Maersk’s SA container lines wane

CONTAINER movement in and out of the country’s ports declined in the third quarter as economic growth slowed to under 1 percent, according to shipping group Maersk Line South Africa in its trade report.

Jonathan Horn, the managing director for southern Africa, says a significant factor counting against South Africa was the slowdown in its biggest trading partner, China, which had been experiencing slower economic growth for the past three years, as well as the sluggish economic recovery being experienced in the EU and US.

Almost 40 percent of South Africa’s exports go to China and that is weighted significantly in favour of raw minerals, metals and wood products.

Container imports by Maersk were 0.2 percent down in the third quarter, compared with a 10 percent decline in the second and a 9 percent decline in the first, year on year, Matthew Conroy, the trade executive, said yesterday.

Container exports by the company were flat in the third quarter, down 4 percent in the second quarter and showing a positive 7 percent in the first.

Maersk says the export market in South Africa, which has a large commodity base, is being affected as much as the import market, despite expectations rand weakness would boost export demand.

South Africa’s trade deficit widened to R16.3 billion in August from a revised R6.82bn shortfall in July.

Exports in August fell by 9.6 percent to R77.24bn, while imports were up by 1.4 percent at R93.53bn.

The gross domestic product contracted by 0.6 percent in the first quarter. While it rebounded by the same figure in the second quarter, growth was experienced in the agriculture and construction sectors, while it remained negative in the mining and manufacturing sectors.

Economic growth in mining in the first two quarters was significantly affected by the five-month strike in the platinum sector, and the country is still experiencing the after-effects of this.

Horn said Maersk’s volume performance in southern Africa in 2014 was expected to be in line with the market, a decline of about 3 percent.

The rest of Africa, meanwhile, experienced growing container movements in the third quarter, with imports rising by about 3 percent year on year.

Maersk said while there was a moderate recovery in commodity demand from China, which was good news, the South African commodity export market remained vulnerable across a number of important areas.

Conroy said the longer-term deals made with labour in the platinum sector hinted at a greater level of stability.

He believed the rest of the year would see a steady uptick in exports in the 2 percent to 4 percent range.

Horn said within this context, South Africa needed to do more international business. It needed to increase winning investments from international businesses, which put valueadding infrastructure on the ground as an economic growth strategy that depended largely on recovery in the world’s more developed markets.

Horn said commodity cycles were a cause for concern.