Sound reforms needed for SA to take advantage of Middle East shipping crisis

Martin van Staden / Midjourney
Martin van Staden / Midjourney

This article was first published by City Press on 2 February 2024

Since last year, Iran backed Houthi rebels in Yemen have devastated shipping in the Red Sea. Commercial ships have been under constant attack by missile and drone strikes, as the Houthis wage a war against global shipping, in lieu of striking Israel (as a part of their complex terror strategy as an Iran proxy).

But what does this mean for South Africa? Like in 2021, when a container ship ran aground and blocked the canal for six days, South Africa stands to gain from this redirection of global shipping. But only if we harness the opportunity.

Since December 2023, hundreds of ships have been rerouted from the Suez Canal to make the long trip around the tip of Africa. But a lack of sufficient infrastructure, red tape, and corruption have exacerbated congestion and led to a huge delay in shipping. For every delay, South Africa and other African countries along the route are losing out on potential revenue and global standing.

Under government corruption, mismanagement, and bad policy, shipping infrastructure in Durban and Cape Town has decayed and stagnated. As far back as November 2023, Durban was facing huge delays and congestion, with a backlog going as far as at least 21 days and involving 70 000 containers. Authorities predict things getting better only by February 2024. That’s quite optimistic.

Cape Town’s port has suffered as Transnet failed to maintain its equipment and ignored warnings from businesses and the local government. Shipping delays of fruit alone are estimated to have lost that industry R2.5bn in the 2021/2022 season.

Our own local export industries already suffer from Transnet’s ineptitude. Now, countless container ships from around the world will be suffering from the South African government’s apathy and incompetence.

We could be benefiting from processing thousands of container ships through our ports. Global companies pay a fee to dock, refuel, and maintain their ships here. This money grows the South African economy and could be re-invested to create even more wealth. The more ships we process through our ports, the more money we make.

But, instead of efficiently refuelling, maintaining, and seeing ships on their way, we are facing a mammoth backlog. At the rate we’re going, the Red Sea Crisis may end up concluding before the backlog is addressed, and we will have squandered the opportunity to become a global port nation.

We need to fix our port infrastructure and the institutions that govern them. This means that Transnet must no longer be in charge. It has destroyed our local infrastructure through corrupt cadre deployment, apathy, and incompetence.

Rather, our ports should be privatised in a transparent, open auction system that preferences competence. Local government should have more of a say, as they benefit far more than a national parastatal if the ports are running on time. International companies should also be allowed to enter the auction.

Imagine a well-equipped, competent, and capital flush global company running our shipping. They pay the money to fix our infrastructure, they run the whole show, and pay a decent tariff that can be re-invested into the economy. It’s a win-win for us and global shipping.

A big private company can also anticipate and understand the needs of container ships and build the necessary infrastructure and equipment to service the ships along their route. They could even invest in further ports along the coast. For instance, imagine the economic growth and job creation potential of building another global port in the Eastern Cape.

On top of privatisation, we need deregulation. Red tape must be cut as much as possible to expedite processing times. There must be constant audits of shipping staff to ensure there is no bribery or corruption holding up processing times. Containers and ships must be treated equally and processed as fast as possible with minimal fuss.

We can be a global port nation and reap the profits. We just need to make the right choices. Privatisation, deregulation, and sound investment.


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The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation. This article may be republished without prior consent but with acknowledgement to the author.




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