5 October 2022

These factors are driving port congestion in Cape Town

Port congestion is not a new problem for South African importers and exporters. Over the last few years, it’s been a challenge faced by many ports globally which affects both the shipping lines as well as the importers and exporters.

Shipping lines are only profitable when their vessels are moving, so waiting at anchorage is not only expensive but it also has the undesirable knock-on effect that shipping lines tend to skip congested ports. Importers and exporters require on-time shipping to meet just-in-time stock requirements, so port congestion and the resultant stock pressure leads to them either having to carry higher safety stock levels or running a high risk of stocking out. Both of these options have a severe effect on their bottom line.

There are a number of factors which can cause port congestion:

  • Windbound port

High winds in Cape Town from October to March every year result in the risk of containers not being discharged within the standard three days. Adverse conditions make it impossible for vessels and landside infrastructure to operate safely, rendering the port unable to operate and bringing all such activity to a halt. Heavy fog and mist have the same effect.

  • Infrastructural constraints

Proper operational planning with skilled staff along with good and efficient systems will ensure that ports operations run smoothly but unfortunately, this is not always the case and the port or terminal can be booked over its capacity.  This results in port congestion, causing delays in containers timeously being offloaded and dispatched.

  • Seasonal peaks

The lead-up to the festive season at the end of the year is a seasonal import peak. Both Cape Town and Durban ports handle large volumes at this time of the year and unfortunately the inflow of Christmas goods coincides with the highest risk of adverse weather.

  • Industrial action

Industrial action or strikes can cause major delays at ports as it normally takes place over a number of days, disrupting operations and resulting in capacity either being tied up outside the ports or vessel schedules being delayed.  A slowdown in port operations and existing trucking constraints can be threatening, creating additional bottlenecks and preventing cargo from moving on time.

 A perfect storm of factors

Any of these factors have the potential to cause port congestion and together, they can create the perfect storm. When any of these factors are at play, vessels are forced to either wait until conditions allow port operations to return to normal or bypass Cape Town entirely.

Shippers must then either discharge their cargo at the next port of call – for Cape Town-based importers this would be either Coega or Durban – and transport their cargo by road to Cape Town, or wait for the vessel or feeder vessel to call back at Cape Town. Such delays are incredibly costly.

Delays in container offloading affects the landside port operations too. Transport is required to move containers into and out of stacks, and shippers typically arrange this transport in advance to prevent incurring port storage costs which are levied when cargo is not collected from terminal within the prescribed free period, usually 72 hours.

When loading and offloading operations are suspended, it results in truck congestion which creates further delays.  Also, containers not collected within the prescribed free period, may even be moved by the shipping line to a nominated depot, resulting in additional handling, storage, and logistical costs, and further delaying the final delivery to client’s premises.

The effect on costs

Port congestion has also had the effect of increasing freight rates, with waiting times having increased significantly around the world. Sea freight rates are still higher than the pre-pandemic period but already lower than in 2021.

A positive peek into the future

To address COVID-related backlogs which made matters even worse, Transnet implemented a truck booking protocol via the NAVIS system to aid port fluidity which came into effect in October 2021. Transporters now need to book a collection or delivery slot, without which they cannot access the terminal area.

In addition, the South African Government has embarked on a massive infrastructure drive to boost the economy. The ports are seen as key engines for economic growth and as part of the Transnet Market Demand Strategy, Transnet Port Terminal (TPT) will receive R33 billion of the total Transnet MDS R300 billion, aimed at creating new capacity for terminals to meet projected demand.

Based on this potential investment, it appears as if the future is looking more promising for South Africa’s commercial ports, the regions in which they are located, as well as all commercial clients, importers, and exporters.

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