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Sunday / 14 July 2024
HomeFeaturesSouth Africa’s ports are the worst in the world – And it’s hurting local carmakers

South Africa’s ports are the worst in the world – And it’s hurting local carmakers

South Africa’s ports are among the worst in the world, and it’s having a big impact on the local automotive industry.

According to the World Bank’s most recent Container Port Performance Index, the ports at Cape Town, Durban, and Port Elizabeth (Gqeberha) are some of the least efficient on the planet, and all three of these points of entry are vital for carmakers to import models and parts needed for the local production of new units.

The cost of business in South Africa

TopAuto reached out to several of South Africa’s original equipment manufacturers (OEMs) to inquire about how the country’s dysfunctional shipping sector is affecting their operations, and whether it is resulting in higher production costs that are ultimately passed onto the consumer in the form of higher retail margins.

This included VW, which produces the Polo hatchback in the Eastern Cape; as well as Ford, which has an engine facility in the Eastern Cape and a bakkie factory in Gauteng.

We also reached out to Nissan, which assembles the Navara in Gauteng; and Isuzu, which is also based in the Eastern Cape where it builds the D-Max.

VW and Ford declined to comment on the matter, and Nissan did not reply by the time of publication.

Isuzu was the only carmaker to respond, stating that the nation’s ports are making it difficult for the company to keep up with its production timeline.

“The efficiency of our ports in South Africa continues to pose a huge challenge to our planned production schedules and in ensuring we are able to meet our business objectives,” said Lebogang Makoloi, the Corporate and Public Affairs Executive at Isuzu Motors South Africa.

“We continue to work with Transnet to find sustainable solutions to recover/improve the current situation as they are a key partner to the growth and development of our industry.”

It should be noted that, while Ford and VW declined to comment on the matter this time around, both brands openly spoke in the past about how the current situation at the country’s ports is making it difficult for their domestic operations.

Thomas Schaefer, head of the VW global passenger car brand, stated in late 2023 that he was “very worried” about the future of the automaker’s prospects in South Africa.

Logistical concerns were cited as the biggest issue, including the county’s ailing railway system and its congested ports, which led to massive delays in the receiving of components for vehicle production, and the export of finished products to international markets like the United Kingdom.

The shortcomings of the nation’s infrastructure mean that it is getting harder for VW to justify further investment in South Africa, and the carmaker has started to investigate other African countries for development like Egypt and Ethiopia.

2-millionth VW Polo built in South Africa

Ford has expressed similar sentiments on multiple occasions at the launch of its new models like the Puma crossover, where President and CEO Neale Hill warned about the “slow death of South Africa.”

He explained that Ford on multiple occasions was forced to resort to air freighting parts from its global suppliers to keep production on schedule because larger shipments by sea kept getting stuck in the ports, racking up huge bills in the process.

“We are a volatile, high-risk country where government is not enabling business. That is the reality of what we are dealing with and it is gravely, gravely concerning,” said Hill.

As a result, South Africa has lost its competitive edge in the global marketplace despite its key geographical position for international shipping.

Furthermore, Ford’s Ranger facility in Thailand is now seen as the better site for investment as it has the upper-hand in terms of labour costs and ease of business.

South Africa has a total of seven OEMs, with an eighth one set to begin production by 2026, and these carmakers are responsible for roughly 20% of all manufacturing in our borders.

The industry contributes around 6% to the country’s GDP and employs an estimated 457,000 people across the supply chain, according to the Automotive Business Council (Naamsa).

The poor performance by Transnet’s ports therefore presents a serious threat to jobs and economic growth, as each of the nation’s OEMs is at risk of losing investment to more efficient factories in other parts of the world.

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