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Trade Winds bimonthly update volume 50

Hello and welcome to our 50th edition of Trade Winds, before we continue, we would just like to thank each and everyone one of our valued customers for being a part of this journey so far and for your continued support throughout the year.

 

Are steel price increases a thing of the past? Steel prices surged during the post covid-19 recovery as supply struggled to keep up with demand. Prices for some products and markets hit all time highs in 2021 and detached from costs. However, the steel price cycle peak may be behind us.

Long products and rod saw huge increases in 2021, levels that were not even seen during the Global financial crisis back in 2008. Flat products had the biggest increases, making the increase on long products seem okay in comparison.

The surge in high prices experienced in 2021 are seen as a once in a decade phenomenon and this trend is not expected to be seen again within the foreseeable future, however with the global carbon steel prices seeming to be tapering down, South Africa is yet to follow suite.

There remain caution however in some circles since inflation in developed countries continues to rise which will further negatively impact global pricing particularly with regards to labour and logistics.  This is already evident in imports from the U.S.A.

Border updates, there were some reports of delays at Beitbridge last week however the border is flowing once again with no issues. No other issues have been reported amongst the other border posts.   The only issue is the time of year and  increased cargo movement resulting in longer waiting times for trucks.

It is really important to plan ahead!

N3 Truck driver protesters arrested, A week ago, truck drivers blocked off Van Reenen’s Pass, a busy North-South corridor between Durban port and Southern Africa. The protest started in the early hours of Friday morning and lasted till the evening, causing huge delays.

Twelve truck drivers were expected to appear in the Ladysmith Magistrate’s Court after they were arrested last week Friday for using their rigs to obstruct traffic.

The blockade was in protest of the presence of foreign national drivers working in South Africa’s Road freight sector.

Wide condemnation has since been expressed over the impact of Friday’s blockade, with Durban Chamber of Commerce CEO Phalesa Phili saying losses of about R800 million a day are lost when the country’s most important supply artery is affected in this manner.

Economists have expressed how this protest was bad for South Africa’s image as a key partner for intra-African trade, especially in light of the African Continental Free Trade Area.

New covid variant poses threat to eased freight rates, The impact of vaccination rates will play a significant role in projected global economic growth in 2022, with predictions that it will slow to 4.3% from 5.7% this year on the back of a downward trend in the post-pandemic rebound.

Freight shipping rates have already pulled back somewhat from their September high, but that said, the new Omicron variant poses a risk in this regard. If it leads to widespread border closures and tougher domestic restrictions, this could spur renewed demand for goods over services.

Stricter lockdowns could also see a repeat of port disruptions, with the attendant impact on cargo flows that has been evident throughout the pandemic.

Ocean freight reliability on the rise, with schedule reliability edging up slightly but still well below acceptable norms, some analysts have said that shippers’ price is sometimes secondary to the predictability of getting product to market.

It is also noted that the new strain has caused a stir with some countries now advising that any vessels arriving at their respective ports are to anticipate a quarantine window period, thus causing further impact on vessel schedules globally.

Further on, South African ports are currently experiencing delays which has been caused by severe weather, terminal congestion and berthing delays ranges from 3-5 days, with a further delay of 5 days expected in Cape Town and an additional 2-day delay in Durban.

Major impact remains on import delivery, clients are now faced with huge demurrage charges as transport booking slots are still impacted by the terminal congestions.

Africa, the leaders in air cargo growth,  there is some bad news with airfreight due to cancelled PAX flights, the capacity remains constrained in and out of South Africa as countries tighten travel rules over the Omicron variant, belly cargo capacity may fall again in the coming weeks.

Iron ore price rockets, Iron ore price surged on Tuesday after customs data showed China’s iron ore imports rose 14.6% in November from a month earlier to hit their highest since July 2020.

The world’s biggest consumer of iron ore brought in 104.96 million tonnes last month, up from October’s imports of 91.61 million and were also up 6.9% from November 2020.

Bureau Veritas slowly recovering from Cyberattack, The French classification company’s internet services remain deactivated after it detected an attempted cyber-security breach two weeks back, forcing BV to take its data and servers offline.

As of last week, more than 80% of operations were running at a normal level and some regions still have IT systems running at a reduced rate.

The company expects to recover most delayed activities in a short period of time and are evaluating any potential impact.

Currently the company is issuing inspections and certificates manually via email, there is a backlog as BV has lost three weeks of work however slowly services are returning.

The festive season is upon us!

We would like to thank our valued customers for all your support throughout this challenging year.  We hope we have served you well and whatever 2022 brings, we will continue to strive for service excellence, reliability and competitively priced product for mutual success and stronger partnerships.

Thank you!!

 

We wish you and your families a happy and safe festive period!

 

  

“You are the artist of your own life, don’t hand the paintbrush to anyone else”

 

 

Please note that Trade Winds will be taking a break until later in January.

Trade Winds bimonthly update volume 1

In Moçambique, the Port of Beira has set up various disinfectant posts to cope with an increase in cargo brought in by sea freight diverted away from South African ports which have been operationally closed due to the coronavirus pandemic (Covid-19).

According to Jan de Vries, CEO of Beira concession holder Cornelder de Moçambique, the port’s container volumes are in excess of projected figures released earlier this year, this is mainly due to the increased volumes of food and fertilizer being moved to Zimbabwe and Zambia.

Meanwhile in South Africa, to ensure reduced congestion once lockdown has ended, Government has lifted regulations requiring goods to be sanitised on arrival, Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini Zuma has been quoted saying; “If goods have been at sea for many days, there is no need for them to be sanitised because the virus will have died by the time they reach the port”.

South Africa and the European Commission have agreed to calm the current required regulations that expects the submission of original certificates of origin to prove the originating status of goods at the time of clearance – copies or electronic versions will be accepted.

SARS released the following statements:

“While Article 26 to Protocol I of the SADC-EU Economic Partnership Agreement (EPA) requires the submission of an original proof of origin within ten months, SARS will honour or accept copies or electronic versions of certificates of origin while awaiting the submission of the original versions within twelve months of their being issued in the EU,”

“Traders are encouraged to register for the generous Approved Exporter Scheme, within the meaning of Article 25 to Protocol I of the SADC-EU EPA, which allows an origin declaration to be presented in the importing country no longer than two years after the importation of the products to which it relates.”

Over in Zambia excitement is growing as the Kazungula bridge is nearing completion, the bridge was expected to be functional in 2018 but due to labour unrest and payment issues this delayed the construction of the bridge.

This “game-changing” bridge close to 1km long,  will shorten travel times quite substantially compared to the current out-dated ferry service being used.

No official dates have been given for when the bridge will be opened but construction is expected to be completed in June this year.