Rand recovery revives hope for retailers
By Denys Hobson, Investec for Business Head of Logistics. It is encouraging to see global schedule reliability continuing to improve, offering relief to importers in reducing buffer stock holdings.
By Denys Hobson, Investec for Business Head of Logistics. The global economic slowdown continues to put pressure on both air and sea freight carriers’ volumes and revenues. For importers, this of course is positive when it comes to rate levels and capacity availability and hopefully as the Rand continues with its recent recovery, it will help drive down landed costs in the second half of 2023. This will give some positive, and much needed, relief to importers and in turn, consumers.
It is also encouraging to see global schedule reliability continuing to improve. According to the latest Sea Intelligence schedule reliability report, global schedule reliability improved by 1.7% to 64.2% and average delays dropped to 4.34 days for late vessel arrivals and from an air freight perspective, there is sufficient capacity to accommodate demand. An increase in passenger travel has added belly capacity to the market.
A tough few months for SA retail
Disruptions across Transnet’s rail and port operations are arguably the biggest concern right now from a supply chain perspective. Performance has been below par and only time will tell if Transnet can effectively overcome its challenges. This all coincides with the peak citrus export season, which will add further pressure to port operations and backlogs.
Berthing delays across South African ports have also been experienced because of operational challenges caused by equipment failure and weather conditions. Some vessels on the Europe-South Africa trade have been delayed and carriers have decided to omit certain ports in some instances. There are scheduled blank sailings planned in July on the Far East to South Africa trade which will impact capacity availability post the Chinese Dragon Boat Festival.
There is no doubt that it has been a difficult environment for retailers. Operations have suffered due to loadshedding, margins have been under pressure and together with a high inflationary environment which has dampened consumer spend, it has been a tough few months.
However, it is encouraging to see global schedule reliability continuing to improve and this should offer some relief and certainly helps importers to reduce their buffer stock holdings. Rate levels have also remained stable or have come down slightly – and now with the strengthening Rand and inflation cooling, one might be optimistic about the opportunities for importers and retailers for the second half of the year.
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