Strong growth in container trade

STRONG and unexpected market growth best characterises the performance of the import container trade into South Africa for the first half of 2015. This is according to the Maersk Trade Report South Africa: Second Quarter 2015, which revealed that in the first half of 2015 the total South African container market (import plus export) grew by 7% year-over-year, whereas the first half of 2014 witnessed a market decline of 5%.

Matthew Conroy, Trade Manager of Maersk Line Southern Africa – a member of Maersk Group – says that this growth is in stark contrast to poor economic fundamentals which South Africa is currently experiencing, such as low consumer confidence and slow GDP growth. “Most of this growth can be attributed to imports into South Africa which have risen by 11% year-over-year. Specifically, there has been a 15% increase in imports of clothing and household goods, which are predominately sourced from Asia.

“Although this is a significant and unexpected increase, when considering the market decline we experienced in the first half of 2014, it is important to note that the total import market size is only now back to the size it was in the first half of 2013. The growth is therefore more of an economic rebound, as opposed to consistent economic growth.”

According to Jonathan Horn, Managing Director of Maersk Line in Southern Africa, in terms of exports, the local market has grown approximately 2%, which is within the Maersk Group’s expectations at the beginning of 2015. “The dry container export market, which consists mostly of mineral commodities, has seen virtually no growth as a result of lower commodity prices and China’s slowing GDP growth. It is also likely this trend will continue and there will be less commodity consumption for the rest of 2015, unless China’s growth improves.”

Horn says that in contrast to the dry market, the refrigerated export market has grown locally by 10%. “This is largely due to the fact that South Africa experienced better weather and crops of apples, pears and grapes this year, whereas in the first half of 2014 crops were very poor due to various weather-related incidents.”

Conroy forecasts that the outlook for the second half of 2015 will be positive, albeit not as positive as the growth witnessed in the first half of the year. “It is predicted that the import market will experience a steady uptick, with expected growth ranging from 1% to 2% year-over-year, mainly due to strong performance during the second half of 2014, which set the bar very high for 2015.

“In order to see higher import growth, we need to see healthier economic fundamentals at play, specifically a higher level of consumer confidence, bearing in mind that the majority of imports are consumable in nature, such as clothing and household goods.

Conroy predicts that during the second half of 2015, dry exports, which consist mostly of mining commodities, will pick up slightly and grow by 3- 4%. He says that growth during the second quarter of 2015 was much stronger when compared to the first quarter year-over-year, and that there has been a clear positive growth trend in the underlying year to date data, which is expected to continue into the rest of 2015. “We expect that this growth will come from commodity exports to Asia and the Middle East as well as automotive exports to Europe.

Dirk Hoffmann, MD of Safmarine – a member of Maersk Group, says, “Refrigerated exports are also expected to grow marginally I the 2-3% range in the second half of 2015, mostly on the back of citrus exports. This increase is susceptible to any European Union (EU) policy changes regarding ‘Citrus black spot’, which could potentially impact South Africa’s citrus exports to the EU,” he said.