As the Cape of Good Hope experiences heavy winds and cyclones, container ships are being further diverted and trade is being severely disrupted. Anglo-South African banking and wealth management group Investec explains that these disruptions are expected to heavily delay delivery timelines within the South African supply chain.

This is following the Red Sea crisis, which resulted in shipping lines rerouting around the Cape of Good Hope, which had already lengthened the sailing times for the Europe-Asia trade lane by an additional three weeks.

The inclement weather led to South African rail freight and ports company Transnet announcing a halt in port operations in certain areas, citing strong winds and high sea swells.

Investec Business Banking head of supply chain Dylan Govender explains that further adverse weather conditions along the east coast, earlier this year, forced Transnet to extend storage periods in the Durban port by over a week.

The Durban port had remained on a tiered release of containers and the booking system for a vehicle to uplift a container from the port remained restricted.

Govender points out that, at the time, Investec’s road-haul partners were experiencing an average delay of three days to secure a booking to load containers, but notes that Transnet has since improved the speed of vessels entering the Durban port for unloading, owing to its new tugboats.

However, the bad weather conditions and equipment-related challenges are causing longer storage times at the port after unloading. Additionally, significant delays in the availability of booking slots for container upliftment are affecting delivery times.

It is important to note that shipping lines calculate free days for returning empty containers from the vessel’s discharge date. Therefore, Investec is monitoring demurrage for its customers, owing to the extended-release days by Transnet.

Govender emphasises that “importers are strongly encouraged to prioritise shipping now to counteract sea freight delays and meet market demands throughout November and December”.

Further compounding this issue is the fact that vessel bookings and space availability in the Asia to South Africa route remain unpredictable.

Govender points out that importers should consider irregular sailing timetables, additional shipping charges, strong airfreight demand and challenges in sea freight capacity and equipment distribution when making logistics decisions.

Freight Capacities

Govender explains that Investec has not observed any discernible improvements in the Red Sea situation and global port congestion continues to escalate.

He adds that several carriers have deployed smaller vessels on the Asia to South Africa trade line, which should provide some relief moving forward, noting that this deployment has led to a stabilisation of freight rates with a slight average reduction of $200 per twenty-foot equivalent unit.

“Our expert opinion is that this relief is expected to be temporary, especially with the Chinese festive holidays approaching in mid-September and early October,” states Govender.

He notes that the increased demand ahead of these periods will likely heighten the need for earlier sailings.

Additionally, because of delays in sea freight transportation, global air cargo capacity has seen a 14% increase on average. This trend is expected to continue in the coming weeks, along with a rise in air freight rates as importers seek to mitigate sea freight transit delays.

Consequently, Investec is currently exploring options for combining sea freight and air freight for shipments along the Asia to South Africa trade route, urging importers to adopt a proactive stance to navigate these challenging times.