Starting last Friday, employees of South African port terminal operator Transnet went on strike over wage issues. Transnet said that force majeure existed in all South African ports.
Transnet owns and operates 16 terminals and seven ports in South Africa. This time force majeure strikes were declared at seven major ports in South Africa. South African exporters are facing supply chain disruptions. The strikes have resulted in a large backlog of goods.
Strike leads to massive container backlog
South African terminal operator Transnet Port Terminals updated information on its website that the strike affected waterfront and landside operations at the Durban port, which handles 65% of South Africa’s container traffic.
“Please note that operations at Pier 1, Pier 2 and Durban Terminal are affected due to industrial action. Appointment slots have been suspended. Please do not send 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 to import and export cars.
The Transnet strike has left large volumes of goods waiting at terminals and cargo stuck on ships in ports, hampering the supply of goods ahead of the holidays.
Peter Besnard, chief executive of the South African Ship Operators and Agents Association, said there is currently a large backlog of containers at the port that have not yet been processed due to the strike. Durban Container Terminal has suspended operations, while 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 oil tankers and two transport vessels were waiting to unload. The ships carry cargo from China, Europe, South America and the United States.
It is reported that the National Transport Union of South Africa (UNTU) began an indefinite strike last Thursday (October 6), while members of the South African Transport and Allied Workers Union (SATAWU) went on strike on October 10.
“A strike could have a devastating impact on South Africa’s economy,” the South African Business Federation said.
The strike comes amid South Africa’s energy crisis, which has caused blackouts of up to nine hours a day.
Figures from the South African Association of Freight Forwarders (SAAFF) show that logistics delays cost the country’s economy between 100 million and 1 billion rand ($548 million) a day, but the total economic cost “could reach billions of rand every day”.
SAAFF also noted that “the impact of a one-day strike at the port will result in operations taking at least 10 days to recover.” The association also made an “urgent call for the impasse to be resolved to maintain supply chains, as a strike could be more damaging than an energy crisis”.
Some shipping companies have stopped booking business
The shipping company has informed customers that it is looking for alternative solutions. Hapag-Lloyd said several terminals were still unable to operate, and on top of that, Transnet Port Terminals had 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 detention for all container types.
Maersk has also recently announced a service adjustment plan and suspended dry container bookings at all 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 port strikes continues to ferment
Separately, the strike could disrupt fruit exports from Transport Network’s Cape Town port at the start of the deciduous fruit season.
Shippers are now looking for alternative models. Lynee du Toit, CEO of Air Charter Services South Africa, said there had been an increase in requests for charter flights from perishable exporters over the past two days. It added that due to limited air transport capacity, this will trigger an increase in freight rates.
The normal charter fee of US$500,000 rose to US$1 million during the epidemic, and the fruit merchants simply could not afford it. With the current increase in crit prices, expect a period of disruption. Back in 2010, Transnet faced a 17-day strike, which took about seven months to recover.
At the same time, the Transnet strike will also exacerbate the mining industry’s logistical difficulties. Even before the strike, the Minerals Council of South Africa predicted that South Africa would lose revenue of 50 billion rand ($2.76 billion) this year and 35 billion rand in 2021 as poor performance by transport network companies squeezes exports.
Miners Thungela Resources, Kumba Iron Ore and Jupiter Mines warned that the strike could affect production and exports of coal, iron ore and manganese.
As one of the major importers of chrome ore to China, South Africa’s strike directly affects the supply of chromium ore. According to Mysteel, chrome ore currently in port can still be shipped, but shipments of chrome ore to the port have been suspended. Most chromium ore ship shipments will be delayed, and it is impossible to predict when shipments from the port will resume.
Finally, we remind cargo owners and forwarders who have plans to ship to South Africa in the near future to pay close attention to the delays and impact of the strike on cargo transportation to avoid unnecessary losses!