Nelson Mandela Bay businesses already reeling from the US tariffs are now facing a second blow as shipping giant Maersk has announced it will discontinue its direct SA-US route.
The container logistics company announced that from October 1, it would transition to a transshipment model, rerouting goods through European hubs.
Under the new system, shipments will be offloaded in European ports and reloaded onto other vessels before heading to the US — a change that is expected to delay deliveries and increase costs for exporters.
This comes as Maersk withdraws from the AMEX service agreement, which it jointly operated with the Mediterranean Shipping Company (MSC) for direct shipments to the US.
Despite MSC having announced in May that it would increase the number of vessels dedicated to the route, exporters said they expected an increase in costs and disruptions, which could hurt operations.
The exit of Maersk will be another hit for local firm ROVD Engineering, which recently halted expansion plans due to the US tariffs.
It has already lost hundreds of millions of rand in confirmed and near-finalised export contracts, with major US clients withdrawing due to sudden cost escalations and trade uncertainty.
ROVD business development head Athi Luphondwana said this had placed their oversized industrial shipments at constant risk of delay.
“And in our business, every lost week can throw an entire project off schedule,” he said.
“Until now, we have relied on two direct shipping partners, Maersk and MSC, with most of our oversized production line equipment moving on MSC vessels.
“ROVD’s operations depend on short lead times between manufacturing in SA and installation at our customers’ facilities in the US.”
The 61-year-old Eastern Cape firm specialises in industrial automation systems, which are designed, manufactured and exported from its Bay facility to support production lines at global automotive manufacturers.
Luphondwana said while they were now working closely with MSC to minimise disruptions, the ongoing challenges were making their business model no longer viable in SA.
“The 30% US tariff and reduced shipping capacity hit us from both ends as costs are up, delivery times are longer, and the risk to our ability to meet customer deadlines has never been higher,” he said.
“The combination of higher costs, reduced shipping options, and the risk of project delays has turned what was once a reliable supply chain into a major operational threat.
“While we are working closely with MSC and our freight forwarders to minimise disruption, the reality is that these challenges make it difficult to see our business model working in SA, as these challenges make it harder to serve our US customers.”
Production software company Jendamark also recently revealed that it had lost a contract worth R750m as a result of the tariffs.
Jendamark managing director Siegfried Lokotsch said going through Europe would now increase their risks for lead times, which was how long it took to deliver.
“Lead time is a massive risk factor for us,” he said.
“It’s not a good thing for anyone exporting from the Eastern Cape because the one operator can now charge us whatever they want.”
The company is a manufacturer of automated assembly lines and production software for global automotive giants such as Ford, BMW, Volkswagen and Mercedes-Benz.
“We send 50% of our exports to the US, and we ship big equipment. It’s not something that you can put in an aeroplane and fly it,” Lokotsch said.
“This will increase our costs because it will have to go through Europe while increasing the lead time.”
Citrus Growers’ Association vice-chair Hannes de Waal said the withdrawal was a concern for the Canadian market, which was accessed via US ports.
“We serve many Canadian receivers and retail chains from New York, taken up by trains to Montreal and the west coast of the country.
“We understand transshipment, but the issue is that the schedules are not reliable, whether because of ports or weather, and, unfortunately, unlike wines, citrus has to get to the customer as soon as possible,” he said.
“When vessels start withdrawing, you get concerns about how the trade is going to be impacted.
“While we cannot say it will all be doom and gloom, it is concerning for the bigger picture of trade.”
Transnet spokesperson Ayanda Shezi said they were not expecting a major impact on the volumes moved through the country’s ports.
“Transnet does not anticipate any impact to the service as MSC is the lead line, and MSC has confirmed its commitment,” she said.
The Marine Business Chamber’s Unathi Sonti said the Maersk announcement sparked concern and outrage across sectors.
He said the rerouting through other ports would add more challenges for SA exporters, who would face delays.
“This will be a logistical nightmare.
“A transshipment to a European port, where they will be moved to another vessel before the US, brings questions of time and delays — rerouting always has delays.
“We would also not be sure if they would get preferential berthing in US ports.
“I hear MSC will be making investments; perhaps it is an opportunity to revamp its infrastructure in the country, but this will be a challenge until something else happens.”
He said that while the tariffs had raised concerns regarding the viability of a weekly route, which would affect volumes, Maersk’s departure should also be examined from a historical perspective.
He said the route dated back to the 1920s.
“What is significant is that Maersk inherited it after acquiring Safmarine in 1999,” he said.
“The SA Marine Corporation [Safmarine] was the country’s shipping line specialising in container transportation and was acquired by Maersk in 1999.
“When it acquired Safmarine, it deregistered all the SA ships from the country.
“If it always had an interest in participating in the country, that move meant our seafarers, who would have enjoyed preferential employment, were then in the same boat as everyone else.
“From the outset, for me, there seems to be an idea from Maersk that it would want to disengage on SA with certain things.”
Nelson Mandela Bay Business Chamber chief executive Denise van Huyssteen said the withdrawal of Maersk would make SA exports less competitive.
“While the decision is disappointing, it is pragmatic considering the potential impact of the US tariffs on trade between SA and the US,” she said.
“This now puts South African exporters in an even less competitive situation as they will incur additional logistics costs and loss of time in rerouting their products to European hubs before being able to get them to the US.
“It is now exceptionally difficult for local manufacturers, who already have been dealing with the disadvantage of great distance to key markets, to continue to trade with the US.”
In addition to the need for favourable trade conditions to be in place, Van Huyssteen said SA generally needed to become more competitive to compete with other global manufacturing locations.
“This starts with ensuring that we have an enabling environment in place, requiring that municipalities deliver efficient basic services, logistics efficiencies are improved, and critical issues like safety and security are prioritised,” she said.
The Herald
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