Floods wreak economic havoc
Logistic networks severely disrupted, and insurers say cost will run into hundreds of millions of rands
● The devastating floods in KwaZulu-Natal will be felt throughout the economy as critical logistic networks have been severely disrupted.
This week the Durban port was closed, and while some operations have resumed the container terminal remains largely inaccessible.
Gavin Kelly, CEO of the Road Freight Association, said the authorities in KwaZuluNatal had asked that, where possible, no more trucks head for the port “until the situation has improved”.
“There are already long queues of trucks along the N3. The Mariannhill toll plaza has a backlog of 10km, all the way to Hammarsdale, and the problem is that, according to the road traffic inspectorate, the local communities are now targeting the trucks [for looting].”
Kelly said the situation “will not be resolved quickly as the damage assessment must be done before trucks can pass along roads or bridges that may be undercut or damaged”.
“Some of the damage will take months to repair. Access roads around the port have been damaged, container yards, truck depots and trucks themselves have been flooded and damaged and the area is really a disaster at the moment.”
He said there will be delivery disruptions for imported goods and the association has advised members to delay any departures towards Durban, but he does expect operations at the container terminal to resume relatively soon.
Minister of public enterprises Pravin Gordhan said in a statement this week that Transnet had gradually resumed operations at the Durban port.
A priority is Bayhead Road — the main access road to the container terminals and Island View fuel terminal — a section of which has been washed away. Alternative access is being investigated but in the meantime the “evacuation” of food, medical and petroleum products is being prioritised, he said.
Shipping operations would only resume once it was safe to do so.
There has been no damage to the pipelines infrastructure, and Transnet Pipelines will continue to supply fuel already in the system into the inland market, the minister said.
Transnet Freight Rail is assessing the rail network before any train services into and out of the port can resume, and routes via the north coast and south coast, as well as the main line between Durban and Pietermaritzburg, remain closed, he said.
Kerry Rosser, Maersk Africa regional communications manager, said the shipping line was monitoring the situation closely to get supply chains moving again as quickly as possible. No infrastructure damage to vessels or containers within the terminal had been reported.
Maersk had received reports of damage to containers and some instances of looting at depots in the Durban area but “our containers in these facilities were all empties” ready for export bookings, she said.
Logistics company Grindrod said its container depots, terminals and warehouse facilities in and around central Durban have been hit, with operations at five sites presently suspended and unlikely to return to operation for several weeks.
Palesa Phili, CEO of the Durban Chamber of Commerce and Industry, said the magnitude and the frequency of the storms were a major risk to the growth and development of the local economy, especially in an already constrained environment. Flooding and traffic congestion were a significant challenge, disrupting transport and the delivery of goods and services.
He said the damage was “disastrous” and would have a cascading negative effect on economic activity.
Several major companies have suspended operations, and telecoms companies are trying to repair damaged infrastructure.
Thomas Funke, CEO of the South African Cane Growers’ Association, said it is “extremely concerned” about the heavy rain, which was recorded at more than 500mm in some areas. It had caused extensive damage to infrastructure, sugar cane fields, farm dams, roads, bridges, electricity supply and internet connections.
“We are working with our members ... to determine the extent of the damage and quantify the likely losses.”
MTN said technicians have been able to get some of its sites in Umlazi and Amanzimtoti up and running again but the intermittent rain made the process challenging “and is also resulting in additional sites going down”.
MTN and Vodacom reported earlier in the week that about 900 towers were down.
At Toyota SA’s plant in Prospecton, south of Durban, operations have been halted after the site was flooded.
Mondi said its Merebank operations have been flooded and it will assess the situation at its mill for resumption of operations once water levels subside.
Sappi said many of its operations had been halted due to damage to roads, railway lines, warehousing and other infrastructure, and to the inability of some staff to travel to work. Its Saiccor, Tugela and Stanger (KwaDukuza) mills would operate with skeleton staff until it was safe for all workers to return.
It said some inventory had been damaged and deliveries to domestic customers had been affected, while shipping lines said the company’s exports will also suffer.
Sappi said none of its plants had been damaged yet, and it had insurance to cover all assets and stocks.
For affected businesses, damage would be covered by insurance companies in the private sector, unlike in the July 2021 riots where damage was covered by the South African Special Risk Insurance Association.
Outsurance CEO Danie Matthee said any uninsured assets would be “for the client’s account”. Matthee said it was too early to assess losses because damage to bridges and roads and the continuing rain made access to affected areas difficult. But even excluding corporate or private losses, the damage to infrastructure alone, including bridges and roads, could run into billions, he said.
Local insurance companies have “very good reinsurance arrangements, specifically for catastrophe losses”, he said, and “all insurers in SA are very well regulated, especially from a solvency perspective”.
Soul Abraham, CEO of retail insurance at Old Mutual Insure, said “the damages are severe, and we’ve already received a significant number of related claims and expect even more claims to be registered in the coming days”. He said it was “too early to tell what the total claims would be” but initial assessments suggested the damages are “significant and run into hundreds of millions of rands, if not more”.
‘There are already long queues of trucks along the N3. The Mariannhill toll plaza has a backlog of 10km’