Southern Africa’s Ports Lag Behind in Evolving Global Shipping Routes

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JIMMY MOYAHA: A few weeks ago, we examined the potential prospects for South Africa, especially as a southern African port following the closure of the Strait of Hormuz.

We talked about the effects on ships needing to reroute around the Cape of Good Hope en route to Europe and the US via Africa. This scenario seemed to offer advantages for African ports and economies.

However, it appears that some countries are not taking advantage of this situation as much as we anticipated. Today, we will delve deeper into this topic with Dr. Jacob van Rensburg, the research and development head at the Southern African Association of Freight Forwarders.

Welcome back to the show, Dr. van Rensburg. We appreciate you joining us today.

With several countries witnessing nearly a 90% increase in port traffic, one would expect this to translate into a considerable uplift in economic and port activity. Yet, that doesn’t seem to be the case. What seems to be the issue?

JACOB VAN RENZBURG: Good evening, Jimmy. It’s a pleasure to be back.

This situation highlights a gap between the ‘increased vessel traffic’ and genuine ‘economic activity or port calls’. Presently, we are seeing this discrepancy.

We must remember that international trade, especially in shipping, follows specific schedules. Typically, a port is part of a network of about 10 to 15 ports within a broader schedule that lasts 50 to 70 days.

Therefore, while we might observe a significant increase—like a 90% surge in some regions—this doesn’t equate to a proportional rise in vessel calls.

In our context, South Africa’s port throughput for containerized trade saw an increase of almost 4% last year, and bulk throughput also rose by approximately 4%, while the increase in vessel calls only reached 2%.

This indicates that while our ports have seen some growth in activity, there seems to be no direct link between increased traffic and economic growth.

JIMMY MOYAHA: Now, Dr. van Rensburg, let’s shift to the commercial viewpoint. For many vessels, the ports mentioned function merely as transit points rather than final destinations. However, this does not imply a lack of commercial opportunities for these ports.

How do ports generally position themselves to benefit from transitory vessels rather than those delivering goods to final destinations?

JACOB VAN RENZBURG: It’s vital to first grasp the port model.

In South Africa, as in other parts of the world, major ports facilitate the country’s economic activities. Think of significant ports like Shanghai in China or Rotterdam in Northern Europe.

We also have transshipment hubs where cargo is redirected, akin to major players in aviation like Dubai and Doha.

Looking back at South Africa’s statistics, approximately a decade ago, 15% of our cargo was transshipment-related, a figure that fluctuated between 15% to 25%. Currently, that number has dropped to 13%.

Clearly, even with increased vessel traffic, we are not seeing corresponding port calls; this is linked to whether the ports are meeting the needs of local economies or ongoing shipments.

When port activity thrives, an increase in transshipment becomes evident. Conversely, when it lags, transshipment also diminishes.

Additionally, related activities like bunkering (fueling), crew changes, and dry dock services—where repairs or maintenance occur—can bolster economic activity.

If you can’t boost volume, you should still engage in related economic activities.

South Africa holds a strategically crucial geographical position globally, especially in light of recent crises.

The challenges we’ve faced—including incidents in the Red Sea, the Ever Given blockage in the Suez Canal, and now the closure of the Strait of Hormuz—offer an opportunity to enhance participation in these activities.

JIMMY MOYAHA: Dr. van Rensburg, before we finish, let’s talk about how we frame this opportunity. Many claim that routing via the Cape of Good Hope, through South Africa, extends delivery times, increases costs, and introduces delays compared to the Strait of Hormuz or the Suez Canal for shipments to Europe.

However, this should not detract from the ongoing discussions about the potential of this route. As you rightly noted, disruptions are becoming increasingly common.

How can we effectively communicate this opportunity to the international community to establish this as a maintainable rerouting option?

JACOB VAN RENZBURG: For South Africa, the main focus should be on refining our port models—understanding our strengths and leverage.

Over the past two decades, significant investments in our port infrastructure have primarily been directed towards Coega in the Eastern Cape, specifically designed to operate as a transshipment hub around the Cape of Good Hope.

We seem to be trying to cater to diverse needs, which isn’t where the real opportunities lie.

Moreover, most trade flows east-west, with limited commerce routed past us.

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Despite these low percentages, the rise in traffic signifies untapped possibilities.

We need to invest in our ports, upgrade our equipment, and encourage collaboration and data sharing. Progress is being made.

It’s crucial to recognize that we are at a turning point, yet substantial work lies ahead—this demands a collaborative effort from all stakeholders.

The recent cooperation between Transnet and International Container Terminal Services, Inc. (ICTSI) at the Durban Gateway Terminal, previously Pier 2, has yielded positive results.

Based on my estimates, there has been a year-on-year growth of 6.7% in Q1.

While there are positive indicators, we must maintain consistent investment in equipment, continue optimizing our processes, leverage digital solutions, and integrate the entire logistics ecosystem.

Moreover, strengthening connections with the hinterland is essential—this covers improving rail infrastructure, roads, and overall system coordination.

There are certainly positives, but many opportunities await that we must grasp.

JIMMY MOYAHA: Indeed, there are numerous untapped opportunities we can effectively seize. We need to ensure we’re making the best strategic decisions moving forward.

We’ll conclude our discussion there. Dr. Jacob van Rensburg from the Southern African Association for Freight Forwarders joined us today to explore how we can maximize the benefits from our port situations.