By Liesl Peyper.
The closure of the Lebombo border post between South Africa and Mozambique, and the resultant disruption to cargo moving through the Maputo Port, is costing the South African economy an estimated R10 million per day, says Gavin Kelly, CEO of the Road Freight Association.
On Thursday, the Border Management Authority temporarily closed the border crossing into Mozambique following a new wave of protests that broke out around Maputo.
“Direct losses to freight logistics is around R6 million, including damages to and loss of vehicles, injuries to drivers, the looting of loads and disruptions of import and exports,” Kelly says.
He adds that companies lose business due to unfulfilled consignment loads and experience revenue losses due to the necessity of deploying extra security.
There have so far been eight days of delays at the border crossing, with full closure over the last four days, according to Kelly.
Hundreds of trucks carrying cargo, most notably chrome, have been stranded. South Africa is the world’s biggest chrome exporter.
Minerals Council South Africa says in an emailed response to Moneyweb: “The closure of the Lebombo border post used by trucks transporting South African minerals to the Maputo harbour for export is of particular concern to the chrome industry.”
Of the 17.7 million tonnes of chrome ore and concentrate that South Africa exported in 2023 (an all-time high), 9.4 million, or 53%, was exported through Maputo.
“Importantly, by far the majority of that 9.4 million was trucked by road to Maputo.”
According to the Minerals Council, there are a few weeks of chrome inventory at the Maputo harbour.
“However, Grindrod has stopped port operations, which further constrains flows of chrome to overseas customers. A prolonged border closure of weeks rather than days will have a serious impact on South African chrome exports,” it says.
Besides the closure of Lebombo, the Port of Maputo also halted activity on Thursday and logistics group Grindrod subsequently announced on Sens that it would temporarily suspend its port and terminal operations in Maputo and Matola.
Shareholders are advised that following the closure of the Lebombo Border connecting South Africa and Mozambique, a suspension of rail operations, and to ensure the safety of our employees, Grindrod’s port and terminal operations in Maputo and Matola are temporarily suspended,” the company noted.
“The situation will be assessed continually before any resumption.”
Grindrod’s terminal at the Maputo Port handles cargo volumes of approximately seven million tonnes, the group said previously.
Risk of economic setbacks
Meanwhile, the Southern Africa Association of Freight Forwarders (Saaff) has voiced concern over the slow response to the crisis by the Southern Africa Development Community (Sadc). It called on member states to ‘move immediately into a leadership position as mediator’ to restore law and order and stabilise trade operations.
Dr Juanita Maree, Saaff CEO, says the geopolitical conflict in Mozambique comes at a very delicate time for South Africa when logistics and the supply chain are under pressure from several other disruptive challenges.
The need for the temporary closure of the Lebombo border and the resultant economic impact extends beyond Mozambique to all other countries in the Sadc region but in particular, South Africa and Zimbabwe, as halted trade raises the risk of economic setbacks, she notes.
The supply chains currently utilising the Maputo Corridor compete internationally, and the predictability required for ensuring international competitiveness is putting these fragile supply chains at significant risk.
“To varying degrees, the implications of this crisis will have a long-term negative impact on all the countries in the region, as it will take time for traffic to and from the Port of Maputo to stabilise and to restore to previous volumes,” Maree says.
“Additionally, many essential jobs are now at risk, while the ripple effects for informal, small and medium businesses will be felt for some time. Business will limp forward into an uncertain future after this troubled, disruptive period.”
Significance of the port to SA
The border and port closures come as an increasing number of South African export businesses rely on Mozambique’s Port of Maputo to transport their products to overseas markets.
The main reason Maputo is favoured among exporters is because of the ongoing logistical challenges at South Africa’s ports and railways.
The Port of Maputo has become a noteworthy competitor to South African ports, overtaking Durban in the World Bank’s container port performance index for 2023. It came in 329th out of 405 ports globally, while Durban was ranked 399th.
Post-election unrest
Mozambique has experienced violent demonstrations since its election results were announced on 24 October. The ruling party’s presidential candidate, Daniel Chapo, won 71% of the vote, extending the party’s 49-year rule.
The protests have intensified since Monday when protesters blocked the N4, which connects South Africa with Mozambique.