Suez Canal Crisis: South Africa must step up to service re-routed ships, says Maritime Business Chamber

Maritime Business Chamber (MBC) executive chairman Nathi Sonti. Picture: Supplied

Maritime Business Chamber (MBC) executive chairman Nathi Sonti. Picture: Supplied

Published Dec 29, 2023


The Maritime Business Chamber says the crisis in the Middle East, which has resulted in more than 100 container ships being rerouted around southern Africa to avoid the Suez Canal presents a “rare and rare and lucrative opportunity” for South Africa.

Earlier this month, AFP reported that South Africa might see increase in maritime traffic as concerns continue to grow over the situation in the southern Red Sea and Gulf of Aden, as reports emerged that Yemen’s Iran backed Huthi rebels have repeatedly fired missiles and drones at vessels using the shipping lanes that they say are linked to Israel - in the rebels’ show of support for Palestinians.

However, on Wednesday, the Maritime Business Chamber highlighted that for South Africa to reap any meaningful benefit from the re-routing of ships, the country must speedily put its house in order, particularly reviewing the “crackdown” unleashed by the South African Revenue Services (SARS) regarding tax compliance on the marine bunkering services.

“The crisis (in the Middle East) presents South Africa and its maritime industry with massive economic and commercial opportunities to generate beneficial value in a substantial global dollar-denominated market whilst playing a significant role in rescuing international shipping and rendering the Cape Sea Route commercially viable despite the Middle East disruptions,” said MBC executive chairman Nathi Sonti in a statement.

A container ship on the Suez Canal. File Picture: Val Boje

“That conflict has again re-asserted South Africa’s Cape Sea Route as the only feasible alternative and one of the world’s significant and enduring sea routes for international trade.”

He said South Africa must speedily step up and establish itself as a reputable provider of required critical maritime services in an efficiently, reliably, and consistent manner.

“One such critical service is the marine bunker fuel service. Already, with the adoption of Operation Phakisa - Ocean Economy, South Africa had been positioned and marketed as an attractive international maritime centre that reliably and efficiently provides critical maritime services needed by large international fleets as they circumnavigate the Cape Sea Route along its long 3,000 kilometre-long coast, in-shore, and off port limits,” said Sonti.

Maritime Business Chamber (MBC) executive chairman Nathi Sonti. Picture: Supplied

“Providing offshore - off port limits marine bunkering services to passing ships has been one of the critical strategic target initiatives to make the Cape Sea Route viable, competitive, and attractive for international shipping.”

Sonti argued that one of the best and most successful business innovations championed under Operation Phakisa is in offering offshore maritime logistics services, and the establishment of the international marine bunkering services centre in Algoa Bay, off Gqeberha.

“The business targeted the passing maritime traffic of about 30,000 ships not headed for any of the South African ports. In under five years, that business had attracted thousands of ships requiring many different services, mainly from the tens of small and medium enterprises. It has created employment opportunities for thousands in the country,” he said.

The Suez Canal in Egypt. File Picture: @FullAvanteNews/X

In September, IOL reported that the Maritime Business Council sounded the alarm that SARS’ impounding of five vessels providing bunkering services offshore of Gqeberha may lead to ships no longer refuelling at South Africa’s ports, and an entire industry that is also providing opportunities for small, medium and micro-enterprises (SMME) may be lost.

Sonti said the action by SARS was “not just an ill-advised decision; it was a significant misstep that hampers South Africa's golden opportunity” in the maritime sector.

“This blockade, amid a global shipping crisis caused by the Red Sea route disruption, is short-sighted and economically damaging. The crisis in the Middle East has presented South Africa with a rare and lucrative opportunity. By serving as an alternative route through the Cape Sea Route, South Africa gains immensely from redirecting global maritime traffic,” said Sonti.

“This is not just about redirecting a few ships; it's about tapping into a worldwide trade artery that could bring substantial economic growth and boost tourism and employment opportunities to the region.

“The potential benefits are staggering increased international trade, heightened global standing in maritime logistics, and a boost to the local economy through job creation and business opportunities.”

However, Sonti insisted that SARS's crackdown threatens to squander this unparalleled opportunity.

Offices of the SA Revenue Service: File Picture: Timothy Bernard /Independent Media

“By halting critical maritime services, they are causing immediate disruption to global trade flows and significantly impeding South Africa's ability to seize a pivotal role in international shipping,” he said.

“This is when South Africa should be capitalising on this geopolitical shift, not retreating due to regulatory hurdles. SARS must reassess its position with the utmost urgency. The continuation of this moratorium is indefensible when weighed against the potential benefits to both the South African economy and the global shipping industry.

“The maritime industry's willingness to engage with SARS and find a workable solution underscores the critical nature of the situation. Any further delays in lifting this moratorium will not only hinder the growth of South Africa’s maritime sector but also reflect poorly on the country’s ability to adapt and capitalise on global economic shifts,” said Sonti.

Following its enforcement action in September, the SA Revenue Service issued a statement, confirming the detention of five bunker barges at the Algoa Bay anchorage off Gqeberha, insisting that it has been conducting investigations around compliance in fuel bunkering, aside from normal tax activities, and the detention of the vessels was part of this probe.

SARS Commissioner Edward Kieswetter. File Picture

On Thursday, SARS told IOL that it cannot disclose any information relating to ongoing investigations, in terms of the Customs Act, save to say all economic activities must comply with the law.

“Offshore bunkering and off port limits activities, like all other activities must be conducted lawfully and must be compliant with the provisions of the Customs Act read with the Rules (the legislation) thereto. We draw your attention specifically to the draft legislative amendments which have been published for public comment by all interested parties including the bunkering and related industries,” said SARS head of communications, Siphithi Sibeko.

“Included in the proposed legislative amendments are provisions for the licensing of a special type of sea-based storage warehouse and marine removers of fuel levy goods. The proposed draft legislation and the process of public consultation is to facilitate and promote business development and economic growth, including the bunkering industry while ensuring compliance with the relevant legislation and providing certainty.

“SARS is determined to carry out its legislative mandate to facilitate legitimate trade. In doing so, SARS will always act to ensure that all taxpayers adhere to the law by voluntarily complying with their legal obligations,” he said.

Previously, SARS Commissioner Edward Kieswetter said from 2016, the tax authority has been engaging with the fuel industry to encourage compliance with the legislation concerning the importation, the trading in and other operational activities of vessels engaged in the supply of fuel.

Alongside these engagements, Kieswetter was quoted as saying SARS has also been conducting investigations around compliance in fuel bunkering, and the detention of the vessels was part of the ongoing investigation.

Customs officials working on a container ship. File Picture: Supplied

IOL reported in September that the four detained bunker tankers and an oil drilling ship are connected to Minerva Bunkering Marine Services and TFG Marine. The bunker tankers were anchored in Algoa Bay, while the drill ship is at Port Nqura.

Egyptian air force planes parade during the inauguration ceremony of the new Suez Canal, in Ismailia, Egypt. File Picture: REUTERS/Amr Abdallah Dalsh

Earlier this month, The Guardian reported that the Houthi rebels, who are aligned with Iran, have said they attacked ships in response to Israel’s bombardment of Gaza. Israel is retaliating against an attack by Hamas, which controls Gaza.