Sharp decline in imports despite stronger rand

Johannesburg – The container market took a knock in the third quarter of 2016, mainly due to a decline in imports by 9%.

According to the Maersk Group Trade Report for the third quarter, the container market contracted 6% year-on-year (yoy). In turn, the decline in imports was driven by low demand by consumers, the report revealed.

“The decline is linked to South African consumers purchasing less consumables, which are imported in containers, such as auto, retail and electronic goods,” stated Matthew Conroy, trade manager of Maersk Line Southern Africa.

In the report, he explained that despite a stronger rand, which should make imports less expensive, demand remained low. “The stronger rand has unfortunately not triggered any notable ‘restocking efforts’ to boost imports.”

Data on GDP released by Statistics South Africa (StatsSA) last year indicated an international trade deficit of R44bn in the third quarter.  StatsSA stated that imports of goods and services decreased by 4.9%. Overall, exports decreased by 26.4%.

READ: Exports down more than 25% for third quarter - StatsSA

However, Conroy said that the low level of imports contributed “positively” to trade surplus in the container market. Export container trade is still positive, only declining 2% yoy. “This means that while the market is still not growing, there are definite signs of stabilisation after a terrible first quarter.”

Conroy added that mining commodities such as chrome and manganese are expected to move at a steady pace, given improved price levels and demand from China.

“We will likely see a market decline for imports in the 7% to 8% range, unless the rand was to strengthen considerably,” he said. The market for exports is expected to continue in its “current stable trend”, falling within the -2% and 0% growth range.

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This contrasts with India’s containerised trade market, which grew by 11% last year. India is one of the largest containerised trade markets in the global Export-Import (EEXIM) bank. Fin24 previously reported that this would create opportunities for South African trade, through the increased use of the direct trade route between India and South Africa.

Conroy said there is potential for South Africa in India's automotive, telecommunications and pharmaceutical sectors.