South Africa Shipping Industry Update Quarter 1 2012

  • January 2015
  • -
  • Business Monitor International
  • -
  • 114 pages

BMI View: Moderately Good Year
With some qualifications, the South African ports and shipping market should have a moderately good year in 2012. In terms of the wider South African economy, the current recovery will continue to progress, although the global economy has taken something of a turn for the worse. Both the US and Europe, important export industries, will experience slower growth. On the political front, the five-year suspension of maverick youth leader Julius Malema from the ruling African National Congress (ANC) party in November 2011 has improved President Jacob Zuma's chances of winning its backing for reelection in 2014. The President's victory over Malema will also reassure private segment investors worried by the latter's demands for nationalisation of parts of the mining market . BMI now projections 2012 Gross Domestic Product growth of 2.7%, following an estimated 3.1% expansion in 2011. Our outlook for 2013 is for growth to gather pace to 3.1%.

Headline Market Data
.. Following a small contraction in 2011, Richards Bay Port tonnage throughput in 2012 is projection to increase by 1.2%. Over the mid-term we project a 1.5% average annual increase.
.. Port of Durban container throughput is projection to remain vigorous in 2012, with 7.4% growth, comparable to 7.1% in 2011. Growth will average 8.2% per year in the medium-term projection period to 2016.
.. 2012 total trade growth is projection at 6.0%, slightly down on the estimated 6.7% expansion registered in 2011.
Research by BMI shows that both the US and South Africa are poised to gain an increasing share of coal exports to Asia, at the expense of Indonesia and Australia. The finding is good long-term news for South African ports and dry bulk shipping. If the country is to make the most of the opportunity, increased public and private investment will be required in the coal supply chain, in both freight rail links and in the main coal terminals. Huge amounts of money are to be made by effectively exploiting resources wealth. While we note that governments are keen to moderate expenditure in the current volatile economic climate, the cutting of funding to transport development should be avoided where possible, given the likely revenue realisation from increased coal exports.
Efficiency Of Port Operations Questioned
While throughput at South Africa's ports has been growing, the market has not been short of criticism recently. A study by Mihalis Chasomeris for the National Ports Regulator revealed that port tariffs for container vessels in Durban are two times higher than the average of 12 international ports. Gordon Metter, deputy president of the Cape Chamber of Commerce, claimed that South African port tariffs are loaded with hidden taxes, while operations are suffering due to inefficiency. Durban earlier received complaints from several shipping industry players including Maritime Carrier Shipping and Mediterranean Shipping Firms over a decline in efficiency due to various problems such as inflexibility, congestion, labour disputes and lack of equipment.
Phase 2 To Get Go-Ahead At Ngqura
The Port of Ngqura, which completed the first phase of its expansion project at the end of 2009, has become the third busiest container terminal in the country, after Cape Town and Durban. In late 2010, Phase 2 of the expansion was delayed owing to the global economic crisis. The decision to proceed came after Ngqura was selected to handle manganese exports ahead of the Atlantic Port of Saldanha. Upon completion of the project, the port will have a container capacity of 2mn twenty-foot equivalent units (TEU) a year, compared with its current capacity of 800,000TEUs.

Key Risks to Outlook
The major downside risk for South Africa is the potential break-up of the eurozone. While previously an extreme and improbable scenario, by late 2011 the possibility that the eurozone countries might split into different groups with separate currencies could not be entirely discounted. Most analysts believed an enforced currency realignment would be accompanied by recession, which would have a negative impact on South African exports (Europe represents around one-fifth of South Africa's total exports). In this scenario, shipping demand would clearly be lower than our current projections.

Table Of Contents

Industry SWOT Analysis 7
South Africa Shipping SWOT 7
South Africa Political Environment and Risk Analysis 7
South Africa Economic Environment and Risk Analysis .. 8
South Africa Business Environment SWOT ... 8
World Overview .. 9
Container Shipping 9
Lines To Enter 2012 In The Red . 10
Overcapacity To Plague Medium Term, Beware 2013 14
Data : Snapshot Of Container Lines' Orders .. 17
ETR Short And Long Term Benefits To Woo Carrier Expansion . 20
Data : Top 20 World Ports . 23
Port Operators To Face Tougher 2012 As Box Volumes Slow 26
Container Curse To Hit Box Manufacturers, But Outlook Strong 31
Dry Bulk... 35
Chinese Slowdown Threat Double Downside Risk To Dry Bulk Shipping ... 36
Vale May Find Solace With South Korea As Chinese Troubles Continue 39
Lines Need To Up Capacity Reduction Strategies To Ease Oversupply ... 42
Dry Bulk Lines In Choppy Waters, Possibility Of More Bankruptcies . 46
Liquid Bulk .. 49
Dirty Tanker Indices Not Very Buoyant .. 50
Differing Strategies, Differing Fortunes . 53
Genmar Bankruptcy Just The Beginning . 56
Survival Strategies For Floundering Tanker Operators . 59
Rumoured Chinese Order Has Potential To Sink Crude Oil Shipping Segment .. 64
Industry Trends And Developments 68

Market Overview 73
Port Of Durban 73
Shipping .. 73
Congestion .. 73
Terminals, Storage And Equipment 74
Expansions And Developments ... 74
Multi-Modal Links .. 75
Port Of Cape Town .. 76
Shipping .. 76
Congestion .. 76
Terminals, Storage And Equipment 77
Expansions And Developments ... 77
Multi-Modal Links .. 78

Market Projection .. 79
Port Of Durban ... 79
Port Of Richards Bay .. 82
Data : Major Port Data - Throughput, from 2008 to 2016 . 84
Trade .. 85
Data : Trade Overview, from 2008 to 2016 85
Data : Key Trade Indicators, from 2009 to 2016 (US$mn and % change y-o-y) . 86
Data : South Africa's Main Import Partners, from 2002 to 2009 (US$mn) .. 87
Data : South Africa's Main Export Partners, from 2002 to 2009 (US$mn) .. 88
Company Profiles .. 89
Deutsche Afrika-Linien (DAL) 89
Safmarine 91
Maersk Line 94
Mediterranean Shipping Firms (MSC) .101
CMA CGM .105
COSCO Container Lines Firms Limited (COSCON)110
Hapag-Lloyd ..113
Evergreen Line ..117
APL 120
China Shipping Container Line (CSCL) 125
Hanjin Shipping (Container Operations) ...128
CSAV .132

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