SA citrus growers weighing up port options in Mozambique

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SA citrus growers weighing up port options in Mozambique

Logistic efficiencies go a long way in a competitive global fruit market, but citrus growers in northern South Africa, Swaziland and Zimbabwe are faced with a challenging situation when it comes to ports. The Citrus Growers' Association of Southern Africa (CGA) is trying to tackle the problem with a new cost assessment report into Maputo Port citrus operations in Mozambique.

CGA CEO Justin Chadwick says exchange rates and oil prices are a cause for concern in 2012, while for some growers rising transport costs could have implications for the choice of shipping from Durban or Maputo in the future.

"Transport costs are primarily influenced by the cost of diesel fuel, which at the current price is now 50% (normally 35%) of the total running costs of a truck. Rail, or more specifically the incumbents of the service, are failing to respond to the concerns raised with them, mostly to alleviate rising transport costs," says Chadwick.

"This leaves growers with some uncertainly as to how to reduce rising input costs. The question regarding the future of the oil price can only be answered with uncertainty. What we do know is that growers up north are 450km (279 miles) closer to Maputo than Durban.

"Should that not mean that Maputo port as an option for citrus growers be viewed more vigorously?"

Possible answers to that question are held within the 'Maputo Port Citrus Operations and Logistics Cost Assessment 2011', compiled by CGA logistics development manager Mitchell Brooke.

To read the full report click here.

The report highlights that under current circumstances of higher sea freight rates in Maputo, is has been more cost effective for northern citrus growers to transport their fruit the extra 450km (279 miles) to Durban.

But citrus production from the northern region has almost doubled in the last decade, leading to capacity issues in Durban.

"The result of this is the Durban port becomes severely congested and cold store infrastructure is oversubscribed during peak season," the report said.

"In the near future if the break-bulk conventional shipping mode is not revitalized, almost all citrus will be shipped by containers and container shipping capacity and equipment may not be able to service the industry’s demands.

"Therefore the Maputo port could provide a means of reducing logistics costs, decrease the amount of citrus routed through Durban to increase efficiency, and rejuvenate and create a viable and sustainable break-bulk conventional shipping mode from South Africa."

The report points to Swaziland, Malelane, Nelspruit, Hoedspruit and Letsitele as the regions that would benefit most from an improved Maputo service, as the transport cost differentials are lower compared to Durban. In addition, CGA says rail transport to Maputo could be viable and cost effective from Hoedspruit and Letsitele.

Addressing higher Maputo's freight costs

The report says Maputo's costs are higher for two main reasons: the marine portable tank (MPT) handling and storage rate is twice the amount in Durban, while container cross-haul and service fees are in U.S. dollars and are 'extremely high'.

"Maputo port costs can be radically reduced by applying ambient loading methods and associated rates," the report says.

The report concludes ambient loading in Maputo could be best suited to the following services:

- VSA (vessel sharing agreement) weekly Europe and U.K. break-bulk service.

- VSA weekly Europe and U.K. on-deck container service.

- Baltic weekly Russia conventional break-bulk service.

- Direct packhouse container packing routing through Maputo.

The report finished with the following recommendations:

Formulate a Maputo workgroup constituting growers (regional logistics representatives), shipping lines (VSA), PPECB and exporters and logistics agents.

- Consult and trial with industry bodies in terms of conventional vessel ambient loading percentages.

- Consult with Europe break-bulk VSA group in terms of on-deck container viability through Maputo.

- Consult with growers, TFR (Transnet Freight Rail) and CFM (Mozambique Ports) in terms of rail solutions  from Hoedspruit and Letsitele to Maputo.

- Consult with DP World and Maputo ICD (inland clearance depot) in terms of Reefer container service and storage capacity.

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