The role of seaports in agricultural trade facilitation: Lessons for the Western Cape, South Africa

Asanda Molefe Macro and Resource Economics, Western Cape Department of Agriculture

Introduction

Maritime transportation accounts for 80% of the total merchandise traded globally (UNCTAD, 2020). It is efficient, low cost, reliable for long-distance and has a large capacity, hence it is the most used mode of transportation (Reya & Strachan, 2021). Therefore, the effectiveness of seaports have a significant impact on trade flows, translating into economic growth and greater competitiveness of the country (Li, Seo, & Ha, 2020; Reya & Strachan, 2021). Seaports contribute to export-led growth and, therefore their efficient working will improve a country’s global competitiveness (Notteboom et al., 2021). In 2021, about 80% of the Western Cape agricultural exports were facilitated through seaports. Given the perishability of most agricultural products, the inefficiencies at the seaports may cause delays resulting in major economic losses.

In 2020, the Cape Town port facilitated about 93% of fresh grapes, 21% of citrus, 78% of pome fruit, and 91.6% of stone fruit exports to the global market (Agrihub, 2021). This is also in line with the Western Cape Department of Agriculture’s (WCDoA) strategy to promote export-led growth in the medium term. To inform planning and decision-making in the agricultural sector of the province, this study highlights an overview of port efficiency in South Africa, and the performance of the provincial ports with emphasis on the Cape Town port. Lastly, there will be lessons drawn for the Western Cape agricultural sector.

South Africa’s Logistic and Connectivity Performance

South Africa (SA) has diverse modes of transportation ranging from rails, roads, maritime and air. This section discusses SA’s Logistic Performance Index (Figure 1), Liner Shipping Connectivity Index (Figure 2) and agricultural export trends per port (Figure 3).

(a) Logistics Performance Index

Figure 1 gives a summary of the South African Logistic Performance Index (LPI), which is a tool created for countries to identify challenges and opportunities on a country’s trade logistics and areas of improvement (WorldBank, 2021). The LPI scores range from 1 to 5, with 1 representing bad logistics performance negatively affecting the economy of the country. Therefore, moving closer to a score of 5 means that the country has efficient customs clearance process, good quality of trade and transport-related infrastructure, ease of arranging competitively priced international shipments, quality of logistics services, ability to track and trace exports, and frequency with which shipments reach the importer within the scheduled time (WorldBank, 2018). In 2016, South African logistics performance reached a maximum peak of 3.78, and overall LPI score of 3.54 between 2007 and 2018. The South African LPI has regularly achieved a score slightly above average but less than a score of 4.

(b) Liner shipping connectivity index

Liner Shipping Connectivity Index (LSCI) measures the connectivity of countries to global networks based on the number of shipping lines servicing a country, size of the largest vessels on the services in twenty equivalent units (TEU). Figure 2 shows the trends of South Africa’s LSCI on average

Source: World Bank (2021)

Source: World Bank (2021), UNCTADstat (2020) and per seaport. The country is not well connected as it always scores less than 50.

Durban port has been the best-connected port in South Africa compared to the other ports, like the ports of Cape Town, Coega hub in Ngqura, East Lond on and Gqeberha. Connection to rails, roads, and being at the centre gives the port of Durban the advantage to be the most connected linershipped port in South Africa. The port of Cape Town was the best-connected between the first quarter of 2016 and the second quarter of 2017.

(c) South Africa’s agricultural trade performance

Commodities such as citrus, grapes, apples, pears, nuts and others are produced in the Western Cape. In 2020, the Cape Town harbour facilitated about 93% of grapes, 21% of citrus, 78% of pome fruit, and 91.6% of stone fruit exports to the global market (Agrihub, 2021). There was a 5.73% five-year annual growth for the national agricultural exports, and 0.60% for the agricultural imports. Figure 3 shows trends of agricultural exports facilitated in various seaports in South Africa between 2010 and 2020.

In 2021, South Africa’s agricultural exports amounted to a value of more than R175 billion. A large share of 62% (R108 billion) of the total agricultural products was exported through seaports, 31% through land border ports and the remaining 7% through inland and airports. For all the agricultural commodities exported by South Africa, the maritime transport shows an annual average growth rate of 11.2% in the past 5-years. A significant share of 60% (R65 billion) of all national agricultural exports were facilitated through the Cape Town seaports and the remaining 40% by other ports in the country, and the value of agricultural exports through the Port of Cape Town increased by an annual average growth rate of 7.32% during the period 2016 and 2021. This port has indeed been the most dominating port in facilitating agricultural exports over the past five years. Furthermore, this port specialises in breakbulk and containers, therefore most agricultural products are shipped in bulk.

Concluding remarks

• The South African agricultural sector is gaining new international markets for exports, for instance, the recent shipping of 20 thousand tons of citrus to the Philippines, and the revised South AfricaChina lemon protocol, which estimates to export 175 thousand metric tons by 2024.

• The expected growth of agricultural exports will contribute to the regional, provincial and national employment of the sector and to the gross value production. For instance, the citrus industry forecasts export growth increase of 76% by 2030 from 2021 (Sihlobo, 2021). Therefore, the maintenance of seaborne trade infrastructure is important to cater for this growth, which is also envisaged in other industries within the sector.

• Seaport management is among other factors that contribute to seaport efficiency and plays a crucial role in trade facilitation.

• Seaports contribute to the GDP (gross domestic product) per capita growth of an economy and neighbouring economies. The efficiency of the seaport could ensure that the potential of the province is being maximised. AP

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