Search:  
Western Cape Business News
774
VIEWS

Send  Share  RSS  Twitter  04 Mar 2013

EXPORTS: Trade Growth In 2013 To Improve

 



Recent Western Cape Business News

Maersk Line South Africa (Pty) Ltd, a subsidiary of the world’s largest container shipping company, sees a moderate trade growth for the country in 2013 after a challenging 2012, this despite significant socio-economic challenges in the local market, including the impact of industrial action in the mining and agricultural sectors during the second half of last year, and a decline in consumer spending on the back of rising fuel, transportation, electricity and food costs.

The 2012 financial year was definitely a tale of two halves,” says Jonathan Horn, Managing Director of Maersk Line South Africa. “While the first half of the year was firm - showing growth in demand for containers for both imports and exports - the second half brought flat performance in the import sector, and a decline of 3% - 4% in the country’s total containerised exports.”

This trade report follows on the back of the Maersk Group 2012 results, which showed an improved  profit of US$461m after the losses posted in 2011, while South African operations are anticipating  mid-single digit growth in both the import and export sectors in 2013.

On a macro level, intense competition fuelled by an oversupply of capacity, had a strong influence on global freight rates and thus revenues. Maersk responded to these with a classic efficiency and cost containment strategy; managing capacity carefully, reducing unit costs by 1.7% in 2012, improving volumes by 5% and increasing rates by 1.9%. This approach ensured that, while the return on invested capital for the year remained low at 2.4%, cash flow from operating activity was improved at US$1.8bn.

At home, the mining sector strikes in the autumn and winter of 2012 combined with a decline in commodity prices (chrome in particular) and a slowdown in commodity demand in the Far East had an effect on the export markets. From an imports perspective, increases in CPI largely fuelled by the well-publicised hikes in food, transportation (fuel) and energy (electricity) costs have had a direct impact on levels of disposable income and thus consumption. The weakening of the exchange rate in the second half of 2012 has also started to impact on imports due to increasing cost of imported items, although the full impact of this is likely to be felt in 2013. 

Commodities make up approximately 35% of South Africa’s containerised exports,” says Horn, “and in the third quarter of the year, mining production decreased by 13% compared to the same period in 2011. Further, exports usually improve as the rand gets cheaper, although this does take a while for the full impact to be felt, but last year it was a decline in demand for commodities that was largely responsible for pushing down containerised export levels. Positively though, containerised commodity exports have showed a strong resurgence from December”.

As severe an effect as this had on the country’s export revenues, positive developments on other fronts are beginning to counterbalance the negative trend. For example, China’s GDP is expected to grow by 7% to 8% this year, which is likely to continue to drive demand for commodities. Supply disruptions due to industrial action in this critical sector of the South African economy can hopefully be kept to a minimum.

Horn also says that if the rand remains at around ZAR8.50 to the US Dollar, this could represent a boost for exports. Historically South African exports have tended to increase with the weakening of the Rand (typically after a short period where exporters gear up their operations to cater for demand). It could, in fact, see total containerised exports trade growth reaching into the high single digits during the course of the year.

We’re less optimistic about Europe, though, with GDP decline in Q4, as well as retail sales and industrial production continuing to decline” he says, “but we do see encouraging signs in the US with consumer sentiment improving. The recovery in the housing market increased hiring and expectations of manufacturing production increases indicate that the economy is hopefully warming up after the financial crisis of 2008 and the deep recession that followed.”

Unfortunately, while the situation looks brighter for exports, the same can’t be said for imports.

The flat trend in the second half of 2012 bucked all trends,” says Matthew Conroy, Maersk South Africa’s Trade and Marketing Manager, “as this is usually the time when retailers begin stocking up for the festive season. South Africa’s import container market is driven largely by consumer demand for finished goods and, if this dips, the impact on imports is quickly felt.”

While inflation remains relatively low at 5.4%, consumers nevertheless have to tighten their belts as prices of essential goods and services rise. Together with a tepid GDP growth forecast of 2.6% for 2013, this means the year is likely to be another tough one for consumers, and that demand for imports is likely to remain below par. This could, however, be offset by a certain level of re-stocking if interest rates remain low.

Horn nevertheless feels that the South African market will remain competitive on the whole. With respectable growth expected in 2013, it’s a case of “steady as she goes” for the local container industry.


 
 
 
Business ProfilesDebt Recovery Services Cape Town | Libra Debt Recovery Services (Pty) Ltdmike-scholtz-electricalBubble-Chairsolive-studio
 
   
 
 
 
  Accomodation
Accommodation


Online Foreign Exchange
Foreign Exchange


Directory
Directory


Fax
Fax 2 Email


Finance
Finance


Furniture
Furniture


Casino
Online Casino


Restaurant
Restaurant


Auctions
Shop Online


Study IT
Study IT Online


Web design
Web Design


Weddings
Weddings


Work
Work from Home
 
 
 
 
 
Company News
 
 

 

© 2018 www.wcbn.co.za. All rights reserved.

Daily Newsletter Subscription

 

Subscribe to the Western Cape Business News Daily News and information email (it's free).

Thank You
Your email address has been added.

Name:
Email Address: