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Speaker 1: The Money Show Explainer. Time now for our Money Show explain. Now,

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Speaker 1: we've had some bottleneck problems at South African ports over

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Speaker 1: the past few years. In fact, at some point some

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Speaker 1: ships re rooted from the Cape to go to our

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Speaker 1: neighbors in Mozambique and Mauritius to try and get their

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Speaker 1: business done there because we had a lot of backlots.

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Speaker 1: But since then there's been a lot of work done

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Speaker 1: to try and reform our ports. But with the Strait

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Speaker 1: of Hormos being choked up by this US Israel attack

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Speaker 1: on Iran doesn't mean it also pressures the Cape of

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Speaker 1: Good Hope ports because a lot of these ships are

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Speaker 1: rerouting there because firstly there's safer and probably they'll get

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Speaker 1: their business done faster less. And now get into this

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Speaker 1: conversation with Timothy Walker, senior researcher on maritime security at

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Speaker 1: the Institute of Security Studies. Timothy, is this an opportunity

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Speaker 1: at this particular point or is it too early to

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Speaker 1: try and test those ports in Cape Talk Good evening.

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Speaker 2: I'm saying good evening to everyone listening, and thanks for

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Speaker 2: having me on. There's been several years really that this

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Speaker 2: opportunity has been in place. Really since the end of

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Speaker 2: twenty twenty three. In beginning of twenty twenty four, when

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Speaker 2: we started to see a lot of diversions caused by

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Speaker 2: the Red Sea crisis, in particularly the Hooty attacks on

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Speaker 2: shipping in the Barber mendeb we did see a lot

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Speaker 2: of cape bound diversions. It basically really doubled relative to

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Speaker 2: the baselines prior to that. So you're looking at over

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Speaker 2: well over one hundred percent more ships coming around the Cape,

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Speaker 2: but a lot of those ships weren't necessarily looking at

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Speaker 2: calling into South African ports. You might expect that this

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Speaker 2: boon and chipping coming around the Cape might result in

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Speaker 2: higher revenue from services like burthing fees or cargo handling

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Speaker 2: or in particular bunkering, but that hasn't really been the cave.

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Speaker 2: So we've looked at about three years worth of increased

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Speaker 2: shipping but not necessarily seeing South African ports derive a

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Speaker 2: lot of increased benefit relative to what they were doing

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Speaker 2: already from the past.

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Speaker 1: When we look at the ships now and the way

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Speaker 1: they're going, are we seeing hundreds of ships coming towards

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Speaker 1: us at the Cape ports or is there still a

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Speaker 1: lot of ships trickling through waiting for the Strait of

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Speaker 1: Homos to open.

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Speaker 2: Well, remember the straightfall Moos is a sort of a

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Speaker 2: sort of shipping dead end in a way. Once you're

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Speaker 2: through the straits before Moves and you're into the Persian Gulf,

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Speaker 2: so a lot of ships are bottled up in there

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Speaker 2: for the time being. What the crisis so far in

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Speaker 2: the Iran's closure of the straightsfom moves and it's threatening

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Speaker 2: to impose a kind of a toll regime over shipping

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Speaker 2: as given the shipping industry in general a lot of

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Speaker 2: concern about the vulnerability of certain choke points and the

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Speaker 2: control of coastal states or coastal authorities over them. As

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Speaker 2: I mentioned the ababb A Mendez so between Chibouti and

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Speaker 2: Yemen on the other side of the Arabian Peninsula has

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Speaker 2: been a site of insecurity for a long time, and

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Speaker 2: now with the other choke points on the other side

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Speaker 2: of the Arabian Peninsula being problematic, it's just confirmed or

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Speaker 2: reconfirmed in the minds of a lot of companies like

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Speaker 2: shipping companies, containers, shipping companies like Mask or Hapag Lloyd

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Speaker 2: that the whole area in itself is not going to

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Speaker 2: be one where there can be reasonable expectations of security.

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Speaker 2: So rather than take the risk, for instance, of going

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Speaker 2: through areas where you might have to increase your war

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Speaker 2: risk coverage, which is usually calculated based on the value

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Speaker 2: of the ship, what they've done is divert a lot

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Speaker 2: of their high value shipping around the Cape. So you're

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Speaker 2: looking at large shipping containers which would ordinarily maybe go

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Speaker 2: through the Sewers Canal. Sure many remember the blockage of

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Speaker 2: the Sewis Canal a few years ago. Might be ever,

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Speaker 2: given those kind of ships do go through that area still,

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Speaker 2: but very few. They tend to prefer to come around

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Speaker 2: the Cape, taking the extra time taking, which adds delays

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Speaker 2: and adds cost to the voyages of those ships. But

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Speaker 2: there aren't quite a relatively tight schedule, which is why

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Speaker 2: you don't see them often calling in for South African

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Speaker 2: port services. They're not there to make South African stops.

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Speaker 2: They're carrying on to their destinations. The ships which are

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Speaker 2: coming around the Cape, which have been diverted as well,

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Speaker 2: tend to be often or or already going around the

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Speaker 2: Cape to begin with, are lower value in terms of

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Speaker 2: their insurance value, but are they quite vital in terms

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Speaker 2: of the material they carry. It could be oil tankers

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Speaker 2: or bulk carriers carrying food or raw materials. Those sometimes

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Speaker 2: do stop in South Africa, sometimes in the ports, but

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Speaker 2: often what they've done for several years has stopped outside

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Speaker 2: in offshore areas. And this happens all over the world.

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Speaker 2: The designated offshore area where bunkering can happen. That's the

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Speaker 2: refueling of ship. A ship comes out to your ship

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Speaker 2: with fuel on board and or pump it into your ship.

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Speaker 2: But that's been stopped for several years, or had been

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Speaker 2: stopped for several years because of a problem over the

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Speaker 2: taxation which companies who were practicing that were carrying out.

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Speaker 2: It was felt that there was a loophole. SARS felt

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Speaker 2: there was a loophole which was being exploited, which was

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Speaker 2: pretty much the case. But the companies were effectively not

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Speaker 2: paying enough tax and we're escaping some of the duties.

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Speaker 2: And what's happened, and you mentioned Namibia and Mauritius earlier,

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Speaker 2: is that a lot of the shipping companies or companies

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Speaker 2: who supply fuel and you know, think of things like

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Speaker 2: companies like BP or Traffagura looked at this So African market,

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Speaker 2: so it was too risky or there wasn't regulatory certainty,

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Speaker 2: so decided to open up bunkering in other parts of

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Speaker 2: the world where shipping would choose to go, and those

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Speaker 2: are relatively well established now and we're only kind of

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Speaker 2: reopening our bunkering facilities now. So there's more ships coming

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Speaker 2: around who sometimes do want fuel, but often they're refueled

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Speaker 2: enough they aren't looking to buy from South African sources.

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Speaker 2: We're a little more expensive. And how can.

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Speaker 1: We become more attractive then, because during the red Z crisis,

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Speaker 1: around three hundred and forty three hundred and fifty four

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Speaker 1: container vessels made their way here up eighty one hundred

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Speaker 1: and twelve percent surge. Now with the Strait of Hormos

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Speaker 1: are closed, how can we make it a more viable option?

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Speaker 1: That is the cape of good hope in terms of

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Speaker 1: the post.

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Speaker 2: Yeah, I think South Africa's on the right track. Here's

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Speaker 2: there's a long, longer term view to capturing a different

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Speaker 2: layer of value. What we're trying to do as a

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Speaker 2: country is reconcile several agendas and they don't always fit

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Speaker 2: very neatly together. So we want to become an international

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Speaker 2: maritime center catering for the global maritime economy, but we

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Speaker 2: also want to do activities which have a kind of

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Speaker 2: a developmental mandate still, especially framed around job creation member

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Speaker 2: the unemployment rate being one of the highest in the

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Speaker 2: world here, so we want to sort of invest in

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Speaker 2: maritime economies and activities which will produce a lot of jobs,

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Speaker 2: but also cater for the future direct jectory. And what's

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Speaker 2: happening there is we're looking at new types of fuel production,

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Speaker 2: the projected kind of shipping industry in the future, which

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Speaker 2: is not going to disappear. We're not going to invent

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Speaker 2: any way of carrying the bulk of goods around the

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Speaker 2: world by air or by land. It's always going to

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Speaker 2: be viic. So the ships which are going to be

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Speaker 2: built in the next ten to fifteen years are going

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Speaker 2: to have new types of engines and fuel requirements, particularly

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Speaker 2: hydrogen and pneumonia. And that's where the Safgan economy, or

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Speaker 2: rather the Southron government, supported by organizations like the World

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Speaker 2: Bank and the EU, have been investing a lot in

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Speaker 2: terms of the commercialization of green hydrogen. The DTIC in

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Speaker 2: twenty twenty four had a strategy which estimated that could

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Speaker 2: add up to about one hundred and eighty eight billion

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Speaker 2: to the GDP and almost four hundred thousand jobs. So

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Speaker 2: what SO Africa could do is position itself for the

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Speaker 2: future market rather than try and capture the value added,

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Speaker 2: which could be rather temporary and rather sort of traditional,

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Speaker 2: could start be looking at the more the future requirements,

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Speaker 2: the future fuels, future production and export nodes. So this

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Speaker 2: is why it's quite interesting for South Africa at the moment.

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Speaker 2: It's in this sort of difficult position of we are

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Speaker 2: in a position to cater or with benefits in the

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Speaker 2: short term potentially from this search, but what we're looking

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Speaker 2: to do is to establish ourselves as the long term

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Speaker 2: node for new types of fuel and being a real

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Speaker 2: hub for that.

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Speaker 1: And that long term node will probably need a quick

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Speaker 1: turnaround that Timothy, Unfortunately you're running out of time there.

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Speaker 1: What they explain that Timothy Walker, senior researcher on maritime

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Speaker 1: security at the Institute for Security Studies