HIGH-VALUE EXPORT INDUSTRIES
Challenging times for fruit trade as the world emerged from the pandemic Over the past two years, high-value export industries were affected by a myriad of adverse events, ranging from high shipping cost and production input costs to floods, labour unrest and export claims on producers due to quality concerns. The single biggest issue weighing on producer returns was substantially elevated shipping costs. During the first months of 2023, there are however indications that reefer shipping costs are abating, with some global market stakeholders noting drops of around 20% from the peaks that occurred in the third quarter of 2022. This is also reflected in the Drewry Reefer Shipping Index, which shows average reefer shipping costs over time. As shown in Figure 3.1, reefer prices have surged over the past three years but the orange bars, which represent an estimation of possible decreases, suggest that some cost relief could be on its way. Reefer cost from South African ports has however not decreased notably and stakeholders in the industry have varying views on how global cost reductions could filter through to the local context. Our view is that reefer shipping costs will decrease over the next 12 months but the reduction would be smaller than what is apparent in global averages. This is largely the effect of a high concentration in shipping liners servicing South Africa and inefficiencies in South African ports.
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