward to in 2016, and a few things that indicate we’ll need to tighten our belts. But in the world of freight there are so many variables that you never really know what’s going to happen next.”
