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Seven major ports declared force majeure, shipping companies stopped booking space!

Staff at South African port terminal operator Transnet have gone on strike over wages since last Friday, with Transnet saying force majeure exists at all South African ports.

Transnet owns and operates 16 terminals and seven ports in South Africa. The seven major ports in South Africa declared a force majeure strike this time, South African exporters are facing supply chain disruptions, and the strike has led to a large backlog of goods.

Strikes lead to massive container backlog

South African terminal operator Transnet Port Terminals said in an update on its website that the strike has affected waterside and landside operations at the Port of Durban, which handles 65% of South Africa’s container traffic.

“Please note that operations at Pier 1, Pier 2 and Durban Terminal have been affected due to industrial action. Appointment slots have been suspended. Please do not dispatch trucks to the terminals until further notice.”

It is understood that Pier 1 and Pier 2 are container terminals, while the Ro-Ro ship terminal is used for importing and exporting automobiles.

The Transnet strike has resulted in a flood of cargoes waiting at the terminals, with cargo stranded on ships in the port, hindering the supply of goods ahead of the festival.

Peter Besnard, chief executive of the South African Association of Ship Operators and Agents, said there was currently a large backlog of containers at ports that had not been dealt with due to the strike. The Durban Container Terminal has suspended operations and the new terminal at eThekwini is not operating either.

Besnard said that as of Tuesday morning, six container ships, 18 bulk carriers, one multipurpose vessel, three tankers and two carriers were waiting to unload. The ships are carrying cargo from China, Europe, South America and the United States.

It is reported that the South African National Transport Union (UNTU) started an indefinite strike last Thursday (October 6), while members of the South African Transport and United Workers Union (SATAWU) went on strike on October 10.

“The strike could have a devastating impact on South Africa’s economy,” the South African Business Union said.

The strike comes amid South Africa’s energy crisis, which has caused power outages of up to nine hours a day.

Data from the South African Association of Freight Forwarders (SAAFF) shows that logistical delays cost the country between 100 million and 1 billion rand ($548 million) a day, but the total economic cost “could be in the billions of rands a day”.

SAAFF also noted that “the impact of a one-day port strike will result in at least 10 days of operational recovery”. The association also made an “urgent call to resolve the impasse to maintain supply chains, as strikes could be more damaging than an energy crisis”.

Shipping companies have stopped booking business

Shipping companies have notified customers and are looking for alternative solutions.

Hapag-Lloyd said several terminals were still unable to operate, in addition to the Transnet Port Terminals having officially declared force majeure.

The strike is expected to have an impact on local operations. With this in mind, Hapag-Lloyd offers an additional 7 days of free demurrage for all types of containers.

Maersk also recently announced a service adjustment plan and suspended all bookings for dry containers at South African ports.

It also warned that imports “may face lengthy delays” and would waive export fees that require a change of destination.

The impact of the port strike continues to ferment

The strikes could also disrupt fruit exports from the transport network’s Cape Town port at the start of the deciduous fruit season.

Shippers are now looking for alternative models. Lynee du Toit, chief executive of Air Charter Services South Africa, said requests for charter flights from exporters of perishables had increased over the past two days. It added that this would trigger higher rates due to limited air capacity.

The normal charter fee of US$500,000 has risen to US$1 million during the epidemic, and fruit merchants simply cannot afford it. In the face of the current crit price increase, expect a period of disruption. Back in 2010, Transnet faced a 17-day strike that took about seven months to recover.

Meanwhile, Transnet’s strike will also exacerbate the mining industry’s logistical woes. Even before the strike, the South African Mines Council had forecast that South Africa would lose 50 billion rand ($2.76 billion) in revenue this year, compared with 35 billion rand in 2021, as poor performance by transport network companies squeezed exports.

Miners Thungela Resources, Kumba Iron Ore and Jupiter Mines warned the strike could affect production and exports of coal, iron ore and manganese.

South Africa is one of China’s major importers of chrome ore, and the strike directly affects the supply of chrome ore. According to Mysteel, the chrome ore in the port can still be shipped, but the shipment of chrome ore to the port has been suspended, and the shipment of most chrome ore ships will be delayed, and it is impossible to predict when the port shipment will resume.

Finally, I would like to remind the shippers and forwarders who have plans to ship to South Africa in the near future, they must pay close attention to the delay and impact of the strike on the transportation of goods, so as to avoid unnecessary losses!

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