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Impact of 'slobalisation' and shipping disruptions on South African agri-trade

Absa AgriTrends has pinpointed several large global and local trends post-pandemic, significantly affecting international trade dynamics. A notable trend is the slowdown in globalisation, or 'slobalisation', which has been on the rise since the 2008 financial crisis, further fueled by the pandemic, trade wars, and concerns over dependency on single trade partners. This has led to increased protectionism and geopolitical tensions, impacting the volume and value of global trade. Specifically, South Africa felt the sting of protectionism when the EU implemented extra phytosanitary measures on its citrus exports in 2022, incurring an industry cost of around R200 million.

Trade wars have also indirectly impacted South Africa. The retaliatory tariffs from countries like Canada, Mexico, the EU, Turkey, India, and China on US goods have led to supply chain disruptions, inflationary pressures, and hindered market access for South African exports. Additionally, South Africa's trade benefits under the Africa Growth and Opportunity Act (AGOA) are crucial, with potential exclusions posing a threat to its export rates.

Logistical challenges represent another significant threat, with major shipping routes experiencing disruptions due to the Panama Canal's drought-induced low levels and terrorist attacks in the Red Sea, forcing detours that elevate costs, prolong voyages, and create container imbalances.

While global shipping costs have decreased, South Africa's reductions are less pronounced due to local port inefficiencies. However, these disruptions also present opportunities, as seen with South African avocado producers and the citrus industry potentially benefiting from reduced competition and supply issues in other producing regions.

Nevertheless, the table grape industry's ability to capitalize on these opportunities has been hampered by operational challenges at the Cape Town Port, necessitating costly alternative routing for exports.


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