Strong 2013 At Richards Bay

Richards Bay is South Africa's largest port in terms of total tonnage, and a major outlet for South African coal for Chinese consumption. Established in 1976 for the export of the fossil fuel, the port has since grown and now also handles other bulk and breakbulk cargoes. Its grounds encompass the privately operated Richards Bay Coal Terminal, which is separate from the facility. We are forecasting robust growth in 2013 at the facility, and we believe its medium-term growth prospects are strong.

In 2013 we forecast that the port of Richards Bay will see 6.2% growth in total tonnage handled, to 96.88mn tonnes from 2012's handling figure of 91.22mn tonnes. This is an upgrade from our outlook of last quarter, when we forecast that 2013 growth would be 1.3%, and would also, if realised, see 2012's growth rate of 5.6% exceeded. The upwards revision to our outlook has come on the back of strengthening monthly throughput data from Richards Bay; in the four months from January to April Richards Bay handled 32.67mn tonnes, a 6.0% gain on the 30.81mn tonnes handled in the same period in 2012.

The level of throughput has been rising over the year so far, having been down year-on-year in January and February. March in particular saw a huge increase in throughput, with volumes up by 32.4% on those handled in March 2012. That said, much of the year-to-date gains are based on this one month, and so we acknowledge that there remain downside risks to our tonnage throughput forecasts for the port.

Boosted By March Outperformance
Richards Bay Monthly Tonnage Throughput, 2011-2013

Richards Bay's throughput is almost completely geared towards the export of South Africa's considerable mineral wealth, and of this the major commodity handled at Richards Bay is coal, which made up nearly 75% of the total volume handled in 2012. Risks are presented to our 2013 growth forecast by our Mining desk's outlook for South African coal exports; they project that growth will be around the 1% mark, with few new projects due online over the year.

It should be noted that these monthly tonnage throughput figures include the weight of the containers handled, calculated at 13.5 tonnes per twenty-foot equivalent unit (TEU). However, given the small number of containers handled at Richards Bay, their weight is very small proportionally compared to the port's dry bulk throughput.

Box handling at Richards Bay is a secondary consideration to the port's bulk handling role. In 2013 we forecast growth in throughput of 68.0% to 28,839 TEUs. This is based on the throughput over the first third of the year of 10,927TEUs, 161.4% greater than the 4,180TEUs handled in the first four months of 2012. Our forecast is considerably lower than the throughput so far might suggest, and this is down to the erratic nature of Richards Bay's box handling. A triple-digit rise or fall in box volumes each year is not uncommon at the facility, and month-on-month disparities are often of a similar level. Should the subsequent monthly data continue to show a triple-digit year-on-year gain in box throughput then we will revise our forecast upwards.

South Africa is planning to enhance operations at the port of Richards Bay, with an investment of ZAR3bn (US$0.37bn) over the next five years, according to public enterprises minister Malusi Gigaba. The funds will be used to add new loading and off-loading equipment, conveyor belts and other handling equipment to increase the terminal's handling capacity.

Growth Picking Up Over Forecast Period
Richards Bay Tonnage Throughput, 2008-2017 ('000 tonnes & % chg y-o-y)

These works will enable Richards Bay to compete for the expected rise in coal export volumes over the medium term. While we forecast slow growth in the port's throughput in 2013 and 2014 on the back of a dearth of new projects, over the rest of our forecast period, which runs to 2017, we envisage faster growth. A number of new South African coal projects are due to come online in 2015, and in 2016 we see scope for a number of new Botswanan projects using South African ports such as Richards Bay. While there is a chance some of these exports from landlocked Botswana will use the Namibian port of Walvis Bay, Richards Bay, on Africa's east coast, gives more immediate access to the Indian Ocean and trade routes to the demand markets of Asia.

In light of this, our 2015 growth forecast for Richards Bay tonnage is 5.7%, and in 2016 we forecast growth of 6.6%. Over the forecast period as a whole we project an annual growth rate of 5.3%, hastening towards 2017, when we forecast throughput of 117.85mn tonnes. The investment in the port by operator Transnet will help the facility cope with this demand growth, and ensure it remains attractive in the face of rising competition from Walvis Bay and the Mozambican port of Maputo. Maputo is actually closer to the Gauteng industrial hub in South African than Richards Bay and Durban and has been benefiting from South African coal volumes; from tonnage throughput of 6mn tonnes in 2005, Maputo handled around 12mn tonnes in 2011.

This article is tagged to:
Sector: Freight Transport, Shipping
Geography: South Africa

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