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COVID-19: Cargo movement update Date: 15 September 2020

About this update

This update — the eighth of its kind — contains a combined overview of the flow of air, sea and road freight

to and from South Africa over the course of the last week. The report provides a consolidated view of the

different modalities published earlier by the Business for South Africa supply chain team.

Weekly snapshot Table 1 - Port volumes and air cargo flows compared to last week

Flows Current1 Previous2

Growth Import Export Total Import Export Total

Port Volumes (TEUs) 27 942 32 922 60 864 33 320 44 887 78 207 ↓22%

Air Cargo (tons) 2 194 1 494 3 687 1 942 1 364 3 306 ↑12%

Monthly snapshot Figure 1 - Monthly3 cargo flows compared to the same period in 2019

Key Notes

• An average of ~8,695 TEUs were handled a day over the course of the last week, ↓2 478 from last

week

1 ‘Current’ means the last 7 days’ (a week’s) worth of available data. 2 ‘Previous’ means the preceding 8-14 days’ (a week’s) worth of available data. 3 ‘Monthly’ means the last full month’s worth of available data compared to the same month in 2019 (in this case Aug 2020 versus Aug 2020)

79%

99%

97%

83%

53%

39%

33%

0% 20% 40% 60% 80% 100% 120%

Containers (TEUs)

Dry bulk (MT)

Liquid bulk (MT)

Breakbulk (MT)

Vehicles (Units)

International Air Cargo

Domestic Air Cargo

2

• Air cargo volumes have increased by ↑12% since last week, with international air cargo flows at

approximately 71% compared to pre-lockdown levels. Domestic flows have also increased slightly.

• South Africa’s GDP fell sharply by just over ↓16% between the first and second quarters of 2020.

• Globally, average freight rates have stabilised at $2,452.99 per 40’, which is a 0.5% decrease on last

week. On the other hand, global container throughput in June is 2.3% higher than in May 2020.

Ports Update

This section provides an overview of the flow of containerised cargo to South Africa’s commercial ports.

Container flow overview

The following two tables indicate the container flows for the last 7 days, as well as the projected container

flows for the next 7 days.

Table 2 - Container Ports - 7-day flow forecasted for 4 September to 10 September 4

7-day flow forecast (04.09.2020 – 10.09.2020)

TERMINAL NO. OF CONTAINERS TO DISCHARGE (IMPORT)

NO. OF CONTAINERS TO LOAD (EXPORT)

DURBAN CONTAINER TERMINAL PIER 1: 5 734 4 950

DURBAN CONTAINER TERMINAL PIER 2: 16 156 24 660

CAPE TOWN CONTAINER TERMINAL: 5 224 5 103

NGQURA CONTAINER TERMINAL: 5 741 7 784

PORT ELIZABETH CONTAINER TERMINAL: 465 2 390

TOTAL: 33 320 44 887

Source: Transnet, 2020. Updated 11/09/2020

Table 3 - Container Ports - 7-day flow forecast for 11 September to 17 September5

7-day flow forecast (11.09.2020 – 17.09.2020)

TERMINAL NO. OF CONTAINERS TO DISCHARGE (IMPORT)

NO. OF CONTAINERS TO LOAD (EXPORT)

DURBAN CONTAINER TERMINAL PIER 1: 4 107 6 177

DURBAN CONTAINER TERMINAL PIER 2: 13 763 11 421

CAPE TOWN CONTAINER TERMINAL: 4 996 6 625

NGQURA CONTAINER TERMINAL: 4 687 7 751

PORT ELIZABETH CONTAINER TERMINAL: 389 948

TOTAL: 27 942 32 922

Source: Transnet, 2020. Updated 11/09/2020

A recurring trend is once again present with export container volumes outstripping import container

volumes, 11,500 TEUs this week (Table 2) and almost 5,000 TEUs next week (Table 3). The Port of Durban

has again seen significant volume increases over the course of the last week. However, as mentioned in the

report last week, these figures can be an early sign of congestion if volumes continue to increase. The

volumes did not do so; therefore congestion has not occurred. Table 3 shows that volumes are subsiding

somewhat in the following week.

4 It remains important to note that a fair percentage (approximately 28%) of containers are neither to be imported nor exported, but rather consist of empties and transhipments. Due to container imbalances, this proportion is fluctuating more than usual. 5 As noted in footnote 1.

3

Overall stack occupancy is approximately 64% and 46% in Durban and Cape Town respectively. Meanwhile,

reefer occupancy currently stands at around 37% and 32% in Durban and Cape Town respectively.

Numerous factors have inhibited port operations at both the Ports of Durban and Cape Town. Note the

discussion thereof below.

Figure 2 - 7-day flow forecast for total cargo movement (TEUs: 30 March to 11 September; week-on-week)

Source: Calculated using data from the Transnet Port Terminal updates. Updated 11/09/2020

The figure above clearly illustrates the general upward trajectory in container volumes, though there is a

marked decrease in the week-on-week volumes. Due to the delayed effects of the pandemic and standard

lead times in ocean-going freight, container volumes were exceptionally low during the early days of

lockdown. Levels have subsequently increased steadily, especially in recent weeks, until the drop referred

to above. As a result, levels are now hovering around ~79% compared to the same time the previous year.

This figure is slightly down compared to last week; however when viewing this holisitically, it seems that

volumes are returning to near-normal levels. However, it should be noted that the end of the citrus season

will have an impact. Note the TNPA figures for August below.

The figures below show the weekly container flows for the last 7 days, as well as projections for the next 7

days.

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7-day flow period

DURBAN CONTAINER TERMINAL PIER 1 DURBAN CONTAINER TERMINAL PIER 2

CAPE TOWN CONTAINER TERMINAL NGQURA CONTAINER TERMINAL

PORT ELIZABETH CONTAINER TERMINAL Linear (DURBAN CONTAINER TERMINAL PIER 2)

4

Figure 3 - 7-day flow forecast for total cargo movement (4 September to 10 September; day-on-day)

Source: Calculated using data from Transnet Port Terminal, updated 11/09/2020.

Figure 4 - 7-day flow forecast for total cargo movement (4 September to 10 September; day-on-day)

Source: Calculated using data from Transnet Port Terminal, updated 11/09/2020.

Transnet National Ports Authority update for August

The following section provides a comparative overview of all cargo movement in and out of South Africa’s

ports for August of this year; compared to the same months last year, as reported by TNPA.

Table 4 - TNPA - Volume and growth: Aug 2019 versus Aug 2020

Aug 2019 Aug 2020 Movement Growth

Containers (TEUs) 447 072 354 015 -93 057 -21%

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7 day flow - 4 September to 10 September

DURBAN CONTAINER TERMINAL PIER 1 DURBAN CONTAINER TERMINAL PIER 2

CAPE TOWN CONTAINER TERMINAL NGQURA CONTAINER TERMINAL

PORT ELIZABETH CONTAINER TERMINAL

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11-Sep 12-Sep 13-Sep 14-Sep 15-Sep 16-Sep

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7 day flow - 11 September to 17 September

DURBAN CONTAINER TERMINAL PIER 1 DURBAN CONTAINER TERMINAL PIER 2

CAPE TOWN CONTAINER TERMINAL NGQURA CONTAINER TERMINAL

PORT ELIZABETH CONTAINER TERMINAL

5

Landed 228 134 178 047 -50 087 -22%

Shipped 218 938 175 968 -42 970 -20%

Dry bulk (MT) 14 766 987 14 565 868 -201 119 -1%

Liquid bulk (MT) 3 431 284 3 343 442 -87 842 -3%

Breakbulk (MT) 439 036 365 520 -73 516 -17%

Vehicles (Units) 78 742 41 890 -36 852 -47%

Total Cargo (excl. Vehicles) 18 716 049 18 316 720 -399 329 -2%

Source: TNPA, updated 15/09/2020

The following table provides a consolidated view of the calendar year compared to the same time last year:

Table 5 - TNPA - Volume and growth: Jan - Aug 2019 versus Jan - Aug 2020

Jan - Aug 2019 Jan - Aug 2020 Movement Growth

Containers (TEUs) 3 032 366 2 646 487 -385 879 -13%

Landed 1 559 743 1 173 163 -386 580 -25%

Shipped 1 472 623 1 323 524 -149 099 -10%

Dry bulk (MT) 123 598 413 112 387 336 -11 211 077 -9%

Liquid bulk (MT) 27 740 871 23 778 588 -3 962 283 -14%

Breakbulk (MT) 3 826 517 2 183 366 -1 643 151 -43%

Vehicles (Units) 496 484 298 041 -198 443 -40%

Total Cargo (excl. Vehicles) 155 165 801 138 349 290 -16 816 511 -11%

Source: TNPA, updated 15/09/2020

The consolidated table shows that overall cargo movement for the period since January is down by -11%

across all categories (for July, this figure was -9%), with all types of cargo experiencing negative growth

compared to 2019. Trade in especially vehicles and breakbulk cargo remains consistently low.

The following table provides an overview of the containerised cargo for the period.

Table 6 - TNPA - Volume: Jan - Aug 2019 versus Jan - Aug 2020: Containerised cargo

2019 2020

FULL EMPTY TOTAL FULL EMPTY TOTAL

LANDED:

DEEPSEA 1 028 091 205 983 1 234 074 812 856 246 674 1 059 530

COASTWISE 4 143 27 728 31 871 2 289 26 986 29 275

TRANSHIPPED6 239 448 54 350 293 798 172 863 61 295 234 158

TOTAL LANDED 1 271 682 288 061 1 559 743 988 008 334 955 1 322 963

SHIPPED:

DEEPSEA 796 847 359 566 1 156 413 740 124 324 399 1 064 523

COASTWISE 4 444 13 652 18 096 3 561 23 196 26 757

TRANSHIPPED 238 057 60 057 298 114 174 688 57 556 232 244

TOTAL SHIPPED 1 039 348 433 275 1 472 623 918 373 405 151 1 323 524

GRAND TOTAL 2 311 030 721 336 3 032 366 1 906 381 740 106 2 646 487

Source: TNPA, updated 15/09/2020

6 ‘Transhipped’ means an act of off-loading cargo from one ship (generally at the hub port) and loading it onto another ship to be further carried to the final port of discharge. In the process, the cargo is often held at the transhipment port for a period of time.

6

The following figure provides a visual representation of the overall volume movement shown in the table

above.

Figure 5 - TNPA - Growth: Jan - Aug 2019 versus Jan - Aug 2020: Containerised cargo

Source: TNPA, updated 15/09/2020

It is very clear from the figure above that the volume of full containers has significantly decreased over this

period, whilst, at the same time, the volume of empty containers (especially containers landed) has shown

substantial growth. This phenomenon is testament to the slowdown of ocean freight and the industries that

feed it across this period. It also gives a clear indication of the container imbalances currently being

experienced by shipping lines.

Summary of port operations

An average of ~11,172 TEUs were handled per day over the course of the last week (4 – 10 Sept - Table 2),

with a decreased average of around ~8,695 TEUs (-23%) expected to be handled over the course of the next

week (11 – 17 Sept Table 3). These figures can be compared to an average of ~11,350 TEUs handled per day

in the previous report (4 Sept). Monthly containerised cargo volumes are slightly down compared to last

week, currently at ~79% compared to the same time the previous year.

Nonetheless, the industry has reported some operational challenges which have occurred in Cape Town in

recent days. These challenges included the port being windbound as well as slot areas declared “men

working areas” which effectively blocked out whole sectors of the terminal and transporters. These

blockages resulted in transporters not being able to collect containers as planned (in some instances for up

to 24 hours), which caused significant delays. Despite these challenges, Transnet announced in their 11th

Port of Cape Town Bulletin that “it’s business as usual” at the Port of Cape Town. The following table

summarises the port operations according to Transnet.

-25%

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-15%

-10%

-5%

0%

5%

10%

15%

20%

FULL EMPTY TOTAL

TOTAL LANDED TOTAL SHIPPED GRAND TOTAL

7

Table 7 - Port operational status

Source: Transnet 11th Port of Cape Town Bulletin

In other news at the Port of Cape Town, it has been reported that four new RTGs will be fully commissioned

by end November which will increase the terminal’s capacity by 400,000 TEUs, from 900,000 TEUs to

1,300,000 TEUs7. The Western Cape government-convened Port task team will resume work on the 18th

September, and top of the agenda is the truck staging area. For the liquid bulk industry, two vessels and

31,000 MT have been handled over the course of the last week. Furthermore, the ship repair industry

continues with their work on the ‘Gariep’ project, with 2,248 people employed. Besides the Gariep project,

a further 400 people were working in ship repair in the last week.

In terms of the current situation in Durban, port operations seem back to normal after some road

interruptions in and around Maydon Wharf and Maydon Road. The terminal was over capacity with seven

bulk ships loading and discharging. The capacity constraints resulted in hopper trucks causing up to 5-hour

delays, meaning that access was denied to export trucks which began queueing on city streets. Later in the

week, the resultant traffic back-up caused Maydon Road / Wharf to be blocked entirely. Maydon Road is not

under the control of Transnet as it is a city street. The police were called in but met with limited success in

their attempts to resolve the situation.

Truckers insisted that the blame, as far as containerised cargo is concerned, rests with the booking system,

which does not allow sufficient uplift capacity for imports. At the same time, seven vessels are waiting at

anchorage with waiting times extending exponentially. The threat of vessels withdrawing service is

becoming real, and the effects are being felt in other ports. Besides these issues, there was a separate,

unrelated traffic incident at the key intersection of Langeberg and Bayhead Roads which also caused some

7 Transnet, 2016. https://www.transnet.net/InvestorRelations/AR2016/2016/downloads/4.%20Transnet%202016_Port%20Terminals.pdf

8

minor delays. Durban MPT Point continues to be a significant concern with continuing vessel delays

impacting the AMEX service.

To provide a holistic picture, TNPA released the cargo stats for the month of August8. TNPA reports that

liquid bulk — (-3%) and dry bulk (1%) cargo is approaching similar levels to those handled at the same time

last year. Breakbulk, on the other hand, remains down, at -17% compared to August 2019. Trade in vehicles

has been particularly hard-hit with volumes significantly down compared to the same period last year,

currently at -47%. These figures are in line with the global experience, where light vehicle sales are forecast

to fall to 59.6 million units in 2020, down 25% from a peak of 79.6 million in 20179. The continued increase

of empty import containers remains a matter of concern; however, these figures primarily reflect the global

imbalances currently experienced in ocean freight markets.

In other news concerning international shipping lines, Hamburg Sud on the 4th of September announced that

following its acquisition by Maersk in a $ 4 billion deal, the company would embark upon a restructuring

exercise in South Africa which would probably result in the closure of its local operations. Consultations

about this proposal have commenced with the South African workforce and representatives of organised

labour. Until then, the German shipping company will continue to service the South African industry with its

existing shipments.

Air Update

• International air cargo

The following table depicts the inbound and outbound air cargo flows to and from ORTIA in the last week.

For comparative purposes, the average air freight cargo (inbound and outbound) handled at ORTIA in the

two months before the lockdown period (January and February) was approximately 743 879 kg per day10.

The volumes depicted in the table are also in kilograms.

Table 8 - International inbound and outbound cargo from OR Tambo

Flows 07-Sep 08-Sep 09-Sep 10-Sep 11-Sep 12-Sep 13-Sep

Volume inbound 367 648 202 690 276 218 417 078 323 423 253 896 352 634

Volume outbound 197 578 178 370 153 731 283 946 169 710 174 528 335 945

Total handled per day 565 226 381 060 429 949 701 024 493 133 428 424 688 579

Updated: 15/09/2020

The average volume of air cargo handled at ORTIA over the seven days starting 7 September amounted to

313 370 kg inbound and 213 401 kg outbound, resulting in an average of 526 771 kg per day, which is

approximately 71% compared to the two months before the lockdown period and up by ↑12% since last

week.

The following figure is a visual representation derived from Table 8, illustrating how the volumes of air cargo

have fluctuated over the course of the last seven days.

8 TNPA, Port Statistics. http://www.transnetnationalportsauthority.net/Commercial%20and%20Marketing/Pages/Port-Statistics.aspx 9 Statista, 28 Aug 2020. https://www.statista.com/topics/1487/automotive-industry/#:~:text=Global%20sales%20of%20passenger%20cars,terms%20of%20sales%20and%20production. 10 Note, when including statistics from South Africa’s other two international airports, Cape Town International and King Shaka (Durban) International airports, the total figure rises to 916 175 kg per day.

9

Figure 6 - 7-day cargo flow for OR Tambo

Updated: 15/09/2020

The following figure shows the long-term average of international air cargo flows to and from ORTIA since

30 March. After the initial spike in volumes in late April and early May (mainly due to the bulk imports of

PPE from the East), weekly flows, although fluctuating from day to day, have settled into a reasonably

consistent average. This average has also slowly increased over the course of the last couple of months. The

sustained increase is evident by the trend lines on both inbound and outbound cargo in the figure below.

Figure 7 - Daily cargo flow for OR Tambo

Updated: 15/09/2020

The following table depicts the origin and destination of air cargo moved to and from ORTIA. Note that the

origin shown is the source of the flight, not necessarily the source of the load. The cargo originates around

the world and then moves here via the hubs of the major airlines, i.e. Doha (Qatar), Dubai (Emirates),

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Volume inbound Volume outbound

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Inbound Outbound Linear (Inbound) Linear (Outbound)

10

Istanbul (Turkish), and London (British), etc. Indications are that the bulk of the arriving cargo originates in

the Far East, since there are virtually no passenger flights, and only chartered flights and scheduled cargo

flights are arriving. Consistently high volumes between ORTIA and Nairobi are noteworthy and can be

explained by the opportunities arising out of the fresh flower export trade from Kenya to Europe.

Table 9 - Total international cargo movement to and from OR Tambo

Partner 07-Sep 08-Sep 09-Sep 10-Sep 11-Sep 12-Sep 13-Sep

Amsterdam 42 426 46 401 46 676 47 541 40 341 35 208 50 399

Doha 90 465 52 698 18 395 84 154 98 111 19 828 21 201

Dubai 73 150 77 641 92 057 96 581 84 234 43 671 89 832

Frankfurt 17 717

Istanbul 17 545 22 968 64 489 89 530

Johannesburg 46 862 61 951 60 094 94 544 54 267 146 355 24 247

London 92 608 42 235 54 085 62 388 59 334 88 829 89 790

Luanda 726

Luxembourg 78 678

Nairobi 150 174 80 376 33 855 111 511 107 742 25 394 94 333

Paris 49 709 38 995 45 159

Singapore 19 032 23 141 25 470 30 144 184 088

Zurich 51 996 46 920 49 104

Total handled: 565 226 381 060 429 949 701 024 493 133 428 424 688 579

Updated: 15/09/2020

When comparing the origin and destination of air cargo moved to and from ORTIA over the course of recent

months, it is evident that our trading partners have mainly remained the same. The significant omission is

Addis Ababa and Ethiopian Airways, which accounted for a large portion of the air cargo during the early

days of lockdown when bulk imports of PPE from China were in full swing, and even passenger aircraft were

being used on a charter basis. Since then, Ethiopian Airlines have requested that their figures should not be

publicly reported, so the figures throughout this report are not the entire picture but provide as close an

indication as possible.

The following figure, a graphic representation of Table 9, shows the diversity of South Africa’s trading

partners in terms of cargo handled per country of origin. Overall, international freight has increased by ~12%

compared to last week.

11

Figure 8 - Total cargo movement between OR Tambo and trading partners

Updated: 15/09/2020

The next figure illustrates the cargo moved per ground handling agent since the start of the lockdown period,

with Swissport handling the bulk of the international freight to and from ORTIA.

Figure 9 - Cargo movement during the lockdown, per handler

Updated: 15/09/2020

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Sum of Inbound Sum of Outbound

12

The following figure illustrates the cargo moved per airline since the start of the lockdown period, with Qatar,

Martinair, Emirates, and Ethiopian accounting for the vast majority of the international freight to and from

ORTIA.

Figure 10 - Cargo movement during the lockdown, per airline

Updated: 15/09/2020

We are once again underlining the fact that most international air cargo has been channelled to ORTIA during

the lockdown period, with very little foreign cargo consigned to or from Durban and Cape Town. The onward

movement of cargo from ORTIA to the coastal cities (primarily by road) adds to both cost and transit time,

as well as creating a need for in-bond clearances with Customs which has also presented some obstacles.

The figure below illustrates the percentage of cargo sanitised, as well as the portion of cargo checked by

Port Health.

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Figure 11 - Air cargo sanitation process

Updated: 15/09/2020

With the increase in flights, it is worth pointing out that a delay in the movement of trucks into the foreign

airline cargo handling facility was reported on the morning of Tuesday 15 September. The delay was ascribed

to the imposition of new regulations by ACSA. The photograph below illustrates the problem.

Figure 12 - ORTIA Foreign airline cargo handling facility

Taken: 15/09/2020, 09:30

It has been reported that Airports Company South Africa (ACSA) security is not allowing any unmarked trucks

and private vehicles into the gates, which consequently has meant that the ground handlers had to take the

89%

11%

Cargo sanitasation percentage

Cargo sanitised Cargo not sanitised

34%

59%

7%

Percentage cargo checked by Port Health

Checked Not checked Unknown

14

cargo to the security gate. A meeting with ACSA and all the industry role players was scheduled for Tuesday

afternoon in an attempt to resolve the problem and eliminate the delays.

Domestic air cargo

The following table shows the domestic inbound and outbound air cargo flows for the duration of the

lockdown period, as reported by industry. The table comprises the main domestic hubs, with a summary for

the other airports. For comparative purposes, the average domestic air freight cargo (inbound and

outbound) for ORTIA handled before the lockdown period was approximately 75 000 - 90 000 kg per day

(calculated from industry feedback). The volumes depicted in the table are also in kilograms.

Table 10 - Total domestic cargo movement

DATE / AIRPORT CPT

DUR ELS JNB PLZ OTHERS TOTAL

March Average 8 581 823 1 728 4 020 2 912 1 555 19 619

April Average 14 664 900 2 152 13 911 3 814 1 760 35 956

May Average 28 421 1 639 4 677 25 282 7 333 1 099 58 064

June Average 24 256 2 137 5 105 23 935 8 601 3 324 63 236

July Average 23 395 2 759 4 896 24 255 6 550 5 139 63 116

August Average 22 860 2 418 40 93 22 142 5 643 2 819 59 559

01-Sep-20 35

204 3 911 5 731 24

868 9 919 5563 85 196

02-Sep-20 34

103 4 141 5 853 46

107 9 473 4956 104 635

03-Sep-20 33

494 3 584 5 243 25

086 8 637 4122 80 165

04-Sep-20 15

314 1 608 3 367 22

067 4 583 3216 50 155

05-Sep-20

591 521 31 1

489 20 77 2 727

07-Sep-20 47

440 3 955 6 501 33

296 9 619 5547 106 358

06-Sep-20 2

509 468 10

416 493 554 4 449

08-Sep-20 37

894 3 500 5 638 28

413 10 705 5070 91 220

09-Sep-20 37

421 5 085 5 119 46

715 8 673 4430 107 443

10-Sep-20 39

277 3 863 5 375 28

339 8 211 4909 89 973

11-Sep-20 11

825 1 332 4 064 18

994 5 609 3942 45 768

12-Sep-20 1

134 612 3 1

080 81 94 3 003

13-Sep-20

766 402 182 1

133 170 288 2 940

15

14-Sep-20 51

050 3 878 6 282 39

635 10 597 4634 116 076

Grand Total 3 645

783 347 184 565 546

3 504

574 924 770 680 535 9 472 606

Updated: 15/09/2020

The following figure is an illustration of the total air cargo moved per day as per the table above:

Figure 13 - Total domestic air cargo since lockdown commenced

Updated: 15/09/2020

The average domestic air cargo moved during the lockdown period has amounted to ~61 729 kg per day,

which constitutes approximately 69% (up by ↑12% since last week) of the volume moved pre-lockdown,

and this reflects the current situation as experienced by the industry. On a more positive note, however, has

been the fact that the daily flow of goods has continued to increase steadily as the trend line in the figure

above illustrates.

Global air cargo traffic

The following air traffic image displays the current pattern of air traffic globally, providing a snapshot around

mid-morning of 16 September.

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100

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27-Mar-20 27-Apr-20 27-May-20 27-Jun-20 27-Jul-20 27-Aug-20

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Figure 14 - Global air traffic: 16 September 2020

Source: FlightRadar24, 16/09/2020, 09:00

The image continues to highlight the lack of activity in African airspace, although this traffic has increased

dramatically compared to the early days of lockdown. The numbers of aircraft currently moving across

African airspace has increased, but the failure of African countries to adopt an ‘open skies’ policy still has a

detrimental effect. Still, as can be seen in the statistics provided in the previous section, the amounts are

not yet up to normal ranges, as the following image will show.

South African air traffic

The next image displays the current pattern of air traffic in Southern Africa, providing a snapshot around

early-morning of 16 September.

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Figure 15 - Southern African air traffic: 16 September 2020

Source: FlightRadar24, 16/09/2020, 09:00

Although domestic air cargo volumes have stagnated somewhat in recent weeks, it remains encouraging to

witness from the figure that the number of aircraft travelling on South Africa’s busiest aviation route —

Johannesburg/Cape Town — has continued to increase in recent weeks.

Overall economic update

a. StatsSA - GDP figures for Q2 2020

StatsSA on Tuesday 8 September published South Africa’s GDP statistics for the second quarter (Q2) of

202011. Overall GDP fell by just over 16% between the first and second quarters of 2020, giving an annualised

growth rate of ‑51%. Therefore, in summary, the second quarter of 2020 is the steepest drop in GDP since

1960, according to historical data sourced from the South African Reserve Bank12.

In summary, the South Africa economy’s output in the second quarter of 2020 amounted to almost R654

billion. Using constant 2010 prices, Q2 2020 was the lowest level of production since Q1 2009, when the

economy generated R649 billion, mainly due to the aftermath of the global financial crisis. Ultimately, South

Africa’s annual GDP growth is expected to be within the -8 to -10% range for 2020.

Of all the major industries, only agriculture escaped this massive drop. The following figures show the growth

figures for the leading South Africa industries.

11 StatsSA, 2020. http://www.statssa.gov.za/?p=13601 12 SARB, 2020. https://www.resbank.co.za/Research/Statistics/Pages/OnlineDownloadFacility.aspx

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Figure 16 - Industry growth in the second quarter of 2020 (quarter-on-quarter)13

Source: StatsSA

Concerning international trade, the industry contracted by -67.6%, which means that national output levels

were approximately 32.4% compared to the first quarter of 2020. Similar figures have been reported since

the inception of this report, with capacity levels (both air and sea freight) hovering around the mid-30%

range.

In the press release, StatsSA noted that “Air travel came to an almost complete halt, contributing to the fall

in economic activity in the transport and communication industry. There was also less activity by rail and

road freight operators due to restrictions on the production and movement of various goods14.”

Not only are the reported figures alarming in their own right, but the situation is exacerbated by the fact

that the comparisons come off an already low base. The country already entered into a recession in the first

quarter of 2020.

1. Regional update

a. Border closures

Some of South Africa’s borders have been affected by temporary closures over the course of the last week

as COVID-19 infections spread across the country. Still, generally, such closures have been less prevalent

than when COVID-19 infections were at their peak. Only one border post was affected during the review

period:

• 11 September: Skilpadshek border post (Botswana) has reopened.

13 Seasonally adjusted and annualised 14 StatsSA, 2020. http://www.statssa.gov.za/?p=13601

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• 10 September: Skilpadshek border post (Botswana) is closed until further notice.

Regional Electronic Cargo and Driver Tracking System

On Tuesday, the East African Community secretariat officially rolled-out the Regional Electronic Cargo and

Driver Tracking System (RECDTS). The system — implemented from the Malaba border crossing between

Uganda and Kenya to the Mirama Hills-Kagitumba border between Uganda and Rwanda — monitors long-

distance truckers’ crew and allows partner states to share truck drivers’ COVID-19 test results electronically.

RECDTS provides a surveillance system which therefore minimises the need for multiple tests in a single trip,

according to a statement from the EAC15. As has usually been the case over the last couple of decades,

manual procedures often delay the flow of cross-border trade. This initiative seeks to fast-track the flow of

goods, whilst at the same time protecting lives, promoting safe trade and supporting health-related

protocols during the ‘new normal’ which has developed under COVID-19.

SADC Regional response to COVID-19 pandemic

The SADC Secretariat released its 11th “Response to COVID-19” bulletin16, providing an overview of the

situation in the region, as well as the rest of Africa. In terms of cross-border road transport operations, the

SADC noted the following to provide an update in the region:

• Severe border delays are still occurring for trucks on cross border trips as countries are still taking

measures to fully comply with the SADC and Tripartite Trade and Transport Facilitation Guidelines

and Standard Operating Procedures for the Movement of Persons, Goods and Services across the

region.

• Further delays are caused by the closure of border agency offices, such as Customs offices, when a

member of staff appears possibly to have been infected with COVID-19. This situation leads to

closure of the affected offices, which then have to be fumigated and disinfected before they can be

opened for service again. Here again, antiquated paper-based processes play a significant role in

exacerbating the problem.

• These delays result in higher transport cost and a commensurate increase in the price of goods and

services to the consumers.

• Botswana, Namibia and Zambia have made progress in preparations for piloting the Corridor Trip

Monitoring System (CTMS) on sections on the Trans Kalahari, North-South Corridors and the Walvis

Bay - Ndola-Lubumbashi Corridors. Transport operators in those countries have started up-loading

operator, driver and vehicle information onto the CTMS. The CTMS was developed along the same

lines as the RECDTS mentioned earlier in this report, to facilitate promotion of driver wellness by

sharing COVID-19 test results, driver, vehicle and load information and to facilitate tracking of cross

border movements and, where required, contact tracing.

2. International update

The following section provides context as to the health of the global economy and the impact of COVID-19.

a. Container industry at a glance

As predicted in last week’s report, international freight rates have shown a slight decline over the course of

the previous week, according to the “World Container Index” (WCI) as published by Drewry, the UK-based

Maritime research and consulting firm17. The current global average freight rate currently stands at

15 EAC, 2020. RECDTS. https://www.eac.int/press-releases/147-health/1851-eac-rolls-out-regional-electronic-cargo-and-driver-tracking-system 16 SADC, 2020. Regional reponse to COVID-19. https://www.sadc.int/files/9715/9865/2361/COVID-19_11th_Report_EN_mail.pdf 17 Drewry Supply Chain Advisors, World Container Index. https://www.drewry.co.uk/logistics-executive-briefing/logistics-executive-briefing-articles/world-container-index-detailed-assessment

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$2,452.99 per 40ft container. The WCI has therefore decreased by 0.5% since the previous week (4

September 2020). Nonetheless, as a whole, the WCI is up by 76.9% when compared with the same period in

2019. This rate decline likely mirrors an increase in traffic, with consequent greater competition between

carriers.

Drewry provides the following reasons for this continued upward trend in rates:

• The average composite index of the WCI, assessed by Drewry for year-to-date, is $1,780 per 40ft

container.

• The increase of $354 is 24.83% higher than the five-year average of $1,426 per 40ft container.

• In an overall sense, all eight major East-West trading routes see little change since last week.

The following table consolidates the monthly and annual changes for the eight major East-West trades.

Table 11 - World container index per route - Assessed by Drewry ($ per 40’ container)

Source: Drewry Ports and Terminal insights

The WCI has mostly moved in opposite directions compared to the “Global Container Throughout Index”

(GCTI) — also published by Drewry. As with the decrease in container volumes, the average freight rate has

conversely increased. In simple terms, less volume equals more expensive freight rates. The following figure

illustrates the GCTI to June 2020.

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Figure 17 - Global container throughput index - Assessed by Drewry (Jan 2012 = 100)

Source: Drewry Ports and Terminal insights

The following key points can be inferred from global container throughput:

• The GCTI has improved slightly in June and now stands at 124.3 points, 2.3% higher than in May

2020.

• Despite the increase, the GCTI remains in negative territory (-4.9%) compared to the same period in

2019.

• The majority of the increase in June results from the revival in demand in China, as it gained 4.2%.

• The Port of Shenzhen led the monthly throughput revival followed by Qingdao and Ningbo, together

contributing around 33% in June.

• After sliding in May, the index for North America gained 1.5% month on month in June 2020.

• The index in Europe remains level, closing at 109.3 points in June compared to 109.4 in May.

However, the annual decline was more pronounced, down more than 10%.

• For Africa, the index has once again grown in June with an increase of 7.4% month on month. The

growth is encouraging; however, the levels are still around 9.7% lower than in June 2019.

The GCTI roughly corresponds to the weekly container ship port calls, released by UNCTAD18 this week. The

UNCTAD data shows that — after trade underwent a historic slump of 27% in the second quarter of 202019

— the average weekly calls have started to recover, rising to 9,265 by early August, just 3% below the levels

of one year earlier. The following figure shows the weekly numbers, as obtained from Marine Traffic20.

18 UNCTAD Shipping data. https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2466&s=09 19 UNCTAD Trade data. https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2392 20 Marine Traffic. https://www.marinetraffic.com/en/ais/home/centerx:-12.0/centery:25.0/zoom:4

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Figure 18 - Weekly container ship port calls, world and selected regions

Source: UNCTAD, based on data provided by Marine Traffic

The following points can be highlighted:

• Globally, container ship arrivals started to fall below 2019 levels around mid-March 2020 and then

started to recover gradually around the third week of June.

• The start of the decline coincided with the World Health Organisation’s decision on 11 March to

classify COVID-19 as a pandemic21, while the gradual recovery reflected the timeline when some

countries began easing out of lockdown.

• UNCTAD notes that although most regions have seen some recovery in the third quarter of 2020

(both in absolute numbers and compared to 2019 levels), the global figures obscure critical regional

differences, as noted above.

International Air Transport Association

On Wednesday, IATA published the ‘Air Cargo Market’22. IATA notes that demand for air cargo remains much

more robust compared to air travel. The following figure highlights the disparity:

21 WHO. https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020 22 IATA Air cargo market .

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Figure 19 - Global air travel and cargo volume growth (Jan 2019 - Jul 2020)

Source: IATA

Even though air cargo remains much more robust compared to air travel, the recovery is not equal across

regions. The following figure indicates the respective cargo recoveries across significant trade lanes:

Figure 20 - Growth in cargo tonne-km by central trade lane (2016 - 2020)

Source: IATA Economics

From the figure, IATA notes the following vital points:

• Compared to the rest of the global aviation industry, the air cargo business is one of the few bright

spots during the COVID-19 pandemic.

• Air cargo volumes are rising significantly, with worldwide cargo tonne-kilometres flown much

improved in July at -13.5% versus the same month last year.

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• Nonetheless, as mentioned above, the recovery is not equal across regions, with the North Pacific

(the Asia Pacific to/from North America) route is up by 4% compared to 2019; whereas the North

Atlantic (Europe to/from North America) route is down by -30% since last year.

Conclusion

This update — the eighth of its kind — contains a consolidated overview of the South African supply chain,

as well as the current state of trade internationally. The update comes on the back of the country reporting

its steepest drop in GDP since 1960, with GDP falling by just over 16% between the first and second quarters

of 2020. Nonetheless, there is further positive news concerning COVID-19 infections: the number of new

diagnoses of COVID-19, which started to decline rapidly in mid-July, levelled out at an average of just over

1,600 a day in the week to 6 September. In contrast to the move to Levels 4 and 3 however, three weeks

after Level 2 started on 18 August reported infections had not risen sharply23. In global terms, South Africa

has dropped another place to 8th position globally (with Mexico overtaking South Africa in the past week).

Total cases now amount to approximately 650,00024 recorded at the time of writing.

For the ocean modality, container volumes have decreased compared to those recorded last week. The

average this week stands at ~11,172 TEUs handled daily, with a slightly reduced average of around ~8,695

TEUs expected over the course of the next week. Overall, containerised cargo volumes are ~79% compared

to the same time the previous year. For the month of August, TNPA reports that liquid bulk and dry bulk

cargo is approaching similar levels compared to the same time last year. However, trade in motor vehicles

remains desperately low, in line with current global patterns. Overall, cargo movement for the period since

January is down by ↓11% across all categories (for July, this figure was ↓9%).

Concerning international air cargo flowing to South Africa, the average daily volume of air cargo handled at

ORTIA over the seven days has increased by ~↑12% compared to last week. The period beginning 7

September August saw daily volumes of 313 370 kg inbound and 213 401 kg outbound, resulting in an

average of 526 771 kg per day, which is approximately 71% compared to the two months before the

lockdown period. The average domestic air cargo moved during the lockdown period has amounted to ~61

729 kg per day, which constitutes approximately 69% (also up by ~↑12% since last week) of the volume

moved pre-lockdown.

These air cargo figures once again highlight the sustained negative impact of the pandemic on the global air

cargo industry, as confirmed globally by Figures 19 and 20 above. In summary, despite the dire effects felt,

IATA notes that African airlines have been affected the least by the pandemic, with CTKs only down by 14.8%

year-on-year, which is at least a dim star in a very dark sky.

Internationally, the WCI sees average freight rates stabilising after their continued recent record run,

currently at $2,452.99 per 40’). The WCI has therefore decreased marginally by 0.5% since the previous week

(4 September 2020). Despite this slight decrease, in broad terms, the WCI is up by 76.9% when compared

with the same period in 2019. In terms of global container throughput, the month of June saw a 2.3%

increase, according to the “Global Container Throughout Index” (GCTI). The GCTI roughly corresponds to the

weekly container ship port calls which show that — after trade underwent a historic slump of 27% in the

second quarter of 2020 — the average weekly calls have started to recover, rising to 9,265 by early August,

just 3% below the levels of one year earlier.

In general terms, the available supply chain indicators point out that COVID-19 economic recovery remains

slow and that South Africa remains very dependent on external global forces. This dependence is especially

true in terms of the security of the supply chain. Therefore, this report once again strongly reiterates that

23 TIPS, The Economy and the Pandemic. https://www.tips.org.za/manufacturing-data/tips-tracker-economy-and-the-pandemic 24 John Hopkins, Coronavirus Resource Centre. https://coronavirus.jhu.edu/map.html

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economic recovery will broadly depend on three key factors: (1) upward trends in the world economy, (2)

the efficacy of the support measures taken by the country so far, and (3) the resilience of the trading

community in successfully returning to full operation when the lockdown is over, and higher volumes

compared to pre-lockdown levels.