The sharp depreciation of the rand may have caused serious jitters on the markets but it was always going to benefit some local enterprises who suddenly found themselves highly competitive on the export markets.
Some evidence is emerging to suggest that the slide of the local currency from the R7 levels about 12 months ago to breach R10 in June this year has significantly benefited some South African exporters. This evidence emerges from the 2013 first half update of shipping giant Maersk Line South Africa, a division of Norwegian Stock Exchange listed AP Moller Maersk Group.
In a statement released yesterday Maersk Line South Africa said activity on South Africa’s shipping routes with major trading partners in Europe increased 5% to 7% in the first half of 2013. The company said its first half trade performance shows that activity remains pretty steady in the market for containers. Maersk Line SA both imports and exports from South Africa.
The company’s statement noted that seemingly South Africa took advantage of the weaker rand. It noted that 75% of export volumes in containerised exports consist of agriculture and non-manufactured goods. “These have naturally been boosted by the weak rand. Export growth was significantly higher in the second quarter compared to the first quarter,” said Matthew Conroy, Trade Executive at Maersk.
The company maintained that the recent increase in South Africa’s shipping and container market points to a steady and healthier economy than recent official estimates suggest. “Despite the tough news regarding the economic growth, we saw volumes holding up in the first half of the year, with imports and exports growing between 5-7% on an annualised basis,” said Maersk Line SA MD, Jonathan Horn. Although imports and export figures do tend to be higher than the actual GDP growth rate, said Horn these figures are encouraging as the second half is traditionally busier than the first.
“Imports tend to be quite seasonal, with the second half of the year generally seeing more activity as retailers gear up for the Festive Season”, said Horn. The data also suggests there has been a diminishing trend in the growth of imports as the year has progressed in a weak rand environment, which experienced a sizeable depreciation in the first quarter of the year.
The company noted that refrigerated cargo export volumes had a solid growth despite freight rate increases. The growth was further supported by a shortage of fruit in some countries, especially apples and pears, which accounted for much of the growth.
Conroy said “The strongest growth in the resources sector came from chrome, manganese and scrap metal”. He said while there are concerns that China’s slow-down may hurt export volumes going forward, forward bookings of containers looked to be on par with the level of activity seen in the first half of the year.
He said for the second half of the year, the company expects imports to grow at low single digits as the Rand weakness moderates demand. “The weaker local currency will continue to boost exports, which are expected to grow in the mid-single digits”.
The company also noted that generally higher activity will continue at the lower, mass end of the market. “This is evident in that general retailers that service consumers in the lower Lifestyles Measure (LSM) segments are still forecasting solid growth in import containers going forward,” said Conroy.
He said consumers in upper LSM segments seem to be trading down, boosting the bottom end of the LSM scale. “It’s clear the consumer is trading down for certain goods, most noticeably durable goods and clothing”.