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Trade Winds weekly update volume 15

Tensions flare at Beitbridge, following weeks of up and down madness at the Beitbridge Border Post drivers have finally said enough is enough!  Over the past week, the queue going north at Beitbridge has grown, with reports emerging of corrupt police officials soliciting R500-R1000 bribes but the drivers are now pushing back.

From early morning on Tuesday this week, video footage emerged of truckers blocking the path of another truck being escorted by police to the front of the queue, the drivers confronted the official insisting the truck return to the back of the queue. This is not an isolated incident.

The queue is currently sitting around the 16km mark in advance of the potential shutdown.

Maersk resumes operations at CT Northbound, Strategies to reduce the backlog at the Port of Cape Town are bearing fruit, with Maersk announcing that it will resume calls at the port on the northbound rotation of the South Africa Europe Container Service (Saecs).

Due to prolonged delays at the port caused by Covid-19 staff shortages, Maersk announced in June that it had decided to bypass Cape Town on the Saecs rotation between Durban and the Port of Algericas (WAF1).

However, in a customer advisory notice released yesterday, Maersk said: “Waiting time in Cape Town terminal has decreased significantly which has allowed us to review our Saecs product.”

“We are pleased to inform you that we will revert back to Cape Town with our Saecs northbound call and resume WAF1 in Port Elizabeth to cover the Eastern Cape market to Europe.”

The shipping line will however continue to bypass the Cape Town southbound and there will be no change to import routings to Port Elizabeth and Durban.

Slump in production, Anglo America’s platinum production slumped by 25% in the first half of 2020 due to the lockdowns imposed in both South Africa and Zimbabwe.

It was also stated that total refined production including tolling declined by 46% to 1,246,900 ounces as the temporary closure of ACP and load-shedding in the first quarter impacted production.

Whilst things look a little bleak on the platinum side, Gold’s record run to almost $2,000 an ounce has burnished cash flows and driven a surge in shares of bullion producers. The rally provides a renewed test of discipline for Barrick Gold Corp. and peers after a similar climb a decade ago prompted a spate of inflated deals and overly optimistic investments that wasted billions.

For gold-mining companies, this is great news, with costs contained even after pandemic-related closures, virtually all are churning out impressive cash. In the first three months, Toronto-based Barrick alone generated $438 million in free cash flow based on a realized price of not far off $1,600, compared to $146 million a year earlier. 

Valuations look better too, especially for the sector’s largest players.

Power constraints choking sectors, South Africa continues to face electricity woes and there does not seem to be any light at the end of this tunnel.

Earlier in the year newly elected CEO of Eskom, André de Ruyter, positively said that there would only be three days of load shedding this winter however after three weeks of constant load shedding various sectors within the country are feeling the effects, especially the steel sector, this coupled with the impact of COVID and the never ending steel price increases which have now become a back to back pattern, the industry faces serious challenges with high prices, high demand but low output as the lockdown and electricity issues puts strain on production.

So far this year we have seen steel increase on average by 15-20%  with rumours of further increases monthly throughout the remainder of 2020.

“Don’t Let Yesterday Take Up Too Much of Today”

Trade Winds weekly update volume 14

Chirundu 24/7, One of, if not, the most problematic borders on the important North-South Corridor into the copper belt area of Zambia and the DRC last night, told the Federation of East and Southern African Road Transport Associations (Fesarta) that it was open on a 24/7 basis. This comes after previous investigations earlier in the year showed that the border could and should operate at 24 hours seven days a week.

However, the investigations earlier in the year were not actually meant for the border to operate at this level but rather to identify challenges preventing the Zambezi crossing between Zimbabwe and Zambia from returning to previously established OSBP (One Stop Border Post) systems and services.

Mike Fitzmaurice, CEO of FESARTA said the following: “We looked at what it would take to make things work and spoke to officers and customs officials. We found that there’s enough will to make it work and received commitment from all parties concerned to solve Chirundu’s congestion issues.”

The 24/7 decision is effective immediately – and while 24/7 operations were still at a tentative stage, the remainder of the year would be used to fine-tune legal-technical aspects of the OSBP.

Fitzmaurice said it was reassuring that the recommendations made to Zimra and the ZRA following January’s fact-finding mission had been taken to heart, and that it was hoped Chirundu would in time be restored to the OSBP it used to be about 10 years ago.

Congestion strikes Beitbridge again, earlier in the week queues stretching around 8kms formed again south of Beitbridge as ZIMRA has ramped up their game on preventing groceries bought in South Africa being smuggled north across the border. The queue had reduced a bit as earlier in the week it was reported to be around 12Kms however frustrations are still mounting, according to reports ZIMRA officials are searching each and every truck.

There has also been reports of police taking this opportunity to exploit drivers of a reported R500 to jump the queue.

In addition to Zimra’s decision to tighten up on truck checking, staff working for the revenue authority also decided to embark on a go-slow for reasons unexplained.

Another growing concern is the safety of the drivers and in fact other road users, the drivers don’t get to sleep for around 2 days as the queue slowly crawls and once they have been released the drivers are extremely tired and exhausted from not having a good nights rest, thus putting potential dangers to themselves and other road users.

Federation of East and Southern African Road Transport Associations (Fesarta) has been in contact with ZIMRA officials in a bid to clear the congestion.

“There are better ways to deal with smuggling. Checking each and every truck causes massive delays and forces drivers to sit in their trucks for days waiting to get through the border. By the time they finally get through they’re unfit to drive.” Fitzmaurice said.

This is just adding further pressure to all parties involved, drivers are missing deadlines, hauliers are being charged demurrage and projects on the receiving end are being delayed.

JUST IN! following yesterday’s announcement of the 6pm-6am curfew, the slow chug of traffic through Zimra’s facility has been slowed even more, especially because the Documents Processing Centre (DPC) is only working 12 hours a day.

“In other words you have a 24-hour border with the DPC only running for half that,” said Mike Fitzmaurice, chief executive of the Federation of East and Southern African Road Transport Associations (Fesarta).

Earlier Fitzmaurice said Zimra was currently only managing about 30 trucks and hour, yet around 1000 trucks head to that border every day.

At the going rate it means only some 360 trucks are processed and cleared daily, while more and more trucks join the growing queue.

Zimra has just advised that the situation at the DPC centres was being addressed with government. But in view of the curfew introduced yesterday as an emergency restriction to curb the spread of the virus they had no choice but to comply.

They are appealing the ruling to allow DPC to continue working 24 hours but can give no time frame to the resolution of the situation.

Freight industry on its knees, As the industry continues to battle the full extent of Covid-19, the South African Association of Freight Forwarders (Saaff) has provided stats that reveal the extent of the damage.

Saaff estimates that local importers are facing around R1.4 billion in storage and demurrage costs accumulated during level-5 lockdown and more than 20 000 containers piling up in storage facilities whilst continued border congestions add to this burden.

“Road freight in this country is on its knees,” says Marcus Ellappan, director of road freight for Bidvest International Logistics (BIL). “There’s a regional imbalance of freight due to the decline in the economy, which means hauliers are battling to generate revenue, let alone operate profitably, especially on return loads. The protests by truck drivers against the hiring of foreign nationals are impacting utilisation of assets, which also impacts negatively on profitability. Some hauliers are now downsizing fleets as trucks stand idle, and with that jobs are being lost.”

COVID compliance is another nail in the coffin for the freight industry whilst the increase of PPE hijackings adds more pressure.

Light at the end of the tunnel, DRC announced that the state of emergency has been lifted, people in the Democratic Republic of Congo are slowly resuming normal activities in the wake of Covid-19 health emergency.

President Tshisekedi has ordered a three-stage reopening of business activities, schools, and borders.

In a televised address late on Tuesday, President Felix Tshisekedi announced an end to the Covid-19 health emergency enforced since 24 March.

This involved closing DRC’s borders with nine neighbouring countries, as well as shutting down schools, bars and restaurants.

Tshisekedi said that, from Wednesday 22 July, all shops, banks, restaurants, cafes, firms and bars would be allowed to reopen. Public transport can resume, and large gatherings will be permitted.

Back on Track, The Port of Cape Town is making headway in addressing its congestion challenges and is well on track clawing back lost ground.

Following staff shortages, lockdown congestions and backlogs, rough seas and stormy weather the port is back on track. 

Information shared earlier revealed that at the Cape Town Container Terminal (CTCT) five vessels were in roadstead and that there were six vessels waiting to be worked. That figure is at least half of what it once was, when up to 12 vessels could be seen at anchorage, waiting for much-delayed berthing slots.

There are still gangs serving the terminal and the target of 2500 moves per day was smashed yesterday when at least 3200 moves were recorded. This is great news for the port.

The Multi-Purpose Terminal (MPT) too is doing well, with two mobile cranes and six straddle carriers in full operation.

At the time of this morning’s stakeholder session, three vessels had been worked and delays are said to be only two days.

“A champion is defined not by their wins but by how they can recover when they fall.”

Trade Winds weekly update volume 12

Transport violence, following growing concerns over the past week of a possible strike, violence has rocked the transport industry, mainly the focus is on local hauliers that a sporting foreign drivers. On Monday the National Bargaining Council for the Road Freight and Logistics Industry (NBCRFLI) managed to win a court interdict preventing the All Truck Drivers’ Foundation (ATDF) and the SA National Cargo Transport Association (Sancatra) from fomenting xenophobic violence.

A statement issued by the bargaining council’s national secretary, Musa Ndlovu, said the court had granted the NBCRFLI an interdict against the ATDF and Sancatra, preventing them from “organising, encouraging and inciting any other person to participate in protest action or ‘national shutdown’ against the employment of foreign nationals in the road freight and logistics industry on 7 July 2020 or at any other time thereafter”.

However, this unfortunately did not deter some protesters as quite a number of vehicles have been attacked and torched in the process, there were a few “hotspots” in Johannesburg that resulted in freight companies closing their depots.  

Fesarta released the following message they had received: “Attention all SADC truck drivers – South Africa must fall now.

“Zambia, Mozambique, Zimbabwe, DRC, Nigeria, Tanzania, Swaziland – from Friday, 10 July, no South African-registered trucks are to cross any of these countries.”

The message calls for drivers from neighbouring countries to block borders into South Africa as well as requesting South African drivers working cross-border to leave.

“Go back to your country and join Sipho Zungu (ATDF leader) and all other South African hooligans.”

Beitbridge border closure, Beitbridge was closed as of noon yesterday due to a positive COVID case. Initially it was only on the SA side offices that had closed and were being fumigated, any truck that was on SA side or in queue to cross could not move further, today rumours were rife that the border post will be closed for up to 72hours so that a complete fumigation can take place.

Officials are demanding that they be tested prior to returning to work, SARS and management are in talks to come to an agreement. We can confirm that drivers are not being processed at the moment, and no trucks are moving.

Cape Town Port running hot, with the latest —– that took place over the past week at Cape Town Port, the port is now seeing great success from these implementations, so much that the Covid-related cargo build-up could soon be a thing of the past.

Speaking during a webinar, Terry Gale who chairs the Exporters’ Club of the Western Cape (ECWC) said industry reckoned that by the end of the month the backlog should be overcome.

“When the lockdown started we used to have 15-16 vessels at anchorage, with delays lasting for 14-15 days. Some of the delays were a TBA-situation (to be announced).”

Now, with Transnet and private sector freight representatives meeting twice weekly to deliver solutions for slow processing, the port could soon receive direct calls from the same shipping lines who only a few weeks ago started bypassing the port, electing instead to tranship cargo destined for Cape Town at Port Elizabeth.

“We have six gangs – the teams required to operate specialised assets – where we started off with one. Transnet is also training new teams to come on board.”

As for the berths, two were fully operational, meaning imports and exports could move a lot more quickly, and expectations were that a third could soon be back on line.” Said Gale.

More meetings with public-private stakeholders are still required to fully co-ordinate the way forward.

Metals and Engineering sector get the nod, The Steel and Engineering Industries Federation of Southern Africa (Seifsa) has voiced strong support for government’s decision to support the sector which has taken huge strain as an increased global demand and high price hikes affected both raw materials and finished products due to the COVID pandemic.

There is a global shortage of affordable, good-quality scrap metal amid a downturn in global manufacturing as the worldwide lockdowns continue.

“Trade and Industry Minister Ebrahim Patel’s directive to the International Trade Administration Commission of South Africa (Itac) to determine amendments to the Price Preference System guidelines to address the shortage was to be welcomed,” he said, adding that the interventions came at a time when the industry needed all the government support it could get to survive the Covid-19 pandemic and the resulting economic turmoil.

“As Seifsa, we have previously stated our support for the principle of the non-export of scrap metal and are heartened by the government’s decision to support the industry during this difficult time of the pandemic, even as we await a longer-term solution to protect the industry through possible taxes on scrap metal exports,” Nyatsumba said.

Seifsa, which represents 22 employer associations in the broad metals and engineering sector, has in the past supported an export tax on scrap metal due to challenges in the metal industry.

“Keep your face to the sunshine and you cannot see a shadow”.

Trade Winds weekly update volume 8

Huge costs, the result of level 5 lockdown has given importers a massive headache as the costs of storage and demurrage of containers sits at a staggering R1.4-billion. CEO of South African Association of Freight Forwarders (SAAF) David Logan is concerned at the amounts being invoiced by shipping lines to importers for storage especially that its for cargo that could not move during the early stages of lockdown.

“Saaff represents 294 South African companies in the international freight forwarding and customs broking arena, managing approximately 70% of the containerised and breakbulk freight moving in and out of South Africa’s sea ports, airports and land borders,” he says.

“The level of charges levied by ocean carriers has been a source of concern for many years, but in normal times there was some justification for this, as it was generally speaking relatively easy to clear and deliver containers within the free time allowed. Under these circumstances it was reasonable for the carriers to expect that their containers should be returned and put back into service without delay,” Logan said.

On the back of this, the delays at Cape Town port is now jeopardising South Africa’s exports, mainly to the United States. The situation which has lasted for two weeks now is due to Transnet being incapable of handling these delays, several freight liners have been caught on film queueing at anchorage waiting to enter the port. Last week it was reported that employees were asked to stay at home because of Cape Town being the epicentre of South Africa’s COVID outbreak, it seems that Transnet is hiding behind the COVID pandemic and not informing Importer, Exporters and transporters of what is going on.   

Bottlenecking at Beitbridge, since the delays from last week, it was decided to convert a container into a manual testing station that sits on the bridge over the Limpopo River however this has resulted in further delays at a bottleneck effect.

Mike Fitzmaurice, chief executive of the Federation of East and Southern African Road Transport Associations (Fesarta) said the following:

“The completion of forms, the fact that it takes around 15 minutes to test each driver – it all adds to delays.”

Last week he questioned why drivers weren’t encouraged to fill in the forms online.

Adding to this, there are other factors contributing to the delays now coming from ZIMRA’s Documented Processing Centres (DPC), all commercial bill of entries are being processed electronically and these are being processed at Harare, Masvingo and Bulawayo DPCs however Bulawayo’s DPC was recently closed as there was a confirmed COVID cases. Once these bills of entries are processed the trucks are then given the go-ahead to the port of entry/exit where authorities there only check for conformity.

Under normal circumstances, 600 haulage trucks use Beitbridge Border Post with 300 going either side but the average has increased to nearly 1 000 daily. The increase comes after other routes in Botswana and Mozambique have been closed off.

Power struggle, Copperbelt Energy Corporation (CEC) has accused the Zambian Government of trying to expropriate its assets. This comes after a feud involving CEC supplying Konkola Copper Mines with power, the government placed KCM under liquidation a year ago, and which has a $144 million unpaid electricity bill to state owned ZESCO. The state last week declared Copperbelt Energy Corp.’s electricity lines as a “common carrier,” which by law other companies are allowed to use them by paying a fee.

The energy regulator set a fee for using the infrastructure that’s about 30% of what CEC normally charges, the company said.

The decision has negatively impacted CEC and they are now on the brink of defaulting on all loans borrowed.

Tackling undervaluation, Zambian mining authorities have speculation that major mining companies within the country are submitting below par samples of the minerals they are mining in order to pay a less mining tax.

“The loss of revenue could amount to hundreds of thousands, or even millions of dollars per export, depending on the discrepancy in mineral grade between the sample and the consignment being exported,” Barnaby Mulenga, permanent secretary at the ministry of mines, said in a statement.

From 1 July mines ministry officials will start collecting samples from the various mines.

“Life is 10% what happens to you and 90% how you react to it.”

Trade Winds weekly update volume 6

Chaos ensues at the Beitbridge border post as the closure of Botswana’s border post mounts huge pressure on the ZIMRA clearing system which is also understaffed for such volumes.

Developing reports are showing that there is a double lane queue that is roughly 12 Kilometres long, drivers are crossing over to Zimbabwe without having received their Zim Notification and are being fined which itself is adding pressure to the whole ordeal.    

Truck drivers headed towards Botswana face stringent COVID-19 measures, the usual three days allowed to enter the country has been slashed down to just one day.

  According to Freight News, “the Presidential Task Team on Covid-19 has directed that, with immediate effect, all truck drivers entering Botswana will now be required to produce evidence of negative Covid-19 results that are not more than 72 hours old, if your test results come in after 48 hours you then have one day to transit into Botswana.”

“So, if you’re stuck in a queue with all the drivers waiting for their results, your valid test will no longer be considered in Botswana and you would need to be tested again.” Said one transporter.

Growing queues at the Beitbridge border post

Nakonde re-opened, President of Zambia, Edgar Lungu announced on Friday that the Nakonde border be re-opened to the movement of cargo only, President Edgar Lungu shut the border on Sunday after the town of Nakonde recorded 76 cases of COVID-19.

“Trucks from both sides have been moving, starting with those destined for Tanzania,” Malozo Sichone, the minister of Zambia’s Muchinga province, said.

Health Minister Chitalu Chilufya advised that the lockdown imposed on Nakonde town was lifted on Friday, however restrictions on movement would be in force from Saturday to allow for mass screening, the general public are still barred from crossing the border.

More woes for SA Miners, Mining Giants Harmony Gold have had to slow down production at their Kalgold Mine whilst mining has come to a standstill as two sub-contractors tested positive for COVID-19, this comes just days after positive results yielded at Marula Joint Venture, a platinum mine, and at Dwarsrivier, a chrome mine, which are both situated in the country’s Limpopo province.

CEO of Harmony, Peter Steenkamp said “Every effort is made at our mines to mitigate the impact of the COVID-19 virus,”

“Harmony will continue its routine screening and testing at the mine in line with its COVID-19 Standard Operating Procedure,” the company said.

Implats (Impala Platinum) has also temporarily suspended production after announcing that 19 employees had tested positive at their Marula plant on the weekend.

National Union of Mineworkers (NUM) has called on the Limpopo provincial government to shut mines in the province.

Namibian Ports Open, Namibia has vowed to keep its ports open to allow the movement of goods to its landlocked neighbours, this was announced after President Hage Geingob met with leaders from South Africa, Zimbabwe, Angola, Lesotho, Eswatini and Mozambique.

“Covid-19 is a global pandemic and requires coordinated regional, pan-African and global action, during this difficult period, Namibia recognises how interdependent and how interconnected we are as neighbours,” Geingob said.

“Don’t wait for your ship to come in, swim out to it.”