Page 28 - Logistics News - Issue 01 - 2024.indd

T R A D E OU TL O O K

SA’s trade outlook for 2024

By Denys Hobson, Head of Logistics at Investec

Global growth is expected to be subdued, if not stagnant, in 2024 and amidst this slow
growth and the challenging market conditions, global trade is also expected to be sluggish.
According to The World Bank, global trade growth in 2024 is anticipated to be only half the
average of the decade before the pandemic.

e expect this year to be quite volatile. Inflation drought in Panama to see the impact of climate change
globally has been coming down and the market on global trade. If there are significant increases in
Wconsensus is for interest rate cuts to come weather events for extended periods, we may experience
into effect later in the year. GDP growth is still muted disruptions to supply chains.
and added to this, current geopolitical tensions are high.
While these tensions currently only have a direct effect From a South African perspective, the biggest
on certain regional trade routes such as Europe-Asia, concern is the efficiency of ports and rail infrastructure.
should they escalate, they certainly can destabilise global If sustainable progress isn’t made soon, we may see
trade and supply chains in many ways. further route and capacity changes on South African in-
and outbound routes as it has become too expensive for
As an example, the recent military strikes in the Red vessels to be stuck in ports for days and weeks. Shipping
Sea have resulted in sea freight cargo being delayed in lines could utilise their capacity more effectively on other
transit and, subsequently, companies impacted have had trades if required. We may even see some removal of
to airfreight additional stock to compensate for the sea direct sailings or only have limited sailings coming into
freight delays. This pushes up the demand for airfreight South Africa, which will reduce available capacity and
and with an increase in demand, the airfreight rates also increase freight rates.
increase. This leads to higher landed costs. Sea freight
costs also increase on trades impacted by the current Transnet’s financial performance is worrying and all
Red Sea situation because shipping lines have diverted eyes will be on National Treasury’s budget speech in
their vessels around the Cape of Good Hope, which February regarding a possible bailout. Key leadership
increases their transit times and costs as well as reduces positions within Transnet also need to be finalised.
their capacity and equipment availability.
The rand is also expected to remain under pressure
It is also an election year for more than 50 other and with ongoing concerns around Transnet and
countries this year and we know that this can create load-shedding, investor confidence remains muted.
uncertainty in various forms such as investments and Moreover, it’s a big election year, which may cause some
policy, but it also can bring about positive sentiment uncertainty.
depending on the respective outcomes.
While much is underway at Transnet to improve
Weather patterns are becoming more volatile and performance across multiple areas, we still don’t expect
extreme and can have the ability to impact global rail to operate efficiently this year, which will still likely be
capacity and routes. One just has to examine the recent a hindrance to the industry and South Africa’s economic

26 I S S UE 01 – 2024 www .l o g ist i csn e w s .c o .z a