Congestion at South African ports is having a severe impact on the shipping industry with two major companies now taking action in a bid to recover losses.
Shipping company Mediterranean Shipping Company (MSC) recently announced that it was imposing a congestion surcharge for cargo from any destination, except east and west Africa, to all South African ports.
MSC said the congestion in South African ports was generating difficult conditions to operate and therefore the surcharge was to be applied from December.
“As from December 3, 2023 (bill of lading date) onwards, the CGS (congestion surcharge) will be charged (at) $210/TEU (about R3 900) for dry cargoes only.”
It has also been reported that shipping company Maersk will be implementing a congestion fee destination for all dry containers, excluding those from west and east Africa to South Africa from December 1.
Transnet Port Terminals (TPT) said it had been advised of the congestion fee that shipping lines have imposed on customers importing general cargo and was working to boost productivity.
“We will be deploying industrial engineers to maximise berth performance across all container terminals.”
TPT added that with immediate effect they have started sourcing second-hand cargo handling equipment as a temporary measure.
“This will assist with the short term challenges at the terminals while simultaneously engaging with original equipment manufacturers on new fleet replacements in the medium term.”
TPT said that a 24-hour maintenance regime has begun across all the company’s terminals.
“This will sustain the availability and reliability of existing equipment.
“To this end, TPT will maintain informing all customers of real-time recovery as the company implements its turnaround plan.”
Professor Irrshad Kaseeram, from the University of Zululand's Economics Department, said that the surcharge is applied when ships cannot load cargo due to traffic at the ports.
“The surcharge covers additional expenses incurred arising out of the delays such as extra personnel having to work overtime, maintenance, fuel and electricity.”
Kaseeram added that the surcharge could lead in the short term to some vessels moving to other ports such as Maputo.
“This could mean loss of business for South African ports. Moreover, these costs will be passed on to imported inputs and consumer goods that locals need, thus raising the cost of living.”
Professor Bonke Dumisa, an independent economic analyst, said that the congestion surcharge was not unusual in the shipping industry.
“Shipping industries impose it to mitigate against and to cover themselves from the significant additional costs they incur where they have to deliver to and/or collect cargo from ports that are categorised as congested.”
Norton Rose Fulbright director and Master Mariner Malcolm Hartwell said that a congestion surcharge was an agreed penalty to help the shipping line recover some losses it suffers as a result of port congestion and inefficiency.
“Ships sitting at anchor or delayed in port obviously earn nothing while idle and continue to incur operating costs. In response to the congestion at South Africa’s ports the shipping lines, importers and exporters have moved some of the cargo to ports in neighbouring countries and, until now, the shipping lines have borne the costs of the delays at our ports. Clearly MSC has introduced this surcharge as it is no longer able to absorb all of the losses. The other shipping lines are likely to follow.”
Hartwell added: “Anecdotally we suspect that all of those cargoes that could be moved to and through neighbouring countries have already been moved. This means that the surcharge will not alleviate the congestion, it will merely add to the costs of our imports and exports.”
Hartwell said it must be noted that freight and shipping companies have been engaging for decades with Transnet on the performance of the ports and railway lines.
He said in response the government had launched a number of initiatives to try to reverse the decline and avoid further terrible losses to the industry and the country.
“Those initiatives will take years and, in certain cases, decades to bear fruit. In the interim our ports and the roads that serve them will remain congested and the mines, manufacturers, importers, exporters and consumers will continue to pay the costs of that congestion.
“Hopefully the surcharge will add impetus to the government’s initiatives to make our ports attractive to anybody wanting to import or export anything to sub-Saharan Africa.”
The Mercury