Despite some recent volatility, the container industry is getting much closer to a new equilibrium, with high- frequency metrics showing a significant degree of stabilisation, logistics company Bidvest International Logistics (BIL) outlines.

It notes that growth is being driven by an increase in container vessels, as carriers add significant capacity to their fleets after astronomical freight rates in 2021/22 enabled shipping lines to register record profits during the Covid-19 pandemic.

Moreover, there are fewer cases of carriers blanking schedules as a way of curbing the decrease in freight rates.

Another growth factor is that global demolitions are at an all-time low, as carriers make notable use of record rates to boost profits.

Data from shipping research portal Alphaliner shows vessel demolition sales have increased more slowly than anticipated in the first months of the year, with only 28 container ships of 500 twenty equipment units and above having been sold for recycling since January 1.

Global port congestion has also dropped off dramatically as the pandemic has receded, BIL points out.

All these factors combined favour South Africa’s import and export sector, says South African Association of Freight Forwarders research and development head Jacob van Rensburg.

“More capacity means more space to increase volumes, boost trade and potentially access a broader market,” he says.

However, he does caution that the trade, transport and logistics industry is often complex, especially for a country like South Africa, which is quite far removed from its trading partners and relies heavily on shipping connectivity.

As much as space has increased, disruptions to connectivity such as the pandemic and the war in Ukraine are not ideal.

For the most part, though, there has yet to be a “marked inversion of the relationship between people and goods on a global level”, says Van Rensburg, who is also a consultant to BIL.

“Increases in capacity are good for exporters and importers because they drive the price of shipping goods down. With the recent additions of capacity, freight rates have once again been driven down to near prepandemic levels,” he explains.

At one point in the first quarter of this year, freight rates were down 78% compared with the same period in 2022. They were also 83% below the peak in September 2021.

Another boon to imports and exports is that port congestion, rife during the pandemic crisis, is starting to ease.

“From a South African perspective, a few things are essential to consider when dealing with global port congestions and cargo movement,” Van Rensburg says.

“South African supply chains are part of the greater global supply chain network and function within these bounds. Therefore, if there is a bottleneck at any major port hub globally, South Africa is likely to experience the ripple effects.

“Moreover, like any feeder network, South African ports and accompanying logistics networks must do their part to maintain the fluidity of the network,” he adds.

To this end, BIL KwaZulu-Natal operations GM Saloshini Reddy says importers and exporters must stay up to date with container expected times of arrival and if there are any delays on urgent cargo. In the event of delays, the client can either airfreight the cargo or delay selling an item.

Van Rensburg also points to South Africa’s high freight demand, which stands at an estimated 500-billion tonne-kilometres.

“Our economic hubs are far away from our seaports, which ship more than 80% of our merchandise trade. What this means is that we need a multimodal approach, with all nodes doing their part for the network’s success.”

A further consideration is the country’s rail freight problems. In some weeks this year, only 1 350 containers were shipped – a mere 20% of cargo compared with the average in the 2010s.

“We cannot emphasise the need for a functioning rail system enough, as South Africa’s freight demand is exceedingly high. In addition, the increasing rate of damage to road networks can be directly attributed to the lamentable performance of the rail system,” Van Rensburg emphasises.

He also recommends that importers and exporters be vigilant about shipping lines blanking sailings to manipulate capacity and artificially influence prices.

This is because when too much capacity is available, prices can decrease too much and become unsustainable for carriers. Carriers will then resort to removing capacity from the system.

“This approach could alter schedules and impact South African importers/exporters – especially concerning perishable goods and other time-sensitive cargoes.

“Ultimately, in trade, transport and logistics, three matters reign supreme in any service offering and accompanying strategy: reducing cost, reducing time and increasing service reliability. With too much capacity in the system, the possibility arises that all three of these factors are impacted,” Van Rensburg points out.

Management is therefore paramount, he says.