Delays at the port of Richards Bay have resulted in R5 billion worth of goods being trapped, waiting to be processed for import or export, and costing freight companies R98 million a day.
Transnet revealed this following the suspension of receipt of all cargo via road freight at Richards Bay this week.
“This is quite a critical situation, especially considering the backlogs at all of Transnet’s ports,” UJ economist Professor Peter Baur told the SABC.
Baur said this is nothing new as South Africa has been consistently ranked as one of the worst countries at handling shipping containers, according to the World Bank.
The average port wait time globally is four to five days, while at South African ports, wait times are up to 20 days.
While most of the focus has been on the delays at South Africa’s largest container terminal in Durban, the crisis in Richards Bay is just as crippling for the economy.
Richards Bay processes the vast majority of the country’s mineral resource exports, particularly coal, which brings in valuable foreign currency and bolsters the country’s trade balances.
However, of late, there have been significant delays at the port, which have prevented the export of the country’s most valuable commodities.
While Transnet’s poor performance was estimated to cost South African miners R150 billion last year, the delays at Richards Bay have left R5 billion of exports stranded.
Delays at South Africa’s ports have resulted in some mining companies, such as Kumba Iron Ore, cutting production as they have run out of space to store minerals prior to export.
There are few options available to companies to minimise the impact of Transnet on their businesses as it is too late.
Companies can use alternative ports, such as Maputo, Cape Town, or other African ports, but these come with additional costs and potential delays.
Baur estimated that the delays at the country’s ports would shave over 4% off of the country’s GDP in 2023.
There were 96 vessels waiting at anchorage outside South Africa’s commercial ports earlier this week, the South African Association of Freight Forwarders told Bloomberg.
That results in direct costs of R98 million a day when congestion surcharges are added.