BMW Port Alternatives Reduce Risk

BMW South Africa has announced that in line with its planned expansion in production in 2013, it will be sharing its increased exports between the port of Durban, where it currently exports the locally produced 3 Series, and additionally, the port of Maputo in Mozambique. While this is aimed at enhancing the company's competitiveness throughout the manufacturing process, BMI believes it is also useful to have alternative shipping solutions in place, given the adverse impact of transport strikes on the South African autos sector in the past .

Logistics will become increasingly important in South Africa, as BMI has previously stated that in order to meet the minimum output requirements for the new Automotive Production and Development Programme, many carmakers are ramping up exports. However, a number of carmakers have raised concerns regarding the business environment in South Africa recently, with labour relations being a key issue (see 'Investors Still Concerned About Power And Labour Issues', February 18) . Strikes by port workers in the past have disrupted the export schedules of carmakers , as well as import s of necessary parts and components .

Declining Export Hub?
South Africa Vehicle Trade Balance (CBUs)

BMW SA added a third production shift in late 2012, which will result in its annual production capacity increasing from 50,000 to 80,000 units for 2013. This will lead to its exports also more than doubling from 33,000 to 70,000 units a year. In order to cope, the carmaker has chosen the car terminal at Maputo as an additional outlet for around 20% of its exports, which will be shipped to Japan and other Asian markets. However, BMW has committed to still working with Durban port operator Transnet and has indeed increased export volumes from the South African port by around 20,000 units a year.

BMW SA's eventual goal is a highly integrated logistics system, according to managing director Bodo Donauer, including access to multiple ports in the Southern African Development Community and integration between ports, road and rail. With this in mind, it was BMW SA's existing road freight partner Grindfrod Freight Services, which helped to clinch the Maputo deal and will provide freight, terminal and customs services in Mozambique as well as South Africa.

A BMW spokesman has added that Namibia could also be considered as an access point for importing components rather than Cape Town, as it would cut down delivery times by around four days. This would support BMI's view that Namibia is a logistics outperformer in Sub-Saharan Africa, with its quick import supply chain and competitive bureaucracy among its advantages (see 'Namibia: Logistics Outperformer', June 7). Its well developed internal transport network would also fit with the kind of integration BMW SA is aiming to achieve.

This article is tagged to:
Sector: Autos
Geography: South Africa, Mozambique, Namibia

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