Dolphin Bay’s forward planning protected us from the shipping delays that affected many companies when Transnet workers in South Africa went on a two-week strike last month.
However, Transnet remains a red flag for South African businesses and the economy after years of neglect and underinvestment in its infrastructure, along with that of its fellow SOE Eskom.
“We feel very grateful that we were not affected by the strike,” said our Chief Operations Officer Thinus Ferreira. “This was due to our extensive forward planning, which takes place many months ahead and is adjusted frequently.”
South African ports have some of the worst track-records in the world yet are on top for handling fees, he observed wryly. “We must continually work around the logistical challenges at the local ports and within the shipping industry, to ensure that we do not run out of raw materials, and our customers do not run out of CCA.
“This is simply part of doing business for us.”
We acknowledge that it is difficult for many of our customers to plan, as elections have taken place in some of the African countries where they operate, and political dynamics are affecting many markets. The electricity parastatals that give large contracts to timber-treatment companies typically grant very short lead-times, making planning especially difficult.
Shipping lines’ export fees increased by 700% following the Covid-19 pandemic and have not decreased.
Thinus observed that the unprecedented shipping logjams that followed the worst of Covid-19 have now eased, and patterns have reverted to those typical before the pandemic. These include the seasonal citrus exports from South Africa, which have taken up most of the available space on vessels in recent months.
“Unfortunately, while demand on shipping lines has diminished overall post-Covid-19, the lines have not lowered their rates.” These increased by 700% for imports in the year the pandemic began, and 250% for exports.
Currently, there is only one shipping line serving each route. While other companies may offer a service, we have found that they withdraw it at the last minute, citing too few available vessels.
Adding to the constraints is the fact that shipping companies have taken some of their older vessels out of circulation in recent years, to comply with international regulations on carbon emissions.
Shipping fees will remain exorbitant, and the monopoly on routes will remain in place, until there is sufficient disruption to allow new entrants into the capital-intensive shipping industry, Thinus observed. One such prospect could be ships powered by alternative fuels such as hydrogen; another could be the introduction of blockchain to digitise bills of lading and other processes.
“Another disruption, which is already happening, is that some shipping lines are investing heavily in becoming a more inclusive service, doing away with the need for agents,” Thinus said. “Further disruptions in the shipping industry probably will occur; we just have no idea when, as it will need investors with very deep pockets.”
“There are always solutions to logistics problems; they just come at a cost,” he concluded.