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ZA Update: Green investment takes a step forward amidst rising inflation

Significant investments into efficiency and sustainability for South African supply chains comes as inflation hits a 13-year high

Following our most recent South Africa update, please see the latest news affecting ZA supply chains below:

The results of a recent audit found that South Africa’s Transnet National Port Authority indicated the necessity for it to reduce emissions across its 8 sea ports, including Cape Town, Durban and Port Elizabeth.

Following the audit, the TNPA announced an RFI (Request for Information) to private sector companies with the intention of gathering proposals for its renewable energy programme. The main aim is to collect information on the overall renewable energy market with a particular focus on wind and solar in collaboration with other renewable energy sources.

The overall goal of the project is to procure up to 80 MW of renewable energy generation capacity at each of TNPA’s 8 ZA sites.

As part of the TNPA’s staging area rollout, the interim truck staging area at the Port of Cape Town became fully operational in July of this year.

The first phase of the project has so far significantly cut congestion on the key arterial routes surrounding the port’s multipurpose terminal, whilst phase 2 will aim to have the same effect at Cape Town Container Terminal when it begins operations in September.

The port will also be introducing night runs to increase the capacity and biometric scanning on all truckers entering the port.

Although the current facilities are only on an interim basis, the permanent facility, which will feature as part of phase 2B, is currently scheduled to be completed during the 2024/25 fiscal year.

A settlement has been agreed between the Department of Agriculture, Land Reform and Rural Development (DALRRD) and EU officials to move hundreds of fruit containers exported to the European Union in June that arrived shortly after the implementation date in July.

Over 2,000 containers were impacted by the blockage, and around 509 directly by the new regulations which require certain fruits to undergo phytosanitary treatment before entering the EU, which are said to have been put in place without sufficient time to act on.

The consignments were rejected by ports in EU destinations including Germany, Spain and France, however, the DALRRD was able to replace the phytosanitary certifications with additional correct documentation to relieve some of the goods and so far has been able to move around 300 containers.

The goods have been categorised into grapefruits, soft citrus fruits and oranges, with the latter presenting issues and prompting further negotiations between DALRRD and the EU.

Durban will see a huge jobs boost as its new logistics hub comes to life, following the breaking of ground for the first 1–hectare phase of the development.

The Shongweni Urban Development will sit in the outer west area of eThekwini with the aim of stimulating job creation and attracting investment to the area, whilst the R1.3 bn Westown development (the 45,000 sq m retail hub) will begin in September alongside major road and infrastructure improvements.

The new logistics hub within the development will offer up to 100,000 sq m in warehousing space whilst only sitting 30km along the N3 from Durban port.

Inflation rose to a 13-year high as consumer prices grew by 7.8% in July, as stated in the latest national statistics agency report.

The cost of fuel in South Africa has increased over 56% when compared to 2021 prices, something that has been passed on through the supply chain as a Fuel Surcharge, whilst unemployment figures have reached almost 34%.

As a result, South Africa has seen strikes and protests in retaliation against the conditions whilst demanding the government to take action against the cost of living crisis in the country.

Export and import commodities grew in value by 8.5% as metals, minerals and oil/petroleum imports contributed to the annual value increase. Recent commodity imports from the UK include categories such as machinery and automotive parts, foodstuffs such as cereals and coffees as well as books for educational purposes.

Whilst June saw 3.3% month on month growth for imports, exports in fact dropped -1.2% for the same period despite the yearly growth. A reduction in the demand for metal products and machinery and equipment were the leading cause of the declining export figures.

With congestion and berthing delays across the US East Coast, South African exporters are facing backlogs on goods leaving the port of Cape Town. The delays are having the most significant impact on dry cargo.

With a lack of vessel capacity, it has been stated that the solution would be to have bigger vessels call at the port, allowing the movement of a higher volume of goods. Exporters have also seen a sudden surge of refrigerated cargo above flow expectation, which has caused bookings to slide by around 1 week.

Woodland's Dedicated South Africa Team

Our dedicated South Africa team is on hand to support you and keep your supply chain moving. If you would like more information regarding South Africa supply chains, contact the team here or complete the contact form below

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