Flooding In KwaZulu Natal, South Africa Wreaks Havoc on the Vulnerable Supply Chain.

12 May 2022

As supply chains pivot and mitigate disruptions post the COVID-19 pandemic, the ongoing Russo-Ukrainian war, and the looting and arson of 2021 in KwaZulu Natal (KZN), heavy rains have struck again. The coastal province in South Africa was in April 2022 hard hit by the raging torrent that claimed more than 400 lives.

The PwC in its April 2022 report, indicated that  the rains destroyed 4,000 homes, and displaced 40,000 people in the province.

Read: P wC’s South Africa Economic Outlook (April 2022)

Damage caused by heavy rains averaging 300mm daily between the 8th and 13th of April 2022 resulted in the president declaring a provincial state of disaster. The floods impacted railway lines, roads, warehousing, manufacturing plants and private residences, and those not washed away completely were rendered inaccessible.

It is estimated that flooding and mudslides damaged or destroyed infrastructure to the tune of R17 billion.

Read : R17bn — That’s the estimated cost of KZN floods damage

Source: EWN

According to Infrastructure News, The Passenger Rail Agency of South Africa (PRASA), a South African state-owned enterprise which lost about 300km of its rail infrastructure in the KwaZulu-Natal floods, has estimated its recovery costs to be between R2.8billion and R3billion.

Port logistics has been dealt a heavy blow and seen businesses such as Grindrod and Maersk have suspended operations and been forced to find alternative plans to land cargo and load exports. The severity caused by washaways and mudslides on the Durban and Cato Ridge, and the North and South Coast lines meant that Transnet Freight Rail (TRF) had to invoke Force Majeure for a period of seven weeks – until 9 June 2022.

Source: Bloomberg

The Port of Durban found itself with a backlog of up to 9,000 containers requiring more than seven days to clear, according to Public Enterprises Minister, Pravin Gordhan.

Read: Durban Floods – Impact on Operations

Sappi, a paper manufacturer, in its 22nd  April 2022 update indicated that whilst there was no material damage to any of the plants, its three mills lost 23,000 tons of production mainly dissolving pulp and approximately 45,000 tons of inventory (including dissolving pulp of 30,000 tons) was damaged in the warehouses.

Read: Impact of adverse weather and flooding in KwaZulu Natal province, South Africa on Sappi’s South African operations

The impact of these unprecedented disruptions has seen the Absa Purchasing Managers Index (PMI) slide to 50.7 in April from 60 in March 2022. According to Absa this is its lowest level since July 2021, when widespread looting and rioting disrupted local output and demand. The PMI reflects demand in South Africa’s manufacturing sector. It is also argued that the current Stage 4 loadshedding is not helping heavy manufacturing sectors recover from these recent disruptions.

PwC states that manufacturing and transport were the industries hardest hit by flooding in KZN. Furthermore, the South African currency lost 8.5% of its value against the US dollar in the two weeks ending April 26 due largely to a combination of local factors, including disruptions due to flooding.

Read: South Africa Economic Outlook

The KZN economy contributes 17% to national GDP, second to Gauteng and this disruption to business and consumer activity has a substantial impact on the South African economy and even farther afield. According to Freight News,  it will take about three months to get back to pre-flood levels, reducing the city’s annual GDP by about 1.8 %.

The aviation industry has also not been spared. Speaking to The Money Show’s Bruce Whitfield, Guy Leitch, on the 9th of May 2022, Editor at SA Flyer Magazine stated that airlines were cancelling flights from Johannesburg’s OR Tambo International Airport. as there was jet fuel supply shortage as a result of KZN floods.

According to Reuters, the Chief Executive of Airports Company South Africa (ACSA), Mpumi Mpofu, saidin a news conference that two international airlines had to cancel 15 flights while other airlines had been forced to re-route and make stops for fuel in Durban and even in Windhoek, Namibia, in the initial phases of the shortages. Mpofu went on to say that the flight cancellations cost over $93,000 (R1.5 million) in ACSA passenger fees and thousands in landing costs.

There is no doubt that many more other business opportunities have been wiped away, in some instances never to be recovered as a result of the KZN floods. Again, governments, the private sector, and non-government entities must continue to build collaborative relationships that fortify resilience in the supply chain.

Written by Staff Content Writer, Raymond Moyo. 

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