Importers' Connect

Francois: Welcome to Importers Connect, where we unpack the issues affecting South African importers. I'm Francois Herman.

Vernon: And I'm Vernon Sinden.

Francois: Today we're talking about congestion in China, fuel costs and blank sailings and what they mean for your business.

Vernon: These issues are connected, Francois. A delay in China can affect your connection further down the route.

Fuel costs can add a lot of pressure to the transport bill and your total cost. We're going to look at what importers can do to stay ahead of that curve.

Francois: Let's start in China. Typhoons, crowded terminals and ships arriving close together disrupted schedules during August and September.

We've mentioned that numerous times. Some terminals reported waits of seven to 10 days in early September. Why does the disruption carry on after a port reopens?

Vernon: Because reopening a port doesn't necessarily mean that it's going to clear the backlog. You still have vessels waiting at berths, containers that didn't get loaded and trucks trying to get to the terminals.

Then several vessels arrive together, all needing the same cranes, pilots and yard space. That's what we call vessel bunching. Waiting times did improve during September, but an average can hide what's happening at a particular terminal.

For an importer, the useful question is, "What's happening to the vessel, and where's my container?" Your cargo could be rolled to another vessel, or a ship could skip a loading port. We've mentioned it before, and this can change your arrival date.

Francois: And many shipments don't come directly to South Africa.

That's also something to consider. They connect through Singapore, Port Klang or Tanjung Pelepas, the main transshipment hubs. How does that change the risk?

Vernon: It adds another step, and timing matters. Your container travels to a hub on one vessel and transfers to another vessel coming to South Africa.

If the first ship arrives late, the connecting ship may have already left. The container then waits for the next suitable sailing, which could already be full or delayed. A three-day delay in China can become a delay of one or two weeks further along the route.

Even if a hub's overall waiting times improve, you still need to check your actual connections.

Francois: So what should an importer ask their logistics partner?

Vernon: We've mentioned it before: visibility is essential. Start with whether the service is direct or transshipped and which hubs are used.

That will give you a sense of what's going on in the world and in the market. Then ask whether the container has actually been loaded and departed, and whether the onward connection is confirmed. A booking confirmation doesn't necessarily mean that the cargo has sailed.

It also helps to know what alternatives are available if the connection is missed.

Francois: Moving on to fuel costs, these are another pressure point for importers, including on the local transport side in South Africa. How do fuel increases affect ocean freight compared with air freight?

We often listen to diesel price announcements and just think of our cars and the trucks on the road, but fuel costs also affect ocean freight and air freight.

Vernon: Especially the total landed costs. You have to consider fuel, delays and everything else we're experiencing in the market.

We've seen a substantial shift, in our business at least, from FCL and LCL to air freight. You have to look at what matters to you and whether you're going to get your cargo on time. I'd look at the international journey and the local delivery separately.

With ocean freight, the shipping line often adjusts the marine fuel cost through a bunker adjustment factor, or BAF. A sharp increase may also trigger an emergency bunker surcharge. Those charges generally sit on top of the base freight rate. Airlines use a fuel surcharge linked to jet fuel prices, usually based on the chargeable weight or, if the cargo is dense, whichever is heavier.

Air freight is generally charged per kilogramme, while ocean bunker charges are commonly per container, so they're different calculations. The timing of adjustments can differ too. That's something you need to consider when calculating your total landed costs, especially with the fuel increases we've seen across various modes of transport. You also have to look at your local transport costs because fuel prices have increased substantially.

You have to weigh up the options and compare costs. Based on what we've seen in the market, I believe air freight is becoming a more viable option because of the costs and delays we're seeing in ocean freight.

Francois: The local transport costs still apply whichever way the cargo arrives.

Whether it arrives by air or ocean freight, the cost pressures for the final trucking leg will still apply.

Vernon: The cargo still has to get to the port, airport, warehouse or client. Higher diesel prices can affect cartage, long-haul transport, empty container returns and distribution.

I wouldn't choose a freight option by comparing fuel charges in isolation. You've got to look at the full landed costs, as I mentioned earlier. More important is what a delay would cost the business. Air freight may make sense for a small, urgent shipment if it keeps your production running, but you have to check the quantity.

For heavier replenishment stock, ocean freight will generally remain more economical. It makes sense for larger volumes. To put some numbers around that, the average Shanghai to Durban FAK market rate we're seeing, for a shipped-on-board date from 15 October, is around $4,000 for a 20-foot container and upwards of $5,000 for a 40-foot general-purpose container.

FAK means freight of all kinds, normally general cargo. These are indicative averages. It's still important to check the actual quote, taking into consideration the shipping line, routing and volume. If you're booking at spot rates, with one container here or there, you're going to pay a higher freight rate.

If you're more volume-driven and have a forecast of what's going to be moving, you'll be able to negotiate something better with your logistics partner. We're also seeing a lot of blank sailings across scheduled services this week, which makes it essential to confirm which departures are operating and where space is available.

Francois: Talking about blank sailings, let's unpack that.

What does the term mean and how is it different from just a normal delay?

Vernon: It's important for our listeners to understand that a blank sailing means a scheduled sailing is cancelled. Sometimes the whole voyage can be cancelled.

Sometimes the vessel can skip certain ports. With an ordinary delay, the planned voyage may still happen a few days later, but with a cancellation, the sailing capacity has been taken out of the market. Your cargo may be rolled onto the next available vessel. On a weekly service, that could mean waiting for another vessel, or even longer if the ship is full.

You have to ask which sailing your booking has been moved to and whether space is confirmed. That's something importers need to look into and ask their partners about.

Francois: Why do shipping lines cancel these sailings?

Why do they announce blank sailings? This week, I see a blank sailing on almost every service coming into South Africa from the Far East.

Vernon: Various factors influence blank sailings. These include Chinese New Year, weather delays, demand issues and overcapacity. Sometimes it's a commercial decision.

If demand is weak, the shipping line may combine cargo onto fewer ships rather than sail with empty space. That reduces availability and capacity, which can help support freight rates. At other times, it's about restoring schedule reliability. A vessel delayed by storms or congestion may skip a port or rotation to get back on track.

Mechanical problems and other operational disruptions can also cause cancellations. The reason matters, but the importer's priority is finding out where the cargo is and when they can get the next available sailing. We're hearing from our clients that they want various options and guaranteed sailings.

They're asking for booking confirmation. It's important for listeners to understand that nothing is guaranteed. What we can do is look at the options available in the market. We're seeing shipping lines charging a premium.

If you pay a premium, the chances of your cargo sailing on that particular vessel are much higher than if you pay a general FAK rate. Unfortunately, the importer paying more has a higher chance of getting their cargo on the water.

Francois: What would you put at the top of an importer's checklist for this week?

Vernon: Give yourself some extra lead time, especially on shipments with connections. Check what's happening in the market. Has the container entered the terminal, been loaded and departed? Then keep an eye on the onward vessel. Visibility is essential.

If you have an online platform or visibility of these movements, track them every day or ask your partner for weekly or daily tracking reports or milestone updates. Also identify the stock you can't afford to receive late. Could you split your order, sending smaller portions by air and keeping the balance on ocean freight?

It's about not keeping all your eggs in one basket. That gives you options before the delay becomes a stock shortage problem.

Francois: Check the quote's validity and what's included. We've mentioned before that a low base rate may exclude revised fuel charges or other surcharges, such as the BAF or emergency bunker surcharge you mentioned earlier.

Realistic safety stock for critical components can also give the business some breathing room.

Vernon: Absolutely. Work with your logistics partner and update the plan when the schedule changes. Knowing where the cargo is crucial. Having a practical backup for critical stock makes it much easier for importers to manage disruptions in the market, in their supply chains and in sales to clients.

Francois: Thank you. There's a lot going on in the market, with fuel prices top of mind. Please reach out to your partners and specialists so they can provide different options. That's all for today's Importers Connect. I'm Francois Herman. Thanks for listening.

Vernon: And I'm Vernon Sinden.

Keep an eye on your connections and allow some room for delays. Look at the full cost of getting your cargo here, either by air or ocean freight. Until next time, trade confidently.

Disclaimer: In importing, timing matters. Delays matter. Currency moves matter. This is Importers Connect, your weekly briefing on the logistics, freight and forex trends shaping South African trade.

From port congestion and customs updates to shipping costs and market movements, we bring you the insight behind the headlines so your business can plan with greater certainty. The views and opinions expressed in this podcast are for informational purposes only and should not be considered financial, investment or other professional advice, guidance or recommendations.

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