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He said consumers in upper LSM segments seem to be trading down, boosting the bottom end of the LSM scale.
The recent increase in South Africa’s shipping and container market points to a steady and healthier economy than recent official estimates suggest, according to Maersk Line South Africa, part of the AP Moller Maersk Group and listed on the Norwegian Stock Exchange.
Activity on South Africa's shipping routes with major trading partners in Europe increased 5% to 7% in the first half of 2013, said Maersk Line SA.
The company’s trade performance for the period shows that activity remains pretty steady in the market for containers, which Maersk Line SA both imports and exports from South Africa.
This comes as indications are that SA’s economic activity is on the wane, with the Reserve Bank’s most recent projections signalling that Gross Domestic Product (GDP) will grow by just 2% in 2013. Last year the economy grew 2.5%.
The International Monetary Fund also lowered SA’s economic growth prospects to the SA Reserve Bank’s level.
"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% and 7% on an annualised basis," said Maersk Line SA managing director, Jonathan Horn.
Although imports and export figures do tend to be higher than the actual GDP growth rate, Horn said 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.
SA seemingly took advantage of the weaker rand, which means more revenue for exports to other currencies, as 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 Conroy.
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.
SA’s manufacturing export growth has disappointed which is something the government has been acutely aware of.
"Efforts to strengthen SA’s export base through initiatives like the National Export Development Programme will only be felt in the medium term," said Horn.
It is expected that manufacturing will continue to comprise one third of exports in the near to medium term.
"The strongest growth in the resources sector came from chrome, manganese and scrap metal," said Conroy.
However, 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, said Conroy.
Bulk commodities like iron-ore and coal are not included in Maersk’s figures, because they only report on and have access to containerised volumes. Commodities such as iron ore and coal move almost exclusively in bulk vessels.
There are many other commodities which move in bulk only as well as several which move in both containers and bulk. The swing between the two is largely determined by shipping costs between these options (bulk vessel charter costs are a key driver for bulk) and to some extent parcel size and handling capacity of receivers.
Looking forward to the second half of the year, Maersk 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. That is roughly at the same rate as that seen in the first half of 2013.
The good news is that infrastructure constraints have not affected growth on either side of the equation.
"The congestion in ports was an issue last year, but this year it’s been a bit of a non-event," said Conroy. This has resulted in fewer delays in arrivals and departures of cargo, which has aided the overall level of trade the company, and the country, has enjoyed over the period.
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.
