Durban Outlook Strengthening
In 2014, BMI forecasts that the South African port of Durban will enjoy marginally stronger growth than it has done in recent years. Both container and gross throughput growth will be relatively sluggish in 2014 - though this will be as a result of the South African economy's travails, rather than any issues specific to Durban as in previous years.
In terms of box throughput, we forecast that Durban will handle 2.69mn twenty-foot equivalent units (TEUs) in 2014. This is a significant downgrade from our forecast last quarter, when we envisaged growth of 4.0%. Although it is greater than that seen in 2012 and 2013 - a contraction of 4.7% and anaemic growth of 1.8% respectively - it is still far from the 6.6% and 6.3% seen in 2010 and 2011.
The poor performance at Durban over the past two years has been more a result of quay closures rather than an underperforming trade outlook - the port, the largest container-handling facility in the southern hemisphere - is investing heavily in its future, and this has entailed some reduced capacity in the immediate term. However, our forecast for slow growth in 2014 is more a result of the deteriorating macroeconomic picture in South Africa.
|Maintaining Positive Growth|
|Port of Durban Throughput, TEU|
In 2014 we forecast real GDP growth of 2.5%. This would mark an improvement on 2013, for which we estimate real GDP growth was 1.8%, with the mild acceleration in growth being driven by strengthening demand in Germany and the US - two of South Africa's key export destinations. However, subdued domestic consumer demand, weak investor sentiment and a retrenchment in the gold mining sector will keep a lid on economic expansion. Our view is slightly below-consensus: mean growth estimates according to the latest Bloomberg survey came in at 2.8%.
Private consumption, a key driver of containerised imports, will be constrained by the loss in value of the rand against the dollar - caused by the removal of foreign capital as the US Federal Reserve begins to taper its loose monetary policy. South Africa's consumer sector is under pressure amid rising living costs, sustained high unemployment and weak confidence. On a more positive note, wage increases generally remain high - and positive in real terms - owing to the high levels of unionisation, which should be a supportive factor for private consumption. Furthermore, interest rates are fairly low, having been kept on hold at 5.00% since July 2012. We expect them to stay accommodative amid sluggish growth, easing the costs of debt servicing for indebted South African consumers. The ratio of household debt to disposable income has stagnated since the start of 2012, having previously fallen steadily. Taking all the above into account, we forecast that real private consumption growth will be 2.2% in 2014 and 2.7% in 2015. This supports our forecast container throughput at Durban of 2.0% and 2.5% in 2014 and 2015 respectively.
In terms of tonnage throughput at Durban, largely driven by container volumes, we expect a similar growth rate of 1.8% in 2014, followed by 1.9% in 2015.