An economic bonanza will sail past us unless Sars acts urgently
The revenue service effectively froze the offshore fuelling industry in September — three months before the Red Sea crisis handed South Africa a potential windfall
The military conflict in the Middle East has abruptly disrupted shipping on the world’s busiest sea route through the Suez Canal, diverting traffic towards the Cape of Good Hope.
Since maritime transport makes up 90% of international trade, the effects of the Red Sea disruption are likely to be felt in higher energy and food prices, rising costs of moving goods and supply chain delays.
The Suez Canal has benefited from the drying up of the Panama Canal, caused by a severe drought linked to El Niño. The Panama Canal’s reduced capacity has forced shipping companies to reroute cargoes through the Suez Canal, particularly US grain exports and other bulk cargoes. This has increased traffic and potential revenue for the Suez Canal, highlighting its strategic importance in global shipping amid environmental and logistical challenges. Now, the
Suez Canal is under threat.
The crisis presents South Africa and its maritime industry with substantial economic and commercial opportunities to generate value while playing a significant role in rescuing international shipping and rendering the Cape route commercially viable despite the Middle East disruptions.
The war in Gaza and the associated Houthi attacks on Red Sea shipping have left the route past South Africa as the only feasible alternative. The disruption of the Red Sea route — used by 17,000 ships a year, which constitutes 12% of global trade — creates many direct operational challenges, including likely delivery delays and shortages, rising shipping and trade costs. The route handles 30% of global container traffic, and is a major artery for oil shipments.
However, the critical question for South Africa is how its maritime industry could rescue international shipping and capture the significant economic and commercial benefits. The answer lies in providing the required critical maritime services efficiently, reliably and consistently. One such critical service is the marine bunker fuel service.
Already, Operation Phakisa has sought to position South Africa as reliably and efficiently providing the services needed by international fleets as they navigate the Cape sea route. Providing offshore/offport-limits (OPL) marine bunkering services to passing ships has been one of the critical initiatives to make the Cape sea route viable, competitive and attractive for international shipping.
In the present crisis, five of the six biggest shipping companies have already announced their decision to divert their ships past the Cape. In almost all cases, there will be a trade-off between carrying revenuegenerating cargo and fuel, which is a significant cost item. If there is a reliable and efficient bunker fuel centre midway through a voyage, then the route will be economically viable; ships can load less fuel and carry more cargo.
In that context, one of the most successful innovations in offshore maritime logistics services was the establishment of the international marine bunkering services centre off Gqeberha. The business served thousands of passing ships that were not stopping at a South African port, and created thousands of jobs.
Unfortunately, the operation was brought to a screeching halt in September by the abrupt moratorium imposed by the South African Revenue Service (Sars) on OPL operations, including vital marine bunkering services. It was a significant misstep that scuppered South Africa’s golden opportunity in the maritime sector. As the current global shipping crisis shows, the moratorium was a short-sighted and economically damaging move.
The crisis in the Middle East has presented the country with a rare and lucrative opportunity. This is not just about a few diverted ships; it’s about tapping into a worldwide trade artery that could bring substantial economic growth and boost tourism and employment. The potential benefits are staggering: increased international trade, heightened global standing in maritime logistics, and a boost to the local economy through job creation and business opportunities.
However, the Sars moratorium threatens to stifle this unparallelled opportunity. By halting critical maritime services, it is causing immediate disruption to global trade flows and significantly impeding South Africa’s ability to seize a pivotal role in international shipping. We should be capitalising on this geopolitical shift, not retreating due to regulatory hurdles.
Sars must reassess its position with the utmost urgency. The continuation of this moratorium is indefensible when weighed against the potential benefits to both the South African economy and the global shipping industry.
The maritime industry’s willingness to engage with Sars and find a workable solution underscores the critical nature of the situation. Any further delays in lifting this moratorium will hinder the growth of our maritime sector and reflect poorly on the country’s ability to adapt to and capitalise on global economic shifts.
The time for action is now. Letting this opportunity slip due to regulatory overreach would be a grave error with long-term consequences for the nation’s economic and commercial landscape.
The crisis in the Middle East has presented the country with a rare and lucrative opportunity. This is not just about a few diverted ships; it’s about tapping into a worldwide trade artery