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More competition on the South Africa route

Caption: Photo: Hapag-Lloyd

Hapag-Lloyd announces a new reefer service for the South African fruit industry, challenging MSC and Maersk.

Competition in container traffic to and from South Africa is likely to intensify in the coming months. Two new seasonal services for reefer cargo, mainly for citrus fruit, are due to start in May. [ds_preview]

Hapag-Lloyd was the first to take the initiative and announced the expansion of an existing West Africa service around the Cape of Good Hope to Port Elizabeth and Durban at the end of May. The carrier intends to load a total of up to 800 reefer containers per week there for Europe and North America (transhipment via Tangier).

This is Hapag-Lloyd’s response to an initiative by South African agricultural associations who want to see more competition for reefer shipments from the Cape state. The market has so far been largely dominated by MSC and Maersk. From the exporters’ point of view, the strong market concentration means that freight rates are artificially high.

High transport prices ex South Africa

A study by the market research institute Bureau for Food and Agricultural Policy (BFAP) concluded as early as 2022 that the majority of citrus exporters in South Africa were making losses due to high transportation and logistics costs. The Citrus Growers Association of South Africa (CGA) explained that with Hapag-Lloyd’s market entry, it is hoped that shipping capacity and competition in South African container ports will increase sufficiently to enable exporters to make a profit in the overseas business. According to the industry association, the introduction of the Hapag service is the result of a joint consultancy project by several associations in the South African fruit industry.

The top dogs MSC and Maersk are not at all happy with the German container carrier’s foray into their territory. MSC responded promptly by announcing its own additional service for citrus exports to Europe in the same period as Hapag-Lloyd (calendar weeks 22 to 36). Meanwhile, the counter-attack by the world’s largest line is causing even greater joy among exporters. In a letter to its members, the CGA said the increased offer was “most welcome”.

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