The devastating impact of the pandemic and the Ukraine war on South Africa’s export trade were laid bare at the annual Eastern Cape Export Symposium that was held in East London this week.
The Citrus Growers Association’s Justin Chadwick said the biggest problem facing citrus growers at present was high freight costs.
While export volumes were still healthy, many exporters would not be making any money this year because of the high freight costs.
Freight rates had increased sharply during the Covid-19 pandemic and during the ensuing global supply chain disruptions thereafter, and these rates had increased by four times since the start of the pandemic.
Freight costs amount to some 40 percent of the export cost chain, said Chadwick.
He said it was not as though the major shipping companies were suffering financially, as it was well known that they were generating big profits for their shareholders.
He said prior to the pandemic shipping vessels were 70 to 80 percent on time, but in the past two years they were only 30 to 40 percent on time docking at port.
The average vessel delay was running at six to seven days, which was a long time for perishable cargoes, he said.
Over the past two years, logistics had been disrupted by the pandemic, by the global supply chain disruptions, by local port disruptions from the violence in KwaZulu-Natal in 2021, the cyber-attack on the ports shortly thereafter, and floods in KwaZulu-Natal that destroyed some of the road infrastructure at the ports, he said.
The Eastern Cape’s key export is motor vehicles and components – the province is home to the operations of six vehicle manufacturers.
Ntandazo Mbenya, an economist at the Eastern Cape Development Corporation, said exports from the Eastern Cape, particularly for automobiles and components, had contracted sharply due to the impact of Covid-19 on foreign markets, particularly the EU, an export market that was currently also suffering the effects of the global supply chain crisis and a downturn caused by the Ukraine crisis.
The conference also heard that international trade to and from Buffalo City was being hampered by the port not being big enough for modern vessels, but National Ports Authority managing executive Siyabulela Mhlaluka said Transnet had committed R1.2 billion to expand the port.
AK Communications owner Sitembiso Dalkanyo said the government needed to work harder in removing red tape to make funding available for smaller businesses, and that it should not be as difficult for smaller businesses to obtain government funding as it is to obtain funding from the banks.
“The naked truth is that business needs capital to grow,” he said.
Wool and Mohair SA general manager Mark Knoetze said the mohair price had reached R400 per kilogram in 2021, very high compared with R250 per kilogram in 2020 prior to the pandemic, and demand remained strong. He said the province was “the mohair capital of the world” in terms of production, with exports mainly to Italy, China and the UK. He said there remained large untapped opportunities through further investment in the sector.
BUSINESS REPORT