Hume International, one of the largest importers of frozen food-based commodities in South Africa, has warned that SA consumers could possibly struggle to get certain products on the shelves this festive season and prices may increase due to ongoing delays caused by a serious backlog at the Port of Durban.
HUME International has warned that consumers in South Africa could possibly struggle to get certain products on the shelves this festive season and prices may increase due to ongoing delays caused by a serious backlog at the Port of Durban.
Hume, one of the largest importers of frozen food-based commodities in South Africa, said the chaos at the largest port in the country is plunging the country’s logistics system into disarray.
This comes as Transnet has said it would take up to 15 weeks to clear the backlog of at least 60,000 containers stuck on vessels with goods outside the port due to inefficiencies in port equipment and difficult weather conditions.
Hume’s operations and logistics director, Roy Thomas, said the backlog might lead to increased prices in consumer goods and, in a worst-case scenario, a shortage of certain products come Christmas and the back-to-work, back-to-school period.
“We have heard forecasts that it could take up to three months to clear vessels that are currently anchored at the Port of Durban,” Thomas said.
“This spells bad news for consumers during the upcoming festive period, especially given heightened demand over the period, as well as the fact that most families are looking to stretch limited budgets even further this year. Unfortunately, consumers should brace for a rocky few months ahead.”
Hume imports more than 180 million kg of frozen product per year such as poultry, porcine, bovine, ovine, seafood, dairy, frozen vegetables and fresh fruits for various retailers, as well as independent retail chain stores, manufacturers, wholesalers, traders, informal customers and the food service industry throughout sub-Saharan Africa and beyond.
Aggravating the situation, a number of freight carriers are now levying additional charges against importers owing to the delays caused by the Port of Durban.
Thomas said that while these fees had not yet been levied against frozen and refrigerated cargo, the added fees were impacting products in the dry ingredient product category such as powdered eggs.
“Unfortunately, importers simply do not have the ability to absorb this increase in costs, and have no choice but to adjust prices accordingly,” he said.
“This in turn has a knock-on impact throughout the supply chain and, ultimately, consumers will be left holding the bag.”
Exporters such as the citrus industry have the option of sending freight via road to Port Maputo in Mozambique for further transportation.
However, this option is closed to importers, as regulations set out by the Department of Agriculture, Land Reform, and Rural Development (Dalrrd) do not allow for the importation of containers into South Africa through Mozambique or Namibia.
Thomas said inbound vessels were busy being diverted to other ports to alleviate the situation, but said these ports may also lack the necessary capacity to deal with the strain of a rapid increase in freight traffic efficiently.
“In line with our strategy to allocate some of our freight away from Durban, we have been engaging with our supplier base to develop a plan that will allow us to continue to ship products to South Africa to keep the supply chain moving,” Thomas said.
“For example, Hume International is currently looking at diverting cargo from Durban to Port Elizabeth and Cape Town. However, this is not a silver bullet, and the costs for these changes are substantial for cargo that is already en route or waiting to enter the Port of Durban.”
Speaking to Business Report, XA Global Trade Advisors CEO Donald McKay said he had a number of clients who had goods stuck on vessels outside the Port of Durban.
McKay said importers could not afford to bring in their goods using air as this was an expensive method to import goods but also inefficient in that cargo planes can only carry perhaps one container.
“Some companies might have brought in stock early, but I think that on balance, there will be less stock on the shelves. I don’t know by how much, but certainly goods will be a lot more expensive until the situation at the ports normalises,” MacKay said.
“The heart of the problem here is Transnet. It’s been years of not investing in critical infrastructure and now they have to do all the things they didn’t do for the last decade or so, and it’s not going to happen overnight.”
Two weeks ago, Transnet board chairperson Andile Sangqu admitted that the port congestion was bound to happen due to many years of underinvestment in equipment and maintenance.
Sangqu said Transnet was working on measures to turn the situation around, but cautioned that this was going to take time as the lead times for some equipment is anything from 12 to 18 months.
– BUSINESS REPORT
