South Africa investing in the future of shipping

With no resolution to tensions in the Strait of Hormuz in sight, more and more ships are rounding the Cape of Good Hope. But is South Africa able to capitalise on the traffic?

Timothy Walker, Senior Researcher on Maritime Security at the Institute for Security Studies spoke to 702 and CapeTalk presenter Motheo Khoaripe.

Walker said the situation with the Strait of Hormuz has given the shipping industry in general a lot of concern about the vulnerability of certain choke points and the control of coastal states or coastal authorities over them.

"The Bab al-Mandeb between Djibouti and Yemen on the other side of the Arabian Peninsula has been a site of insecurity for a long time. And now with the other choke point on the other side of the Arabian Peninsula being problematic, it's just reconfirmed in the minds of a lot of shipping companies, container shipping companies like Maersk that the whole area is not one where there can be reasonable expectations of security.

"So rather than take a risk where you might have to increase your war risk coverage, which is usually calculated based on the value of the ship, what they've done is divert a lot of their high value shipping around the Cape.

So you're looking at large shipping containers which would ordinarily go through the Suez Canal...

"Taking the extra time... and it adds cost to the voyages of those ships. But they're on a relatively tight schedule which is why you don't often see them calling in for South African port services."

Walker said one might expect that this boom in shipping, coming around the Cape might result in higher revenue from services like berthing fees or cargo handling, in particular bunkering but that hasn't really been the case.

"So we're looked at about three years worth of increased shipping and not necessarily seeing South African ports drive a lot of increased benefits relative to what they were doing already in the past."

However, he said there's a longer term view to capturing a different layer of value.

"What we're trying to do as a country is reconcile several agendas. They don't always fit very neatly together.

"We want to become an international maritime centre catering for the global maritime economy.

But we also want to do activities which have a kind of developmental mandate, especially framed around job creation. The unemployment rate being one of the highest in the world here.

"We're looking at new types of fuel production, the projected shipping industry of the future which is not going to disappear. We're not going to invent a way of carrying the bulk of goods around the world by air or by land, it's always going to be by sea.

"So the ships that are going to be built in the next 10 to 15 years are going to have new types of engines and fuel requirements, particularly hydrogen and ammonia. And that's where the South African government, supported by organisations like the World Bank and EU have been investing a lot in terms of the commercialisation of green hydrogen.

"The DTIC (Department of Trade, Industry and Competition) in 2024 had a strategy which estimated that it could add up to 180-billion to GDP and almost 400,000 jobs, " Walker said.

To listen to the full discussion on 702 and CapeTalk, click the media player below: