Despite talk of projects and infrastructure upgrades in the region, most freight forwarders are complaining about the lack of good profitable business in the project cargo sector, says Howie Frylinck, trade manager for southern Africa and Angola at GAC Laser International Logistics. He said while the general perception was that there was a lot happening and the sales pipeline looked impressive, when it came to actual volumes this was not the case “Some forwarders have closed their doors in areas where it has become extremely expensive to run an office and have rather reverted to using a small local agent.” He said at present it appeared that larger volumes of project cargo were still moving into other areas of Africa but even this was on a smaller scale than was previously anticipated. Forwarders complain of lack of profitable business Several project cargo experts told FTW they agreed with this outlook, blaming the ongoing economic slump, the downturn in commodity prices and the drop in the oil price. Frylinck said he believed the project cargo sector, in many companies functioning as a department only, was currently in survival mode. “The oil and gas market has traditionally been a very good contributor to project cargo,” he said. “The oil industry, however, remains under pressure with rigs parked all over the world without contracts, thousands of job losses, and no new refineries and LNG plants being built. This has a direct impact on project cargo.” Wesgro economist Janine Botha said in the current economic climate infrastructure and project budgets were likely to be cut significantly. According to Frylinck project cargo growth is closely linked to economic growth. “Food, clothes, medicine – basic needs can be shipped in containers on container vessels. It’s a service that will always be there,” he said. “But for project cargo to start moving we need major investment in areas where it is required – and Africa is at the top of that list.” Commentators believe the oil price also needs to increase to at least $70 per barrel if not $80 – and on top of that if Africa is to see investment that will get project cargo really moving mining has to start performing again, which will in turn give government the extra funds to plough into roads, railways, energy and the like.
Some forwarders have closed their doors in areas where it has become extremely expensive to run an office. – Howie Frylinck
