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Planning for ocean-freight disruption and backlogs
Bidvest International Logistics offers insight on how best to negotiate port congestion in challenging times
JOHANNESBURG, 5 September 2022 – While the past six months may have brought an easing of constraints and prices, port congestion remains a major issue globally.
With maritime transport carrying more than 80% of global merchandise by volume, the system has become visibly stressed, resulting in shortages of certain products, ships waiting for days at anchorage outside ports and consumers feeling the high cost of goods.
As the World Bank points out in its Container Port Performance Index 2021, often ports and terminals can be sources of shipment delays, supply chain disruptions, additional costs and reduced competitiveness themselves. Weather, equipment breakdowns and labour issues are frequently responsible.
The ports may also offer too little space or be limited in terms of maritime and landside efficiency, or exhibit a lack of proper coordination between relevant public agencies. The knock-on effect is colossal, not only for the specific country but how it impacts the rest of the world.
Though the worst of the pandemic may be over, the war in Ukraine and the rising cost of living continue to affect international supply chains. More recently in August, strikes and industrial action in Northern Europe have exacerbated existing challenges, with the ripple effects felt in South Africa and other parts of the world.
Transnet National Ports Authority statistics for July show that container throughput was down 8% year-on-year and still 3% down year-to-date on prepandemic levels in 2019, with Business Unity South Africa (BUSA) noting that even though trade remains strong, many losses offset the gains due to the stop-start nature of trade in 2022.
With so much at stake, overcoming these challenges is no easy feat from a logistics standpoint. Yet it can be done, says Laura de Villiers, head of Trade Lane Management for Bidvest International Logistics (BIL).
“We provide our clients with as much market intelligence as possible,” she says.
“We currently have a quarterly teams meeting where we provide a high-level international trade overview. Planning in advance is essential. This may involve increasing lead times to allow for roll-overs in congested hub ports, and receiving orders at least 6-8 weeks in advance to manage our clients’ expectations.”
BIL also engages with carriers on its monthly forecast to ensure they have sufficient equipment and space to meet booking demands.
“Basically, we’re in close contact with our clients and carriers and review the orders regularly. If there are specific ports of origin where the transit time has increased due to poor vessel schedule integrity, we increase the lead times to ensure we achieve the required of site times,” de Villiers says.
Another important part of the process is establishing which carriers are best suited to the specific job by matching direct savings with client shipments.
“We will measure, for example, the required on-site dates and what is the most economical way to ship those goods. Given current interest rate hikes it is understandable that many clients are price-sensitive,” de Villiers says.
Working with a pool of carriers also dilutes risk as overall volumes are split among several reputed and reliable operators.
An essential aspect of the planning model is to identify alternate ports. This will ensure that the sudden closure of one port will not bring the supply chain to a grinding halt.
“If Durban is congested, for example, we might look at discharging in Port Elizabeth or Maputo to get the best end-to-end price for a client,” de Villiers says.
While there is still much work to be done in South Africa, the logistics sector has welcomed moves by Transnet to partner with private sector respondents to upgrade the Durban Pier 2 and Nqqura container terminals.
BUSA emphasises that private-sector participation is a necessary evolution required to kickstart South Africa’s maritime economy to the benefit of the trade and logistics industry.