CAPE TOWN: The economic slowdown in China, declining demand for mining commodities, dwindling consumer spending power and the persistent drought in Southern Africa have all negatively impacted shipping container trade in South Africa in the first quarter of the year, with import and export markets declining by 8% and 12%, year-on-year, respectively, says Maersk Line Southern Africa trade manager Matthew Conroy.
He says the weakening import market related largely to the Asia market declining by 13%. “This trade lane represents about 45% of total imports into South Africa and is dominated by manufactured goods, which are on the decline due to lower consumer consumption in South Africa.
“Looking forward, we don’t expect import trade to improve drastically very soon, as there are no clear signs of an economic recovery, which is ultimately what is required to fuel incremental consumer spend,” notes Conroy. More positive news is that the smaller Middle East trade lane grew by around 10% during the first quarter of 2016.
This is largely related to a local sourcing change, where more retail products are being sourced from the Middle East and less from Asia. Conroy says the decline in exports is largely the result of the drop in mining commodity demand, as well as the drought.
“Total dry exports have dropped by 14% over the last quarter, but within the larger Asia trade category, which is dominated by mining commodities, the market has dropped by 24%. Despite ongoing stimuli from the Chinese authorities, the Chinese economy is still struggling. “The drought has also contributed to the overall decline in export trade as it has reduced the amount of animal feed and fruit exported.”
Conroy says export trade should see a minor, provisional improvement. “The mining sector in the second quarter is seeing a slight boost and there should be an improvement on this quarter’s 14% drop in demand.
“However, this positive shift looks likely to be more of a restocking, as opposed to structural change in global demand, and will not continue for the full year. “The biggest opportunity for the South African economy continues to be exporting more manufactured goods, enabled by the weak rand.”