Nicola Mawson
Two of the world’s largest shipping companies, Maersk and Hapag-Lloyd, have announced two new potential networks, one of which goes past the Cape of Good Hope, in a move that could be indirectly positive for South Africa’s economy.
The two entities, which unveiled a long-term collaboration in January 2024, indicated in a statement yesterday that the alternative Cape of Good Hope network was being proposed “due to the on-going disruptions in the Red Sea”.
They are also looking at a Trans-Suez Network. The chosen network will be unveiled in October.
Maersk had already said earlier this year that it would divert all vessels around Africa instead of using the Red Sea and Suez Canal for the “foreseeable future” after Yemeni rebels attacked its merchant ships.
On Maersk’s website, it states: “Our goal remains to return to the Red Sea as soon as it is safe to do so, but as the situation remains highly dynamic, we are prepared for either scenario – a return to the Red Sea, or a continuation of the alternative route south of the Cape of Good Hope.”
The Cape of Good Hope network, should it be implemented, would see 341 vessels moving as much as 3.7 million Twenty-foot Equivalent Units (TEU) transported across the ocean.
Research from the World Bank shows that, as of end-March 2024, the volume of traffic through the strategic Suez Canal and Bab El-Mandeb Strait had dropped by half from August last year, while the substitute route via the Cape of Good Hope had witnessed a 100% increase in navigation across the same time period.
The Red Sea was a critical conduit for 30% of the world’s container traffic until war broke out in the Middle East.
The Airports Company of South Africa (Acsa) has already noted a benefit from a shift in logistics flow due to the dangers of shipping through the Red Sea.
Speaking during the recent results presentation last week, Acsa CEO Mpumi Mpofu said that maritime cargo was being diverted to air transport.
“This augers well for the air cargo industry and augers well for us as airports,” she said.
Gavin Kelly, CEO of the Road Freight Association, said that ships from countries that supported Israel in the current Middle Eastern conflict were being targeted, while there was still a “scourge” of piracy to content within the region.
“The Road Freight Association has noted from various logistics supply chain players that this could mean more business for South African ports,” Kelly told Business Report yesterday.
However, he cautioned, this would not necessarily mean that ships normally passing through the Red Sea would now drop or load cargo locally.
Despite this, there was an opportunity to resupply ships with items such as fuel, fresh foodstuffs and other items, as well as the potential for mechanical and/or repair offerings from port facilities.
Kelly noted, however, that “the state of our ports is well-known across the world, and reports of lengthy delays, poor service and backlogs most probably do not place our ports in a good light, or even as an appealing alternative”.
The government and the public sector need to work together to help Transnet become more efficient and remove backlogs, Kelly said.
Last year, Transnet developed a recovery plan, which stabilised the sector and improved freight carrying capacity to 149m tons and reduced waiting times at ports.
“Whilst no one would want the troubles visited on the Middle East or Eastern Europe to continue, this is a golden opportunity for South African ports to redeem themselves,” Kelly said.
“It is now far more expensive to ship from the East to the West (and Europe). Our ports need to offer desirable stopovers within efficient and expedient conditions.”
BUSINESS REPORT