Backlogs shrink trade surplus
Gridlock at Durban harbour robs SA of much-needed export receipts
SA’s trade balance slipped into a smaller surplus in December, missing market expectations and laying bare the damage caused by port gridlock in the country’s busiest harbour as well as high oil prices and lower commodity export receipts.
Data released by the SA Revenue Service on Wednesday showed a trade surplus of R14.06bn, compared with a downwardly revised R20.6bn surplus previously and below market forecasts of R15bn.
On an annual basis, export flows for December 2023 were 0.9% higher than the R162.4bn recorded in the same month a year earlier, while monthly imports were 5% lower than the R157.8bn previously.
The 2023 cumulative merchandise trade surplus dropped to R61bn from R192bn in 2022. The value of both merchandise imports and exports fell sharply at the end of 2023.
Aside from unfavourable swings in commodity prices, the weaker trade performance is down to the port crisis in Durban, which handles about 60% of the country’s container traffic and suffers from long waiting times and penalty fees imposed by carriers.
The port disruptions, which peaked in December, have not only robbed the economy of much-needed export receipts but have also tarnished SA’s reputation as a reliable trading partner and risks eroding its trade competitiveness in the global economy.
Transnet, the state-owned operator of rail, ports and pipelines, has been struggling to provide adequate services after years of mismanagement, underinvestment and corruption. The company, which is drowning in a R100bn-plus debt load, was handed a R47bn debt guarantee from the Treasury in December a lifeline investors and the ratings agencies say will not be enough to fix its lopsided capital structure.
The trade data comes a day after the IMF cut SA’s 2024 real GDP growth forecast to 1% from 1.8%, while the forecast for 2025 was cut by 0.3 percentage points to 1.3%.
The IMF cited logistical challenges as a key constraint.
The trade balance is an important component of a country’s balance of payments and a crucial source of government revenue.
But a weak trade balance could pressure the rand-dollar exchange rate in an environment in which global financial conditions are aggressively tightening and demand for the dollar is rising.
The port disruptions, alongside swings in commodity prices and the volatile rand, may worsen investors’ expectations of a general weakening of the trade and current account balances, economists say.
Jee-A van der Linde, an economist at Oxford Economics, said the latest statistics show that goods imports dropped by 9% month on month to reach R149.9bn in December, while exports slumped by 11.5%.
Shipments of vehicles & transport equipment, precious metals & stones, and mineral products recorded the largest declines, “which coincided with the intensification of logistical backlogs at domestic ports”, Van der Linde said.
IMPORT VOLUMES AND PRICES WILL DECLINE AS DOMESTIC DEMAND WEAKENS, GLOBAL INFLATION SUBSIDES AND WORLD GROWTH SLOWS
Johannes Khosa Nedbank senior economist
In terms of trade partners, SA logged a R28.7bn surplus across Africa in December, but a R1.2bn deficit with Europe.
It also registered a trade shortfall of R18.5bn with Asia.
Nedbank senior economist Johannes Khosa said export volumes and prices will remain under pressure.
“Import volumes and prices will also decline as domestic demand weakens, global inflation subsides and world growth slows,” he said.
Khosa said there has been some improvement in the terms of trade or the ratio of export to import prices coming into this year as global oil prices remain relatively low. The prices of SA’s major export commodities improved, particularly during the second half of the year.