National Lockdown Severely Disrupts Logistics Operations in South Africa

National Lockdown Severely Disrupts Logistics Operations in South Africa

Executive Summary

  • South Africa implemented a nationwide lockdown on March 23 to prevent the spread of COVID-19. The measure is currently scheduled to last until May 1. 
  • The lockdown is particularly wide-ranging; only goods and services related to sustenance and public health are considered essential, halting virtually all other production. The measures are considered restrictive because of the narrow definition of essential goods and services adopted by authorities.   
  • South Africa’s position as a critical supplier of raw materials, manufactured goods, and agricultural products is likely to impact supply chains across the world as businesses halt or reduce operations to prevent the spread of COVID-19 nationally. A series of measures implemented have restricted cargo handling at ports and further increased berth waiting times. Container vessels are waiting for approximately 5-6 days to berth, while port authorities are prioritizing containers related to essential services and discouraging other container movement. 
  • While passenger flight belly cargo capacity has plummeted, some freighters continue to operate in and out of South Africa.
  • 35 out of the 53 land border crossings of South Africa are currently closed. The measure began on March 16 and is likely to coincide with the duration of the national lockdown. The movement of non-essential goods was originally restricted but are gradually relaxing for some transportation modes and/or special permit holders. 
  • After the lockdown was extended to April 30, South African Post Office Ltd. declared force majeure concerning delivery performance. Normal postal services are currently expected to resume on May 4.
  • With the lockdown set to continue at least until May 1, organizations are advised to explore special permit options with local partners and authorities and plan for cargo capacity for when restrictions are lifted.

Background 

On March 5, South Africa confirmed its first case of COVID-19. Seeking to mitigate its impact on public health, on March 23, President Cyril Ramaphosa announced a nationwide lockdown from 00:00 on March 27 to 00:00 on April 17. The order pertained to all businesses, with exceptions provided for pharmacies, laboratories, banks, supermarkets, petrol stations, and healthcare providers. On April 10, President Ramaphosa cited evidence that the national lockdown was effectively limiting the spread of COVID-19 and extended the lockdown end date from April 17 to May 1 at 00:00. This was despite heavy criticism from the centrist opposition party, the Democratic Alliance, which cited concerns of domestic economic collapse.

Some analysts estimated that infections in South Africa would peak at the beginning of June, and argue that the most prudent public health approach would involve a gradual lifting of restrictions between the end of June and the end of August. Relative to other nations, measures and enforcement in South Africa so far have been considered to be exceptionally restrictive. 

One reason why the lockdown measures are considered so restrictive is the definition of essential goods and services adopted by authorities. The very narrow definition means that almost all industrial activity has been halted. A limited set of business categories have been given the opportunity to register as essential in order to continue operations. Businesses eligible to apply include cargo transportation services and “essential mining” services. By March 27, it is understood that 50,000 companies employing 1.5 million workers applied to register their companies as providers of essential services through an online platform set up by the Companies and Intellectual Property Commission, and 40,000 certificates had already been awarded. On April 1, authorities issued clarification on the goods for which trade activities would be fully permitted to continue. The full list of essential goods and associated services, hosted on an official South African government business portal, can be found in Appendix A.

President Ramaphosa faces unique socioeconomic conditions among industrialized nations: approximately 50% of residents are considered to be living in poverty, and almost 30% of laborers, or 11 million people, were unemployed before the COVID-19 pandemic arrived.

South Africa’s position as a critical supplier of raw materials, manufactured goods, and agricultural products is likely to impact supply chains across the world as businesses halt or reduce operations to prevent the spread of COVID-19 in South Africa. Measures put in place on March 27 have severely restricted production and cargo operations across the country, and the regulatory and public health conditions in the country remain fluid. 

Impacts on Logistics Operations

During the initial phase of the lockdown period, the government in South Africa effectively limited cargo movements via ocean, air, and ground freight in and out the country to essential goods only. However, statements from Transnet Port Terminals officials, recent legal amendments to the Disaster Management Act, and amendments to trade and inter-provincial commerce regulations by the Ministry of Cooperative Governance and Traditional Affairs suggest that the movement of some non-essential cargo may be possible under special arrangements, the details of which are outlined below. For goods still moving in South Africa, transporters are operating under heightened complexity due to special precautionary measures and abnormal container volumes.

Ocean Freight

In reaction to the spread of the novel coronavirus, authorities have issued new safety measures, reduced port operating capacity, and restricted cargo handling in order to prioritize essential goods. Beginning March 18, authorities banned all cargo vessel crew changes at South African ports, contributing to crew exhaustion and safety risks amongst vessel operators globally. Additionally, a measure was introduced stipulating that vessels could be cleared for cargo processing only after passing special screening by Port Health and the Transnet National Port Authority.

As South Africa’s national lockdown approached, a series of measures restricted cargo handling and further increased berth waiting times. On March 25, Transnet Port Terminals, the state-owned operator of all ports in South Africa, announced that it would roughly halve port operating staff in Durban, Cape Town, the Ngqura Container Terminal, and Port Elizabeth. Further, Richard’s Bay and the East London river port have halted container handling completely. Since March 27, all berthing windows have been suspended and ports are operating on a first in, first out basis. Before berthing, shipping lines are required to provide import evacuation plans for arriving cargo. As a result, longer berth waiting times than usual were reported on April 7 at South African ports: between 5-6 days at container terminals in Durban; 5 days at the Port of Coega; and between 2 days (MPT) and 8 days (CTCT) at the Port of Cape Town. Similar wait times were reported again on April 14. At the same time, sources indicate that between March 24 and April 6, bulk carrier, container vessel, general cargo, and roll-on/roll-off vehicle carrier traffic at the Port of Durban decreased from 91 to 56 vessels – a 40% drop relative to the same period in 2019.

In an effort to mitigate delays on essential goods, ports are reportedly prioritizing container handling by cargo type, particularly for medical and food supplies. On March 26, Transnet Port Terminals suspended all bulk cargo handling, including minerals, with the exception of essential goods such as grains, soy, fertilizer, and wood chips. General freight and mineral container shipping were discouraged. However, on March 27, Transnet issued a public statement suggesting that bulk terminals would operate “as per demand from mining customers,” sparking confusion. On April 2, an amendment to the Disaster Management Act suggested that cargo transportation “from ports of entry to their intended destination” would not be affected “on the condition that necessary precautions have been taken to sanitize and disinfect such cargo.” A Transnet spokesperson then stated to a journalist that Transnet would “adjust a number of operations,” and that the transport of non-essential cargo remains “critical to the health of the national economy and its revitalization post the crisis,” suggesting that some non-essential cargo may be permitted to move through ports. Furthering uncertainty, sources on April 14 indicated that port authorities are permitting imported non-essential goods to be evacuated from the port area and stored at the premises of appointed trade intermediaries, agents, or other facilities approved by the port authority. However, final destination deliveries for non-essential goods remain forbidden.

Air Freight

Passenger flight belly cargo capacity gradually dropped to near 0 in the second half of March as South Africa imposed travel bans on high-risk countries and aviation demand plummeted globally. The first travel bans were announced on March 18, restricting entry for travelers with recent history of travel in the United States, France, Italy, Iran, South Korea, Spain, Germany, China, the United Kingdom, and Switzerland (added March 20). By that time, sources indicated that South Africa Airways had already canceled 38 intercontinental flights and 124 continental flights between March 17 and 31 due to decreased demand. On March 23, South Africa Airways suspended all international operations until at least May 31. 

It is understood that a schedule of services by South Africa Airways Cargo (SAA Cargo), Ethiopian Cargo, Etihad Cargo, Qatar Airways Cargo, and Turkish Airlines Cargo continue to operate. Martinair (an air cargo subsidiary of Air France-KLM) halted operations for an undetermined period but resumed scheduled services to Johannesburg on April 1 by delivering approximately 100 tons of essential medical supplies. On April 6, SAA Cargo completed its first operation of an Airbus A340-600 passenger plane as a cargo-only flight. The service to Frankfurt exported perishable foods, laboratory supplies, automotive parts, and aerospace parts, and returned with COVID-19 testing kits, immunological pharmaceuticals, insulin, surgical personal protective equipment, and food processing equipment for food such as baby milk powder. 

Sources indicate that Windhoek, Namibia and Gaborone, Botswana are currently being serviced by South African air freight via trucking connection. 

Road and Rail Freight

On April 3, sources indicated that restrictions on ground transportation intensified when South Africa’s Ministry of Cooperative Governance and Traditional Affairs amended its trade and inter-provincial commerce regulations to highlight essential goods trade compliance and sanitation requirements amid the COVID-19 pandemic. All road and rail cargo from ports of entry and between provinces, metropolitan, and district areas must be sanitized and disinfected in order to travel. Some delays in cargo movement may occur as a result. However, the amendment specified that parties exporting goods not deemed essential must obtain relevant exemptions and applicable permits, suggesting that such activities are not impossible.

Regionally, sources indicate that 35 out of the 53 land border crossings of South Africa are closed. The measure began on March 16 and is likely to coincide with the duration of the national lockdown. For transportation through Zimbabwe, some sources indicate that ground cargo movement has been disrupted by a lockdown there from March 30 to April 20. It is understood that only unspecified “essential goods” are permitted to transit Zimbabwe. Due to confusion and uncertainty over South African port access during the lockdown (see Maritime section), trucks carrying copper loads from Zambia and the Democratic Republic of the Congo to the Port of Durban have reportedly been diverted. Cargo that may typically travel over land to benefit from the relative efficiency of South African ports may now be diverting to ports such as Dar es Salaam, Tanzania and others in Mozambique and Namibia, potentially resulting in multi-month shipping delays.

Customs Processing Regulations

General delays or disruptions customs processing have not been reported so far. In the health and life sciences industry, sources indicated on April 2 that as per government directive, all HS codes and commodities for certain medical supplies and protective equipment were restricted and controlled for export with immediate effect. The measure is understood to apply until further notice. These include disinfectants, face-masks (including gas-masks), hydroxychloroquine, heterocyclic compounds with nitrogen heteroatom(s), antisera and other blood fractions, vaccines for human medicine, and medicaments. Goods classified under affected HS codes can only be exported if the recipient possesses an International Trade Administration Committee (ITAC) permit prior to shipping, which can take up to 48 hours to obtain and without which no export of such commodities will be allowed.

Postal Services

On March 25, the South African Post Office Ltd. indicated that owing to the rapid spread of COVID-19 and the increasing number of infections in South Africa, the government has taken several steps aimed at reducing social contacts and physical movements to a minimum. As a consequence, all post offices nationwide will be closed while the country is on lockdown, and all mail items will be delayed. On April 10, after the lockdown was extended to April 30, South African Post Office Ltd. declared force majeure concerning delivery performance. Normal postal services are currently expected to resume on May 4.

Where shipping and courier services remain possible, pickup and delivery activities in South Africa have been restricted to items designated as essential goods. This is expected to remain in place for the duration of the lockdown. 

Outlook and Recommendations

Initial reports indicate that widespread restrictions in South Africa have been successful in limiting the spread of COVID-19. However, the potential for a greater outbreak that could extend or intensify restrictions on cargo movement and industrial activity remains. Under current circumstances, while some strict national lockdown measures are very likely to continue through at least the end of the month, exceptions for specific non-essential industrial activities or cargo movements may be possible. 

Everstream Analytics outlines several recommendations below on how to cope with the impacts of the nationwide lockdown on supply chains in South Africa during this period: 

  • Explore special permit options with local partners and authorities: As a result of the COVID-19 pandemic, a variety of special permits have been required in order to regulate the movement of goods throughout the country. Confusion exists regarding the eligibility of different goods types to move on different transportation modes, and to where the cargo can go. Supply chain managers should coordinate frequently with local suppliers, logistics providers, and regulatory authorities for updated, clear instructions on permits, and restrictions for specific goods. 
  • Anticipate disrupted or canceled ocean freight cargo schedules: Customers should obtain visibility of ocean freight cargo scheduled to transit South African ports between the last week of March and the present day. In cases of goods scheduled to be exported from South African ports, supply chain managers should act now to secure cargo capacity for critical goods.
  • Identify production resumption schedules: Customers should continue to monitor when production resumption will be permitted as businesses prepare to bring manufacturing operations back online. Resumption of operations will create further demand for transportation capacity and will require that customers plan ahead in order to keep cargo moving. 

Appendix A: Essential Goods and Services

#CategoryGood
1FoodAny food product including non-alcoholic beverages
2FoodAnimal food
3FoodChemicals, packaging and ancillary products used in the production of any of the above
4Cleaning and HygieneToilet paper
5Cleaning and HygieneSanitary pads
6Cleaning and HygieneSanitary tampons
7Cleaning and HygieneCondoms
8Cleaning and HygieneHand sanitizer
9Cleaning and HygieneOther disinfectants
10Cleaning and HygieneSoap
11Cleaning and HygieneAlcohol for industrial use
12Cleaning and HygieneHousehold cleaning products
13Cleaning and HygienePersonal protective equipment
14Cleaning and HygieneChemicals, packaging and ancillary products used in the production of any of the above
15MedicalMedical and hospital supplies
16MedicalFuel including coal and gas
17MedicalBasic goods including airtime and electricity
18MedicalChemicals, packaging and ancillary products used in the production of any of the above
NumberCategoryServices
1MaintenanceFood production machinery maintenance
2MaintenanceMedical product manufacturing machinery maintenance
3ProductionManufacture of essential goods
4ProductionCritical component and equipment manufacturing for rendering essential services
5LogisticsSupply, logistics, transport, delivery of critical components and equipment for rendering essential services
6TransportationFor persons rendering essential services

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